“FX Policy Mandate”


A company’s FX Policy Mandate is the document that sets out the rules, limits and procedures of the FX policy guidelines defined at management level. These regulate the principal aspects of the company’s currency management strategy.

This document is especially relevant for companies that handle foreign currency issues in an unsystematic, low-priority manner, as this kind of approach places a huge burden on the CFO, who is expected to design and execute the FX risk policy, without clearly defined objectives, limits or checks in place to manage the implicit conflict between risk and performance.

An explicit CFO risk mandate fulfils two main purposes at such organisations: it protects the company’s finances against potentially damaging excessive action/inaction by a fully autonomous CFO, and simplifies CFO decision-making by providing clear rules and limits for FX risk management.