A multinational corporation that has a high currency risk is likely to experience financial issues, which can interrupt the day-to-day operations of the organization. Unstable financial conditions might lead to the issue of unfavorable incentives and erode the dedication of different stakeholders. Risk and exposure to foreign currencies are key concepts in the study of international finance. It is the degree to which unforeseen fluctuations in exchange rates might affect the value of assets, liabilities, or operating revenue expressed in the native currency. If the home currency values on average in a specific way, there is exposure. When multiple currencies are involved, it also exists. The difference in the home currency value of goods resulting from unforeseen fluctuations in exchange rates is known as foreign exchange risk. Multinational corporations employ derivative instruments including forwards, futures, and options as a hedge against their foreign exchange risk. The "Forward exchange contract" is the initial derivatives agreement in international finance. Moving forward A well-known and conventional risk management technique for obtaining protection against unfavorable fluctuations in exchange rates is foreign exchange. Because the exchange rate is "locked in" for a particular future date, the party to the contract can more confidently plan and budget for their business expenses. Since the 1960s, the forward exchange market has served as a means of tying together global interest rates. Forward contracts, however, now need to share markets and other instruments in order to hedging and arbitrage. These more recent derivatives include swaps, options, and futures