CitiFX Publication - From Crisis Management to Business Recovery

1 5 Foreign Exchange Guideposts for Corporates in a time of COVID-19 From Crisis Management to Business Recovery 5 Foreign Exchange Guideposts for Corporates in a time of COVID-19 The swift and silent advent of COVID-19 has caught the world on the back foot and businesses, in activating their Business Continuity Plans (BCP), have learned that classical crisis management playbooks have only prepared them for disaster recovery scenarios that assume, amongst other things, that business-as-usual can be achieved with recovery sites and fall-back technology. The present manifestation of events however is clearly unprecedented, and businesses are facing for the first time in recent history, a systemic reduction of workforce productivity, the cessation of non-essential businesses at a global scale and the crippling of business plans brought about by an unseen threat. Given these unknowns, crisis management playbooks must adapt. Traditionally held risk factors have been overshadowed by emergent challenges and business leaders should reassess their risk frameworks with a view towards including new and latent threats. With the global reach and impact of COVID-19, Foreign Exchange (FX) as an exposure is especially relevant now as it continues to track the ebb and flow of this global pandemic. Figure 1 illustrates the daily volatility of 6 commonly traded currency pairs and the months of February and March recorded significantly higher levels. Figure 1: Daily FX Volatility, Jan 2019 - Apr 2020 Source: Bloomberg Feb 2020 SHORT TERM LONG TERM Crisis Management #1: Critically Assess FX Risk Management Processes for BCP-Readiness #2: Outsource Non-Critical FX Processes #3: Synchronise Cash Optimisation and Risk Management Practices Business Recovery #4: Optimise e-Commerce Sales Conversion Funnels with FX #5: Future-Proof FX Risk Management Processes by Accelerating the Adoption of Treasury Technology 5 FX Guideposts For Corporates When Navigating COVID-19 MEDIUM TERM Business Optimisation