Ethics and Hedging: Difference between pages

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== Definitions of ethics ==
1.
#Moral principles.
#Principles which govern the conduct of any individual or corporate member of a professional organisation.


Traditionally hedging refers to the process whereby a firm uses financial instruments (such as forward contracts, futures contracts or options) or other techniques to reduce the impact of fluctuations in such factors as the market price of credit, foreign exchange rates, or commodity prices on its profits or corporate value.


== Characteristics of ethical issues ==
The Institute of Business Ethics (IBE) identifies the following characteristics, to help to determine whether a business issue is an ethical issue.


If one or more of these characteristics is present, it is likely to be an ethical issue:
2.


* One individual's 'right' decision about the issue may not be the same as another's 'right' decision.
The application of hedging  techniques has been extended to the management of many other risks including for example inflation and longevity risk arising in pension funds.


The issue:
* raises moral questions
* is not covered by law
* compromises personal or organisational values
* is against any code of ethics or code of practice
* involves personal duties and responsibilities or
* provokes the responses 'should I?' or 'ought I?'


== See also ==
* [[Arbitrage]]
* [[Authorisation]]
* [[Authority limits]]
* [[Basis risk]]
* [[Buy-side firm]]
* [[CertFMM]]
* [[Covering]]
* [[Delta hedging]]
* [[Effective]]
* [[Foreign exchange forward contract]]
* [[Futures]]
* [[Hedge accounting]]
* [[Inflation risk]]
* [[Interest rate guarantee]]
* [[Longevity]]
* [[Macro hedging]]
* [[MCT]]
* [[Option]]
* [[Outturn]]
* [[Overhedging]]
* [[Pre-settlement risk]]
* [[Guide to risk management]]
* [[Sell-side firm]]
* [[Speculation]]
* [[Uncovered]]
* [[Underhedging]]
* [[Warehousing]]




== Tests of ethical behaviour ==
===Other links===
The IBE has identified a number of key tests to help to determine whether a course of action, or inaction, is ethical:


* Is the action legal, transparent and fair?
*[[Media:2015_05_May_-_The_devil_is_in_the_detail.pdf| The devil is in the detail, The Treasurer, 2015]]
* Who will it affect?
* Who benefits?


*[http://www.treasurers.org/node/8925 Harness your hedges, The Treasurer, April 2013]


== See also ==
*[http://www.treasurers.org/node/4592 Falling foul of currency hedging, John Grout, ACT 2009]
* [[ACT Competency Framework]]
* [[ACT Ethical Code]]
* [[Agency risk]]
* [[Asymmetry of information]]
* [[Business ethics]]
* [[Code of practice]]
* [[Corporate governance]]
* [[Corporate social responsibility]]
* [[Ethical business]]
* [[Ethics washing]]
* [[IESBA]]
* [[Institute of Business Ethics]]
* [[Objectivity]]
* [[Professional behaviour]]
* [[The Code]]
 


==Other links==
*[http://www.treasurers.org/node/689 Interest rate hedging: demand the proof, The Treasurer, 2008]
[http://www.treasurers.org/node/9783 Does ethics matter? The Treasurer 2010]


[[Category:Self_management_and_accountability]]
[[Category:Manage_risks]]
[[Category:Ethics]]
[[Category:Risk_frameworks]]

Revision as of 09:25, 9 February 2016

1.

Traditionally hedging refers to the process whereby a firm uses financial instruments (such as forward contracts, futures contracts or options) or other techniques to reduce the impact of fluctuations in such factors as the market price of credit, foreign exchange rates, or commodity prices on its profits or corporate value.


2.

The application of hedging techniques has been extended to the management of many other risks including for example inflation and longevity risk arising in pension funds.


See also


Other links