Forex risk management is important for anyone doing business or investing in foreign markets. Managed forex is a form of taking out insurance against losses caused by foreign exchange risk. It will not completely stop losses occurring due to currency fluctuations but it will limit your losses. It is a necessity for international businesses and investors.

Large banking and investment corporations offer forex risk management to large institutions. Small banks beginning to invest in foreign stock and companies doing international business with small margins can have their bottom line destroyed by a small movement in currency rates. Forex management is important for businesses of all sizes. The following lists some pertinent aspects to taking care of your forex needs.

1. Large banks and investment companies have offices all over the world. They service multi-national corporations, sovereign entities, and institutional investors.

2. Hedging strategies are one of the biggest solutions for managing foreign exchange risk. It means using a futures contract to sell your investment at a set price, avoiding the risk of currency fluctuations. It is a primary form of risk management when dealing with foreign currency.

3. Small- and medium-sized business can outsource their risk management needs.

Action Steps
The best contacts and resources to help you get it done

Learn about managing foreign exchange risk

Taking a course in managed forex is very helpful, especially if you're not familiar with the terminology and practices of this finance area. Magazines dedicated to investing are good sources to learn whether you need managed forex account. Understanding forex risk management is key.

I recommend: ElementK offers a two-hour, self-paced course that will get you up to speed on the basics of foreign exchange risk and currency exchange risk. CFO.com is an internationally acclaimed finance magazine and read by executives the world over. It is accessible on line. The hedging process is explained here in an article originally published by The Bank of Montreal.

Explore managed foreign exchange programs

Big international banks cover the gamut of foreign risk management practices. Foreign risk management is a very important department for obvious reasons. Small- and medium-sized businesses can find ample coverage outside the big banks.

I recommend: Bank of America is an example of the kind of forexx risk sources that available from big institutions. Reuters Professional Products offers finance services including forex risk management. Fireapps designs forex risk management programs based on your company's needs.

Small- and medium-sized banks and companies need to address forex management

The subject of many a business article on currency risk management is the business owner who does not understand or see the need for protection against currency rate changes. Yet, the businesses with the smallest margins could be devastated by a small change in currency rates. Good coverage can be had from foreign risk management markerted to smaller companies.

I recommend: Bank of the West specifically offers forex management for small businesses. Citizens Bank, a larger bank, is also offering forex management designed for small business needs.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Paying for forex management is a cost of doing business today and is only going to be more important as international business grows.