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

33 21% of companies reported hedging 100% of net monetary FX-denominated assets and liabilities with an additional 29% of companies hedging at least 25%. Apart from costs, another commonly cited reason for hedging less than 100% of existing FX-denominated assets and liabilities was the difficulty in accurately tracking exposures. FX RISK MANAGEMENT: TRANSLATION RISK Percentage of Net Monetary FX-Denominated Assets and Liabilities Hedged 29% 0-25% 75-99% 7% 14% 29% 79% 21% 25-50% 100% of net FX asset/liability position at all times 50-75% Reasons for Hedging Less Than 100% of Existing FX-Denominated Assets and Liabilities 40% Do not have the information needed to track exposures accurately Other 27% 40% 40% Some exposures are small Hedging cost is too high