Deloitte's survey of 133 FX risk managers is a response to recent volatility in the FX market over the past year and its impact on businesses. It gives a snapshot of how corporates expect to cope with volatility ahead.

The 2016 Global Foreign Exchange Survey found that some of the main challenges include a lack of visibility of FX exposures and reliable forecasts, as well as the manual nature of exposure quantification are all major challenges. Another problem is that boards don't always receive sufficient information on FX risk.

The key findings in the survey include:

• 22 per cent of the respondents said they had inadequate treasury or financial risk management systems;
• 19 per cent said they had informal or immature hedging practices;
• 31 per cent said they rely on three or more sources to identify and quantify FX exposures;
• lack of automation is part of the problem in identifying FX exposures, with 62 per cent of participants using manual forecasts and 36 per cent having fully or largely manual processes;
• more than one-third (37 per cent) said that the board does not receive sufficient information in relation to FX exposure and risk management;
• only 58 per cent of corporates minimise exposures and hedging cost through natural hedging and 46 per cent through netting;
• 21 per cent of respondents said they don't measure the commercial effectiveness of FX risk management activities;
• fewer than half of respondents measure the commercial effectiveness of FX risk management activities on the income statement (48 per cent) or on profitability (41 per cent);
• more than 70 per cent of respondents report only fairly basic metrics such as quantum of foreign exchange exposures, hedged positions and foreign exchange gains/losses;
• fewer than 25 per cent generate more sophisticated information such as performance against key benchmarks, variance analysis, VaR or other at-risk measures, stress tests or scenario analysis;
• 44 per cent said they don't use a treasury management system to and/or financial risk system today for FX risk management.

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CTMfile take: Deloitte says that FX volatility is expected to continue this year at levels similar to 2015. What is worrying is that many corporates still don't have the systems and visibility in place to track their FX exposures. Boards don't have enough oversight and corporate profits will get hit again by currency fluctuations in 2016.