From Awareness to Action: Institutional Risk Management in the New Era
From Awareness to Action: Institutional Risk Management in the New Era
As financial markets evolve, so must our strategies for managing risk.
In Part 2 of our FX in Focus conversation between Sean Coakley, Director of Strategic Sales at Corpay Cross-Border, and Craig Haymaker, Managing Director of Hedging Solutions at Eris Innovations, the dialogue deepens. They take us from identifying risk exposures to designing actionable strategies.
Here we present part 2 of their conversation.
This episode offers insight into how institutions, from community banks to private credit funds, can become more resilient, proactive and agile in uncertain times.
The Risk That’s Easy to Ignore, Until It’s Not
One of the most pervasive risks in the institutional landscape today is also one least likely to trigger immediate action: interest rate risk. As Craig explains, many community banks and non-bank lenders are sitting on duration mismatches, where their assets (like loans) are long-dated, but their liabilities (like deposits or capital) are short-term. See the problem?
“It’s not a binary event that causes failure overnight,” Craig says. “It’s a slow erosion of value, and unfortunately, that makes it easy to ignore until it becomes unmanageable.”
He compares this to the experience of holding a mortgage in a rising rate environment: while your locked-in rate feels safe, your home’s market value may decline and you’re less liquid. Imagine the same for institutions: the consequences of this mismatch can be even more severe, especially when faced with investors’ redemption requests or changing funding needs.
Why Liquidity Matters More Than Ever
Liquidity, or the lack of it for that matter, is a recurring theme over the conversation. Both Craig and Sean highlight that many institutions are ill-prepared for liquidity shocks, especially those operating in private credit or alternative lending. In traditional models, lenders could rely on stable deposits or predictable inflows. But in volatile markets, redemptions can happen quickly, and funding timelines are increasingly unpredictable.
This is where hedging offers flexibility.
Craig says, “If you can protect your cost of capital through hedging, you gain optionality. You can wait for better market conditions or negotiate from a position of strength.” Isn’t that somehow power?
Sean adds that Corpay’s uncollateralized FX programs have become particularly valuable to funds with cross-border operations: “We (Corpay) help reduce liquidity drag by providing risk management tools that don’t tie up capital. That’s especially important for funds navigating delayed asset sales or capital calls.”
Bringing Risk to the Forefront
A major barrier to effective risk management? Simply getting it on the radar.
Craig points out that many CFOs and CIOs assume someone else — like the treasurer, the back office, or the board — might be handling interest rate risk. But in reality, there’s often no formal strategy in place.
“The first step is awareness. Once leadership understands the exposures and their potential impact, then we can have a conversation about options,” he says.
Sean shares a similar experience in the FX world, where exposures from international payroll or service contracts are often buried in the P&L. “Companies don’t think of FX as material until they do a cash flow analysis and realize they’re bleeding millions annually,” he explains.
Swap Futures and The Democratization of Hedging Tools
Craig highlights the growing adoption of swap futures — a hedging tool that offers capital efficiency and ease of execution compared to traditional OTC swaps. While these instruments were once the domain of large institutions, that’s changing rapidly.
“Our vision at Eris is to democratize access to these tools,” Craig says. “We want community banks, regional lenders, and private funds to have the same hedging capabilities as the big guys.”
Swap futures allow institutions to lock in funding rates and reduce volatility in their margins. Craig notes that in a rising rate environment, this can be the difference between making the loan and walking away from the opportunity entirely.
Realigning Risk Appetite with Strategy
Part of the challenge in today’s market is the disconnect between risk appetite and risk strategy. Many institutions took advantage of low rates and abundant liquidity in the 2010s, neglecting to adjust their approach as conditions shifted.
“You can’t assume the tools that worked in 2018 will be sufficient in 2025. The macro environment has changed, and your strategy has to evolve with it,” Craig says.
Sean agrees with this sentiment on the FX side. “We're seeing more companies rethink their exposure, not just from a hedging standpoint but as part of their broader business planning,” he says. “Do you open that new office in Europe? Do you price in euros or dollars? These are strategic questions, not just financial ones.”
Hedging is an Enabler, Not a Constraint
Both Sean and Craig emphasize that risk management should never be viewed as restrictive. On the contrary, a well-executed hedging strategy can open doors.
It gives institutions the confidence to pursue growth, take on new projects, and respond more nimbly to changing market conditions.
“Think of hedging like a seatbelt,” Craig says. “It doesn’t stop you from driving fast — it just makes the ride safer.”
Sean adds that having a clear risk strategy also improves credibility with investors and stakeholders. “When you show that you understand your exposures and are taking action, it builds trust,” he says.
The Path Forward: A Culture of Risk Awareness
The takeaway from this in-depth conversation is clear: risk management needs to be an intentional, leadership-driven effort. It’s not enough to assume that someone else is handling it. Organizations must create a culture where financial risk is regularly evaluated, discussed, and acted upon.
That begins with education. “We often start with workshops, modeling scenarios, and just helping clients see the full picture,” Craig explains. “From there, the strategies practically design themselves.”
Sean agrees: “Once the risk becomes visible and tangible, the urgency follows. Our job is to provide the tools and expertise to help clients move from awareness to action.”
Conclusion: Leading with Clarity in a Volatile World
In a market where interest rates remain unpredictable, global capital flows are shifting, and liquidity can vanish overnight, institutions can’t afford to be passive about risk. The good news? The tools, technology, and expertise to manage that risk have never been more accessible.
From swap futures to uncollateralized FX hedging, today’s financial leaders have a robust toolkit and partners like Corpay and Eris to help them navigate uncertainty with clarity and control.
Whether you’re a community bank managing funding pressures, a private credit fund facing redemption risk, or a multinational navigating FX exposure, the message is clear: risk management isn’t just a defensive move — it’s a strategic advantage.
This article has been adapted from Sean and Craig’s two-part video podcast on Financial Risk, FX Hedging, and Hedge Accounting, published as part of Corpay Cross-Border’s FX in Focus series. Our guests engaged in a lively discussion on the challenges of managing risk in an evolving market.
Click here to book a meeting with Sean
Click here to book a meeting with Craig
DISCLAIMER: Opinions expressed in this article are those of the author. This article is for informational purposes only and does not constitute advice. Hedging products involve trade-offs, risks, and costs, and results may vary. Before making any decisions, consult an independent advisor not affiliated with Corpay to ensure that the solutions discussed are suitable for your business needs. A comprehensive under-standing of the complexities, benefits, and drawbacks of each hedging product is essential.
About the authors
