Foreign Exchange RCM

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Foreign Exchange RCM

A successful risk management strategy requires a strong internal control environment. The RCM format emphasizes that strong and risk-oriented internal control environments are often optimized with automated/manual controls, depending on the situation.

An RCM provides an overview of different control objectives that organizations should take into consideration and the corresponding controls to safeguard the company against risks which may arise if not checked timely. Once customized to an organization, this document can help the user in assessing each control. The control assessment can then also be summarized to develop an action plan to strengthen the internal control structure.

This document outlines risks and controls common to the [ Foreign Exchange] process in a risk control matrix (RCM) format.

Sample risks include:

  • Bank treasury workstations are used for executing all foreign exchange transactions.
  • Competitive bids are not obtained for large dollar foreign exchange transactions, resulting in trades being executed at noncompetitive rates.
  • Foreign exchange exposures are not identified and hedged.
  • Foreign exchange trading is conducted by an unauthorized individual, possibly exposing the company to potential foreign exchange losses.

This document can be used as a sample RCM and is not meant to be an exhaustive list of risks and controls. The KnowledgeLeader team will periodically update this RCM with new content. Organizations should select, update and modify the risks and controls included in this document to ensure that it reflects business operations.

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