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.