In response to these challenges, Coca-Cola worked with Citi and other banking partners to develop a digitised risk and hedge assessment framework to drive improvements in quality and consistency of risk management decisions. The new process assimilates data and analytics and uses quantitative metrics to assess the impact of FX risk and proposed hedging strategies on the company’s KPIs. It gives guidance, which is presented to the CFO, on the effect of FX on earnings per share (EPS) and income growth. Over the last two years, this has enabled Coca-Cola to make large strides in consolidating and visualising data to support FX trade decisions and in automating reporting via cloud flows. Much of that information is now embedded in reporting dashboards shared with the CFO quarterly. The process eliminates considerable manual effort and frees the team for scenario and cash flow planning and analysis.

Furthermore, Coca-Cola has clarified the range of FX outcomes it targets. It has used analysis, such as a value‑at-risk model, to set upper and lower limits – on dollar strength sensitivity risks, for example. That helps the company manage a range of outcomes in alignment with the goals of the treasurer and CFO, which in turn fosters buy-in from other senior leaders. These leaders now know treasury has a framework to ensure FX positions won’t be over or under hedged at any time. This framework also allows the team discretion and flexibility to optimise hedging costs and pick the right instrument for each circumstance, enabling them to add significant value to the business.