Balancing Digital Aspirations While Addressing Risk Management Fundamentals: Observations From Citi Treasury Diagnostics

29 Frequency at which Hedging Performance is Analysed Daily Quarterly Per Request Weekly Half-Yearly Never Monthly Annually 72% FX RISK MANAGEMENT: TRANSACTION RISK 4% 6% 47% 15% 2% 4% 11% 11% Rolling hedging Layered hedging Static hedging Opportunistic hedging Approach to Hedging Forecasted Exposures 33% 16% 24% 27% All companies surveyed (100%) follow a rolling, static, layered, or opportunistic approach to hedging forecasted exposures. While there are clear benefits for reducing period-over– period volatility from extending hedge tenor, the short-term hedges revealed by responses may be indicative of continued challenges around forecast error. More than 70% of the companies surveyed conduct a FX hedging performance analysis at least on a quarterly basis. “ We have for many years applied the layered hedging program as the main objective of our cash flow hedging program is smooth period-over-period volatility.” — European Treasurer