Economic risk

1. Risk management.

Broadly, the risk associated with changes in exchange rates, local regulations or business environment, which could disadvantage the company’s long-term economic model or favour the services or products of a competitor.

This type of exposure is very difficult to mitigate.

Reponses to economic risk

"... the response to changing exchange rates... is likely to be as much about managing the commercial relationship with customers over a long period, as about immediate action in the financial markets."

Guide to risk management - economic risk - The Treasurer's Handbook.

2. Foreign exchange risk.

More narrowly, the risks above associated with changes in exchange rates.

Also known as economic exposure.

See also

• Economic exposure
• Exchange rate
• Foreign exchange risk
• Guide to risk management
• Pre-transaction risk
• Transaction risk
• Translation risk