Reference no: EM133073488

Basic Background:

• The firm imports high quality wool to Britain from foreign suppliers located in Australia and the New Zealand.
• The firm exports Jewellery to USA from Britain.
• The firm exports designer clothes from Britain to Australia, New Zealand and Singapore.
• The firm has a payment of 8,000,000 AUD due in 3 months to their supplier in Australia,
• a payment of 6,000,000 NZD due in 2 months to their supplier in New Zealand.
• The firm is due to receive 9,000,000 AUD from their customer in Australia in 2 months, 4,000,000NZD from their customer in New Zealand in 2 months, 700,000 SGD from their customer in Singapore in 1 months, and 9,000,000 USD from their customer in USA in 2 months
• The firm is concerned with the impacts of the potential high inflation rate due to the recent expansionary monetary policy globally in their exporting and importing business

Question: (Exposure and risk management)

Use the information above to consider the types of exposure your firm may face. Please provide different types of exposure related to this firm and explain the importance of risk management and the available risk management measures including potential hedging strategies.