Translation risk

This refers to a type of non financial foreign exchange risk.

A translation risk occurs when overseas business units’ accounts are converted into the company’s corporate home currency when the accounts are consolidated. Exchange rate differences may appear to show an accounting profit or loss; however this does not represent a cash profit or loss.

Translation risk is a term normally found in financial management and financial reporting.

Explore our learning zone to discover more

This entry was posted in . Bookmark the permalink.