Most board packs handle currency in one of two unhelpful ways.
Either it isn't there at all, and exposure is discussed only when a move has already damaged the numbers. Or it appears as a line in a variance commentary — "margin was 1.4% below budget, partly due to adverse exchange rate movement" — which tells directors something happened and nothing about whether it will happen again.
Neither gives a board what it needs, which is the ability to make a decision.
Here's what a single page should contain.
1. Net exposure by currency
A simple table. For each currency the business deals in: committed outflows, committed inflows, net position, and the same for the forecast period beyond.
CurrencyCommitted net (12m)Forecast net (12m)TotalEURUSD
This is the foundation, and in many businesses it's the first time anyone has written it down. Two things usually surprise people: gross exposure is larger than expected, and net exposure is smaller — because inflows and outflows partly offset.
2. The sensitivity
One line that converts the exposure into something a director recognises:
"A 10% adverse move in our net currency position would reduce operating profit by £X, or Y% of forecast."
This is the number that changes the conversation. A board that learns a plausible market move takes 18% of operating profit treats currency differently from one reading a variance note.
Use a realistic figure. Major pairs have moved 8–10% within single calendar years on multiple occasions in the past decade. A 10% scenario isn't pessimism.
3. Hedged position and rates
Three figures side by side:
Budget rate — the rate the plan was built on
Hedged rate — the average rate actually secured, and what percentage of exposure it covers
Current market rate — for context
Plus the hedge ratio against policy. If policy says 90–100% cover at 0–3 months and you're at 60%, the board should see that, along with why.
This is the single most useful block on the page, because it tells directors whether the plan they approved is protected.
4. Variance attribution
Split margin variance into its components:
Variance from trading performance
Variance from currency movement
Two numbers instead of one. It takes a line of arithmetic and it separates "how did the business do" from "what did the market do" — which is the distinction a board most needs and most rarely gets.
A sales director whose margin missed because sterling fell 6% is being measured on something they don't control. So, more importantly, is everyone reading the report.
5. Policy compliance and actions
Short. Are we operating within policy? If not, where and why? What's being done before the next meeting?
If there's no policy, that's the item: a recommendation to adopt one, with a proposed hedge ratio framework.
What to leave out
Market commentary. Directors don't need a paragraph on central bank expectations. Nobody forecasts currencies reliably and a board pack isn't the place to try. If the market view matters to a decision, state the decision, not the view.
Rate charts. A twelve-month GBP/EUR chart looks informative and supports no decision. Cut it.
Individual transactions. Aggregate. A board doesn't need the list of forwards booked last month.
Technical hedge accounting detail. Relevant to the auditors, not to a board discussion, unless an accounting treatment is itself the issue.
The quarterly addition
Monthly reporting can be the five items above. Once a quarter, add two things:
Mark-to-market on open positions. What the existing hedges are worth against current rates. Not a performance measure — a hedge showing a loss against spot has usually done its job, because the underlying exposure moved the other way. But directors should see it rather than discover it.
Policy review. Has the business changed in a way that makes the current hedge ratios wrong? New markets, new suppliers, a large contract, a changed customer mix.
Why this is worth the effort
Two reasons beyond good governance.
It makes currency decisions possible. A board can't approve a hedging programme it has never been shown the case for. This page is the case.
It protects the finance function. A finance director who presented the sensitivity six months ago is in a very different position when a move happens than one who didn't. Reporting exposure in advance is how an unmanaged risk becomes a managed one — including in the record.
William Fuller, Co-Founder of Orbis Exchange Group contact on 0203 918 5622
Ben James, Co-Founder of Orbis Exchange Group contact on 0203 918 5621