The document discusses hedging treasury risk with forward foreign exchange contracts. It provides examples of how a company can use FX forwards to hedge foreign currency risk when making international payments. Specifically, it describes how a Croatian company can sell euros forward to lock in the exchange rate and eliminate risk from potential depreciation of the euro. It also provides an example of how to calculate the forward exchange rate using interest rate differentials. The document discusses accounting for forwards using IAS 39 and marking positions to market. Finally, it stresses the importance of risk management policies and procedures when using derivatives.