Text: Treasurers are constantly faced with the challenge of managing profit and loss (P&L) and its key drivers. Foreign exchange (FX) risk arising from balance sheet exposures can have a material impact on a company’s financial results and is often influenced by various sources of “noise.” Hedging and valuation are frequently linked to a specific target rate, which acts as a key driver of hedging effectiveness and therefore requires a precise and strategic management approach. In an environment of extreme intraday volatility, the moment a hedge is executed can ultimately determine the P&L outcome. This raises a critical challenge: what is the most effective way to synchronize the timing of accounting rate fixing, hedging execution, and cash flows to protect results?

HUGO BOSS AG partnered with Bank of America to develop an innovative, automated, FX transaction-based risk management solution designed to mitigate balance sheet currency exposures while minimizing balance sheet noise. In this session, we present the solution and describe the process of developing it.