Reducing Exchange Rate Risk On The Example of ERP Software

Abstract:

Companies that transact in different currencies face financial risk because of unpredictable exchange rate fluctuations. Exchange rate risk constitutes one of the most common forms of risk that firms in the international arena encounter and, in recent years, the management of this risk has become one of the key factors in overall financial management. Measuring and managing exchange rate risk exposure is important for reducing a firm's vulnerabilities from major exchange rate movements which could couldadversely affect profit margins and the value of assets. The purpose of the article is to show how to implement and provide a solution in SAP ERP or S/4HANA systems that significantly reduces exchange rate risk.