Foreign exchange risk

Foreign exchange risk is your exposure to fluctuating exchange rates. Foreign exchange markets are volatile and are constantly moving. These movements can have implications for any business that has receipts and/or payments in a foreign currency. On conversion, these receipts/payments can change in value from one day to the next, depending on the rate at which they are exchanged.

Foreign exchange risk

Interest rate risk

Interest rate risk refers to your exposure to fluctuating interest rates. Interest payments can be a major cost for many businesses. If an interest rate of 5 per cent moves up just 0.5 per cent it will result in a 10 per cent increase in interest cost. This is a significant direct cost that may impact cash flow, profitability and business strategy as cash that may have been reserved to pursue other opportunities is absorbed by the interest rate change.

Interest rate risk

Commodities price risk

Commodity risk refers to your exposure to either fluctuating movements in commodity prices or uncertainty surrounding expected commodity production, affecting both producers and consumers.

Commodity prices can be volatile, which can expose your business to unfavourable prices when it's time to buy or sell in the market place. Ignoring commodity risk can impact your business cash flow, profitability and future planning.

Commodities price risk

Trade risk

There’s a range of issues to be managed associated with both domestic and international trade including:

  • risk of trading partners becoming insolvent, defaulting on payment, committing fraud or being unwilling to accept goods
  • uncertainty of dealing with new suppliers or buyers
  • operating in foreign jurisdictions
  • control over shipment and delivery schedules
  • receiving the goods of the quality and quantity ordered

We can help you manage or minimise the most common trade-related risks for your business.

Important information

Examples are for illustrative purposes only and does not reflect current prices or outcomes. The information provided on this webpage is intended to be of a general nature only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on the information on this webpage, National Australia Bank Limited (ABN 12 004 044 937, AFSL and Australian Credit License 230686) (NAB) recommends you consider whether it is appropriate for your objectives, financial situation and needs. NAB recommends that you seek independent advice before acting on any information on this webpage.

Target Market Determinations for these products are available at nab.com.au/TMD.

Help and guidance

We're ready to help you

Request a call back
Contact us
Visit a branch