Understanding hedging financial instruments
  • Financial instruments and hedging tools - Be familiar with financial instruments and hedging tools (fair value hedge /cash flow hedge, titirisation, credit derivatives, hybrid debt)
  • Financial markets securities and cost of funds - Concepts of interest, yield rate, liquidity, inflation, capitalization, discounting, compound interest calculation, actuarial calculations
  • Financial risks: counterparty, liquidity, interest rates, exchange rates, marketable securities - Analysis, valuation, risk mapping and hedging strategy: - Counterparty risk: financial analysis and control of rating practices (internal, external) - Liquidity risk: ALM and group cash flow forecast - Interest rate risk: fixed and floating rate debt, bond issues - Foreign exchange risk: exports, imports, hedging, forward - Securities risk: dividends, acquisition and disposal of securities, trading room - Project & investment related risk Managing the identification and valuation of financial and non-financial risks

Target audience

- Accounting managers
- Chartered Accountants, Statutory Auditors
- Consolidation and Accounting Directors
- Consolidators
- Financial managers
- Treasurers

2 day


This training does not require any particular prerequisite.


– Understand how risks arise foreign exchange, interest rate and commodity
– Be able to set strategies to hedge risks either totally or partially and to assess the related costs
– Get familiar with the main categories of derivative financial instruments, understand how they work and learn how to use them efficiently
– Understand the accounting issues related to hedging

Detailed content

> Basic financial instruments and related risks (interest rate, credit, forex…)

– Bonds, loans, borrowings, receivables and payables in foreign currencies, common shares, commitments (orders backlog, contracts, commercial tenders)

> Types of hedging strategies and corresponding financial instruments

– Eliminating the risk of loss while giving up potential gains: forward or swap contracts
– Eliminating the risk of loss while keeping potential gains: options and the cost of hedging
– Reducing the cost of hedging: out-of-the-money options, complex strategies (tunnel options, zero-premium instruments, and exotic options)

> Financial instruments: operation and valuation

– Bonds and similar debt instruments: discounting cash flows and calculating the effective interest rate
– Swaps, and how to use the yield curve
– Options and their valuation models

> Practical approach to the main situations and hedging strategies

– Interest rate hedging: using a swap, using a cap
– Foreign exchange hedging: using a forward contract, a swap, a simple option or a zero-premium option. Analysis of a complex instrument.
– Hedging firm commitments (off-balance sheet items)
– Introduction to commodity risk

> Other upstream risk management methods and « natural hedge »

> The banker’s point of view: commissions and negotiation leverage

> Accounting issues: accounting principles generally accepted in France and IFRS

Why should you attend?

Many products are available to hedge foreign exchange and interest risks, some are quite sophisticated, in order to meet many specific needs.
This training session focuses the characteristics of the main derivatives and how they work so that you understand the key principles to use them.

Training methods and assessment

Technical developments and numerous case studies performed individually (valuation performed on spreadsheet during the session). Illustrations taken from recent publications and real cases.
Assessment questionnaire.
A training certificate is delivered at the end of the session.

The trainer is available by e-mail and telephone to answer any follow-up questions participants may have.


1 630 € Excl. VAT – 1 956 € Incl. VAT


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Jonathan C.