How To Fix THM_EXPOSURE197 - Reducing transaction &1-&2-&3 leads to overhedging

SAP Error Message - Details

• Message type: E = Error

• Message class: THM_EXPOSURE - E-Hedge Accounting: Exposure

• Message number: 197

• Message text: Reducing transaction &1-&2-&3 leads to overhedging

Trados Memory = TR

What causes this issue?

You have reduced the amount of the exposure transaction &v3& in company
code &v1& and in hedge plan &v2& so that the exposure is overhedged in
at least one valuation area.

System Response

The system marks the changes.

How to fix this error?

Activate the change in transaction THMEX. If the affected hedging
relationship was already valued, then reclassification occurs. You can
overwrite the amount to be reclassified for each configuration setting.

Procedure for System Administrators

The system issues an error message and will not allow you to continue with this transaction until the error is resolved.

Error message extract from SAP system. Copyright SAP SE.

Smart SAP Assistant

• What is the cause and solution for SAP error message THM_EXPOSURE197 - Reducing transaction &1-&2-&3 leads to overhedging ?

  The SAP error message THM_EXPOSURE197 indicates that a transaction reduction (for example, a cancellation or adjustment of a hedging transaction) is leading to an overhedging situation. Overhedging occurs when the amount of hedging instruments exceeds the underlying exposure that is being hedged, which can lead to financial discrepancies and risks.
  Cause:
  The error typically arises in the context of treasury management and risk management within SAP, particularly when dealing with financial instruments such as derivatives. The specific causes can include:
  
  Incorrect Transaction Reduction: Reducing a hedging transaction without properly adjusting the underlying exposure can lead to an imbalance.
  Mismatched Exposure: The underlying exposure may have changed (e.g., due to changes in business operations or market conditions), but the hedging transactions have not been updated accordingly.
  Configuration Issues: There may be issues with the configuration of the hedging strategy or the way exposures are defined in the system.
  
  Solution:
  To resolve the THM_EXPOSURE197 error, consider the following steps:
  
  
  Review the Transaction: Check the details of the transaction you are trying to reduce. Ensure that the reduction is justified and that it aligns with the current underlying exposure.
  
  
  Adjust Underlying Exposure: If the underlying exposure has changed, update it in the system to reflect the current situation. This may involve adjusting the relevant contracts or positions.
  
  
  Consult Hedging Strategy: Review your hedging strategy to ensure that it is still valid. If necessary, adjust your hedging instruments to align with the current exposure.
  
  
  Check Configuration: Ensure that the configuration settings in SAP for hedging and exposure management are correct. This includes checking the settings for risk management and exposure definitions.
  
  
  Consult Documentation: Refer to SAP documentation or help resources for specific guidance on handling overhedging situations and the THM_EXPOSURE197 error.
  
  
  Engage with SAP Support: If the issue persists, consider reaching out to SAP support for assistance. They can provide insights based on your specific configuration and usage of the system.
  
  
  Related Information:
  
  Hedging in SAP: Understand the principles of hedging and how SAP manages financial instruments and exposures.
  Risk Management: Familiarize yourself with risk management practices in SAP, including how to monitor and adjust exposures and hedging strategies.
  SAP Notes: Check for any relevant SAP Notes that may address this specific error or provide additional troubleshooting steps.
  
  By following these steps, you should be able to address the THM_EXPOSURE197 error and ensure that your hedging transactions are properly aligned with your underlying exposures.