The Brexit is unlikely to represent a simple short-term shock to currency markets. Britain now faces the prospect of functioning without an effective government until October, at which point it will begin a grueling and complex two-year give-and-take negotiation to determine the terms of exit, the ups and downs of which will surely make for a bumpy ride on FX markets. It won't impact only Britain and the pound. The uncertainty will radiate outward across the globe.

Already beset by problems and the looming threat of another Eurozone crisis, Europe will necessarily feel the effects of a drawn-out transition. Additionally, other member states may clamber for their own EU exit, emboldened by Britain's lead. The euro has been experiencing significant volatility since June. Add in the continued shakiness in emerging markets and China, and you have a recipe for a potential and prolonged uptick in volatility for all major currencies and regions across the globe.

We may all be in for a bit of a rollercoaster ride in the coming years. Currency markets sensitive to the slightest surprises and shocks will experience many of both. This will have enormous implications for finance and treasury departments in any company exposed to multiple currency zones across its value chain.

Industry Impacts of FX Volatility

The effects of currency volatility vary by industry. Commodity prices and FX movements are often closely linked, which can magnify the impacts on certain businesses. Take the oil and gas sector: One of the major drivers of FX volatility in recent years has been the collapse of oil prices, from highs of over $100 per barrel in mid-2014 to around $30 per barrel by the start of 2016. At the same time, a sharp rise or fall in the ruble usually has a knock-on effect on the price of crude oil, just as a volatile dollar can impact the entire oil industry from refining through transportation.

While a weak ruble may help Russia's national oil companies withstand low prices, it is a different story for international firms selling into the region. Indeed, many global oil and gas corporates have had to dramatically reduce spending as a result of the falling price of oil and the volatile ruble.

Currency movements in mining-heavy countries (such as Japan) used to act as a natural hedge against movements in the price of the mined commodity. That is because the large-scale producer nations' currencies are intrinsically linked to the mining sector; they fall in line with a plunge in prices. Thus, currency movements act as a hedging tool against price movements. However, quantitative easing in mining-heavy countries over the last few years has removed some of this hedging effect. Companies in the mining industry are feeling much more currency impacts.

Quantitative easing programs have decoupled to some extent the relationship between mined commodities and currencies. Although the U.S. and U.K. economies, and ultimately their currencies, may benefit from the increased liquidity, initial reactions may vary. The increase in risk appetite may lead to dollar weakness, as the slowing of safe haven flows isn't offset by an increase in demand for other U.S. assets.

The global pharmaceutical industry also feels intense impacts from FX movement. A weaker pound sterling is benefiting U.K. pharmaceutical firms, as they reap the rewards of internationally competitive export prices. Meanwhile, the United States is the biggest manufacturer of pharmaceuticals worldwide, and a stronger U.S. dollar—set to become even stronger if the Fed continues its rate hike plans—will hit U.S. pharmaceutical firms in the reverse.

The situation isn't always straightforward. Many emerging economies are net exporters of pharmaceuticals, so you'd expect falling emerging market currencies to benefit them as the falling pound helps their U.K. counterparts. But many of these organizations have substantial loans priced in U.S. dollars, presenting an exchange-rate risk as their interest payments fluctuate.

Another sector that experiences particularly pronounced effects of FX is the travel industry. Explosive growth in this sector led to the rise of Web-based travel sites, whether it's the creation of innovative new players like Airbnb or the expansion of older firms such as Expedia, Travelocity, and Hotwire. Companies like these tend to earn substantial commissions and service fees on transactions they facilitate. Consequently, they tend to have a lot of cash and liquid assets on their balance sheets, in a variety of currencies—which of course makes them especially sensitive to volatility in FX markets.

These are just a few examples, but every industry will experience its own currency effects. Any business with substantial exposure to multiple currency zones needs to be thinking today about how to navigate the volatile times that loom ahead. And in our increasingly globalized and connected world, a lot of businesses fall into that category.

What are corporate treasury, accounting, and finance departments to do? The particulars will vary from sector to sector, and from business to business, but a few overarching principles apply across the board.

How to Prepare for FX Volatility

For companies that want to batten down the hatches in anticipation of future currency storms, hedging is an obvious strategy. Natural hedges, as well as forward contracts and even options, can soften the blow of unexpected changes. Companies are also wise to work with multiple payment partners. Having more than one provider enables the treasury team to shop around for the lowest spread when making cross-border payments.

Perhaps the most crucial step companies can take to prepare for future currency risk is to ensure that they have access to high-quality FX data. Above all, firms need integrated access to trusted, accurate, and reliable data feeds on exchange rates. Some key considerations to help ensure data is accurate:

Check rates daily, vs. monthly or quarterly.  Volatility is here to stay; sudden changes in exchange rates are the "new normal." We suggest monitoring all rates that a company has exposure to, and doing so on a daily basis. Understanding how exposures are changing within the month helps companies act anytime they need to offset a growing exposure, and enables them to explain (if not avoid entirely) the unhappy surprise that is the financial statement FX Gain/Loss entry.

It's also important to keep in mind that volatility in one major currency creates a ripple effect in other currencies, so the impact is usually not isolated. This is important when selecting the software tools and systems that a company will use to assess FX exposure—whether a treasury management system, a module in an ERP system, or a separate management reporting tool.

Automate rate delivery to a single system.  Exchange rates can now be delivered directly to corporate systems, from an information provider, via API. If a company sets up its ERP system to automatically upload the latest rates, it is guaranteeing data consistency across the organization. APIs also eliminate the need for manual input of rates from a spreadsheet.

Evaluate system reliability.  In choosing an FX data partner, make sure that it meets the highest technology standards—especially if you rely on FX rates for pricing and financial reconciliation. Services that automatically deliver rates to corporate systems are generally cloud-based, so an evaluation of system reliability will focus on the vendor's infrastructure. In particular, the company needs to ask prospective vendors what happens when something breaks. The IT department may be very helpful in this assessment.

Look for the provider with the most accurate rates.  Corporate treasurers need to know where their exchange rates are coming from; for that reason, they should beware of rate aggregators. Many providers are aggregators of data on many asset classes, not just exchange rates. Given the challenge and investment required to produce accurate FX rates, make sure that your prospective provider is knowledgeable about FX markets and not just "passing through" a number generated by some other vendor. Since this is an over-the-counter trading market, accuracy comes from the ability to create a market view based on data derived from actual access to the interbank market. Auditors and accountants can often provide helpful insights on trusted sources of FX data.

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Natasha Lala is the managing director of OANDA's Solutions for Business group, which provides a full suite of foreign exchange (FX) services, trusted by the Big Four, tax authorities, and thousands of clients worldwide. Lala has been at OANDA since 2003 in a variety of executive roles, helping clients navigate FX markets. Previously, Natasha led large-scale client-facing initiatives in the CRM, telecom, and financial industries.