Terms in Hedge Management on SAP Treasury Risk Managament

• Hedging Classification
  The hedging classification is an entity that allows you to structure exposures and hedging instruments into freely definable categories. It also can act as a link between your exposures and your hedging instruments, as it is available in both transaction management and Exposure Management 2.0.

• Hedging Area
  The hedging area is an entity that represents a section of your hedging policy. It defines the level of granularity on which you want to monitor your foreign exchange risk. It also controls which exposures and hedging instruments are relevant for the hedging area.

• Analysis Item

  The analysis item reflects the granularity on which you monitor and hedge your FX exposures. The analysis items are defined by the differentiation criteria and the reporting time pattern of the hedging area. Incoming and outgoing exposures and hedges with the same differentiation criteria and time period belong to the same single analysis item. Further, you can define target quotas for the analysis items in the hedging area.

  

  Example Analysis Item

Note

Analysis item is not an entity in the system. It is a term that is only used in the documentation.

• Net Exposure

  The net exposure is the difference between incoming and outgoing exposures calculated on the level of the analysis item.

• Net Open Exposure

  The net open exposure represents the unhedged portion of your foreign exchange exposures calculated on the level of the analysis item. It is calculated as the difference between net exposures and their corresponding hedging instruments.

• Risk-Free Currency

  Typically, the risk-free currency is the currency of the company code/local currency. Cash flows in this currency do not need to be hedged.

• Risk Currency

  The risk currencies are the currencies that are relevant for hedging in the hedging area. Cash flows in these currencies face an exchange rate risk and need to be hedged.

• Original Currency of Exposures

  The original currency is the real currency of the exposure.

---