CitiFX Publication - From Crisis Management to Business Recovery

2 5 Foreign Exchange Guideposts for Corporates in a time of COVID-19 Global businesses and C-suite executives who have traditionally viewed FX as the remit of its Treasury and/ or Finance functions should consider adding FX as a risk management item in their COVID-19 crisis management playbooks as the astute stewardship of FX exposures has never been more pertinent in value preservation. From our dialogues with business leaders during this time, we have observed several consistent FX themes that can be addressed by five practical business considerations. As this pandemic has evolved in an unpredictable manner, we recommend adding a medium-to-long term horizon perspective in your playbooks as it is imperative to look beyond reactive crisis management and address the long-tail impact of COVID-19, with a view towards business recovery. These five guideposts aim to help businesses navigate present and future FX challenges, with a focus on human resource utility and making FX work best for your business. Short-Term Response: Crisis Management Guidepost 1: Critically Assess FX Risk Management Processes for BCP-Readiness With multiple countries having implemented lockdown measures at short notice, businesses have experienced the need to pivot towards alternative working models. Roles and functions that were deemed impossible for remote work have adapted and digital solutions have been key enablers. When thinking about the FX risk management process, businesses that utilise FX dealing platforms may consider themselves to have digitalised this process. However, are organisations unlocking the full value of their selected FX dealing platforms? We ask the following questions: 1. To what extent does your FX dealing platform digitalise the dealing process end-to-end? 2. Has your FX dealing platform performed optimally when working from home? The first question is an interesting one as organisations, when pursuing digitalisation agendas, typically consider processes within the confines of specific roles and teams. Deploying FX dealing platforms in Treasury teams would by default, satisfy digitalisation goals when compared against voice dealing. When assessed in totality across the organisation however, they would need to consider if manual processes continue to exist. In certain controlled currency regimes, Colombia for example, businesses are required to submit documents and/or declarations in support of FX transactions and these are in many instances, still manually processed. Against the backdrop of COVID-19, the ability for multiple departments and roles to work remotely is critical for business continuity and it is within this lens that businesses must evaluate their current software solutions. Are they digitalising your business processes in silos or are they designed for operational efficiency across the value chain? In this new paradigm, the optimal FX dealing platform is one that digitalises processes laterally across multiple functions. The second question is pertinent in current times but is arguably one that is seldom contemplated under regular business conditions. Businesses now acknowledge that full remote work is no longer a distant possibility and consequently, their technology infrastructure must adhere to the demands of this new operational paradigm. Years of BCP scenario drills have fallen short of the unforeseen demands brought about by COVID-19 and without native access to their desktops, business users have experienced challenges accessing business applications and this is often the result of latent networks when accessing corporate servers from home. Just why is this such a widespread phenomenon? The answer lies in our observation that business software and systems are generally designed to be desktop-native, owing to various reasons such as: