From Exposure to Instrument
Sequence a hedge decision from exposure definition to instrument fit and cost-benefit review.
The request A team asks for a swap because rates are moving, not because the exposure has been mapped. Product-first requests often hide natural offsets and wrong maturities. The gates Exposure -> objective -> fit -> readiness A derivative earns its place only when each gate is clear. A hedge recommendation with a reasoned no-trade option. Do not let product vocabulary outrun risk definition. 01 Exposure 02 Objective 03 Readiness Gate 1 The loan is floating-rate, but customer receipts may also float. What is the stronger first move? Gate 2
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