page_title: Currency analytics
section_title: Balance sheet risk
hierarchical_section_title: Currency analytics / Balance sheet risk
caption_attribution_description: English: Currency analytics help companies improve predictability of cash flow and reduce the impact of volatility on the balance sheet
context_page_description: Companies that do business in more than one currency are exposed to exchange rate risk – that is, changes in the value of one currency versus another. Exchange rate risk is especially high in periods of high currency volatility.
  Currency analytics are technology tools that enable global companies to manage the risk associated with currency volatility. Currency analytics often involve automation that helps companies access and validate currency exposure data and make decisions that mitigate currency risk.
context_section_description: In the process of remeasuring transaction currency monetary assets and liability account balances, the difference between the exchange rate when the transaction was posted and exchange rate when the transaction was cleared goes to the functional entity's income statement as an FX gain or loss. Then in the process of translating the functional entity's income statement for the reporting entity's consolidated income statement, that FX gain/loss gets translated at current income statement rate to reporting currency and appears on the consolidated income statement.
  Managing balance sheet risk can involve organic (natural) hedging such as using cash positions or intercompany loans to create exposure offsets. It can also involve external hedging such as buying a forward contract to offset FX exposure.
  In both cases, efficient hedging depends on being able to drill down into the balance sheet to see the currencies of the transactions sitting on the company's books around the world. Currency analytics automates that drill-down process and presents balance sheet exposure data in an easy-to-use dashboard that allows companies to efficiently manage balance sheet risk and minimize FX gain/loss.
caption: Currency Exposure Lifecycle
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