Hedging Policy
Co-Founder•1 min read
A hedging policy is a formal framework that sets out how and when a business manages financial risks — particularly exposure to foreign exchange, interest rate, or commodity price movements.
It defines the company’s objectives, permitted instruments, approval limits, and reporting procedures to ensure consistent, disciplined, and compliant risk management.
Example:
A UK exporter with euro revenue may adopt a hedging policy stating that at least 70% of forecast FX exposure must be hedged using approved tools such as forwards or options, within set time limits and authorisation levels.
Used in:
Corporate treasury management, board governance, lender compliance, and investor assurance.