1. The bank accepts the foreign exchange risk exposure.

2. Investors use these futures contracts to hedge against foreign exchange risk.

3. A forward contract thus insures the exporter against foreign exchange risk.

4. Foreign exchange risk – The risk of financial loss due to adverse movements in foreign currencies.

5. Foreign exchange risk The risk of financial loss due to adverse movements in foreign currencies.

6. One way to deal with the foreign exchange risk is to engage in a forward transaction.

7. Analyses are done on what potential actions are required in order to limit the foreign exchange risk exposure.