Transaction exposure arises from the effect that exchange rate fluctuations have on a company's obligations to make or receive payments denominated in foreign currency.

Translation exposure arises from the effect of currency fluctuations on a company's consolidated financial statements, particularly when it has foreign subsidiaries.

Economic exposure arises from the effect of unexpected currency fluctuations on a company's future cash flows and market value.

The main types of Fx risks are transaction risk, translation risk and economic risk. which are effectively hedged with FX swaps, FX forwards and FX options.