Do you know how exposed your company is – before the market moves?

Financial markets can affect the conditions under which a company operates – and sometimes very quickly. Changes in interest rates affect financing costs. Currency movements affect revenues, costs and competitiveness. And shifts in market sentiment can affect a company's access to capital.

For the board, the question is not whether we can predict the markets. The key question is: How exposed is our company, and how ready are we if conditions change?

Every company has exposure – direct or indirect

Even if your business is not directly exposed to financial markets, your clients and suppliers may be. And I would say there is not a single business out there that does not have some kind of exposure to the broader economy – whether you operate internationally or purely locally.

So even if your direct exposure is limited, it is still extremely important to understand what your indirect exposure looks like.

The board's role: Not prediction, but preparation

The most important thing is not to try to predict what will happen in the markets, but to ensure the company is prepared for whatever happens.

That starts with asking the right questions. Not just: What happened in the markets? But: What does it mean for our company, and how are we going to respond to it? The board should make a clear assessment of the company's risk appetite – how much interest-rate exposure is acceptable, how much currency risk, and how a significant market shift would impact cash flow, investment plans and financing. A risk policy agreed in advance means management can act quickly and consistently when market conditions change rather than having to make decisions under pressure.