Financial Risk Management
Economic Exposure Management: A Review

Article Details
Pub. Date : Mar, 2019
Product Name : The IUP Journal of Financial Risk Management
Product Type : Article
Product Code : IJFRM61903
Author Name : Khushboo Bhasin and Syeedun Nisa
Availability : YES
Subject/Domain : Finance Management
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No. of Pages : 11

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Abstract

The literature on economic exposure management has expanded to a great extent during the last decade. Corporate managers and practitioners have shown interest in examining economic exposure as they have realized the consistency of the concept, with the objective of maximizing the long-term economic value of the firm. In the present paper, a normative view of economic exposure is considered. The paper primarily reviews the identification and assessment of economic exposure and discusses the available models for the measurement of economic exposure. The paper also identifies the gaps in the existing literature and suggests directions for future research.


Description

Exchange risk management is the most significant aspect in order to integrate change in currency expectations into all fundamental corporate decisions. Though, while performing this, it is essential for the corporate to know what is at risk. But there is a high disparity in terms of exposure measurement between accounting practice and economic reality, which is the extent to which a corporate is influenced by exchange rate variation (Shaprio, 2010).


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