transaction exposure

(redirected from Transaction Risks)

Transaction exposure

Risk to a firm with known future cash flows in a foreign currency, that arises from possible changes in the exchange rate. Related: Translation exposure.

Transaction Exposure

In international trade, the risk that exchange rates will change after a company has agreed to a transaction but before it is accomplished, such that it adversely affects the transaction. For example, suppose an American company agrees to buy goods from a British company and settle the transaction in pounds. The American company has the transaction exposure that the pound will appreciate with respect to the U.S. dollar, causing the company to spend more dollars to buy the same number of pounds to be able to settle the transaction.

transaction exposure

The risk of loss caused by changes in currency exchange rates when a company's payables and receivables are denominated in a foreign currency. Derivatives are used to hedge against changes in currency exchange rates and reduce transaction exposure.

transaction exposure

see EXCHANGE RATE EXPOSURE.
References in periodicals archive ?
The ArtBanc approach tangibly addresses all transaction risks prevalent in the sale of fine art and collectibles.
The ratings agency warned however that high prices and regulatory restrictions on bank ownership would increase transaction risks for potential buyers.
Rindfleisch and Heide 1997; Grover and Malhotra 2003), often only examine transaction risks in bilateral exchanges.
Concurrent to this agenda, KFH-Bahrain has recently signed a cooperation agreement with Sinnad Company to manage its network of ATM machines, issued ATM EMV-compliant smart cards and connected them with Benefit and Visa networks, while monitoring and managing electronic transaction risks.
Consultant and practitioner Brancik presents a practical framework for identifying, measuring, monitoring and controlling the risks of insider computer fraud (ICF), covering such topics as recent research on ICF and information security controls, the strategic planning process, information technology architecture and ICF prevention, protection of web sites, web services security and control considerations for reducing transaction risks, application security, the art of the key fraud indicator selection process, application and system journaling, and the role of neural networks.
Placing production in a foreign country exposes your business to further translation and transaction risks.
Every CFO knows that failure to identify and correct potential weaknesses in internal controls and compliance policies and systemic transaction risks can expose organizations to financial loss and diminished credibility.
The primary transaction risks relate to MetLife's ability to integrate the acquired operations into its existing P&C operation, agent retention, and improving overall operating performance.
A variety of hedging strategies are available to assist managers in controlloing such foreign transaction risks.
buySAFE qualifies merchants, identifies reputable online businesses with the buySAFE Seal, and uses surety bonds to provide broad protection for individual buyers from online transaction risks.
The Mintz Group will meet a broad range of fact-gathering needs, including due-diligence investigations to identify hidden transaction risks, asset searches to determine whether a party is worth suing, domestic and international arbitration support, and training to help clients sharpen their own fact-gathering capabilities.
After carefully reviewing and considering the transaction risks, financial terms, timing considerations, market risks and potential benefits and detriments of the Amended Kestrel Unit Purchase Agreement and the New Soros Group proposal, and after consulting with its financial advisors and outside legal counsel, the Board concluded that the New Soros Group proposal was not a "Superior Proposal" under the terms of the Amended Kestrel Unit Purchase Agreement.

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