What is tolerance value check in SAP FS-BA-PM-HP - Hedge Processes?

SAP Term: tolerance value check

• Component: FS-BA-PM-HP

• Component Name: Hedge Processes

• Description: A check that reduces the need to calculate effectiveness. As long as particular tolerance values are not exceeded, effectiveness is not calculated. If the check is applied to absolute value changes, effectiveness is not calculated if small value changes to the hedging instruments and hedged items occur. If the check is applied to remaining maturity, effectiveness is not calculated for short maturities.

Smart SAP Assistant

• Key Concepts: 
  Tolerance value check is a component of the FS-BA-PM-HP Hedge Processes in SAP. It is used to ensure that the hedge ratio between two currencies is within a certain tolerance range. This helps to ensure that the hedging process is effective and that the risk of currency fluctuations is minimized. 
  
  How to use it: 
  The tolerance value check is used to compare the hedge ratio between two currencies. If the ratio is outside of the specified tolerance range, then an alert will be triggered and corrective action can be taken. The tolerance range can be adjusted depending on the risk appetite of the organization. 
  
  Tips & Tricks: 
  It is important to regularly review and adjust the tolerance range as needed. This will help to ensure that the hedging process remains effective and that any potential risks are minimized. 
  
  Related Information: 
  For more information on FS-BA-PM-HP Hedge Processes, please refer to SAP's official documentation.