The pricing risk is the financial exposure that arises from maintaining fixed prices throughout an entire campaign or budget period whilst being subject to foreign exchange rate fluctuations between the time prices are established and when actual transactions occur.

Pricing with an FX rate, i.e. using a currency rate in the pricing formula, requires solutions to manage the underlying pricing risk by frequently updating FX rates—automatically, and in dozens of different currencies. Travel companies are one of the most affected industries.

For Travel companies, pricing risk would be the risk that, between the moment a booking is priced with an FX rate and the moment it is confirmed, the exchange rate will have shifted. Failure to frequently update the exchange rate used in pricing hurts profit margins or competitiveness. 

Currency Management Automation allows firms to set a corridor for the exchange rate, updating the rate every time the limits of the corridor are reached. This market-driven approach stands in contrast with outdated time-based processes. 

 The upshot: when currency markets display little volatility, pricing rates remain steady—an important benefit not provided by the usual time-based processes.

‍