Chevron is one of the world’s largest human energy providers. They have been conducting their business in more than one-hundred countries, such as Brazil, Nigeria, Kuwait, etc. Thus, it is safe to say that Chevron’s economic exposure, including the transaction and operating exposure, is certain and irresistible.  No doubt, Chevron’s transaction exposure comes from exchange gains or losses on foreign currency-denominated contractual obligations. For instance, according to Chevron’s 2008 annual report, the company entered into forward exchange contracts, generally with term of 180 days or less, to manage some of its foreign currency exposure. These exposures include revenue and anticipated purchase transactions, including foreign currency capital expenditures and lease commitments, forecasted to occur within 180 days. The forward exchange contracts are recorded at fair value on the balance sheet with resulting gain and loss reflected in income. In another words, when the currency of Chevron’s foreign-based fluctuate, the company’s future expenses and revenues are changed correspondingly.  Chevron is exposed to market risks related to price volatility of crude oil, refined products, natural gas, natural gas liquids, liquefied natural gas and refinery feedstocks. The company uses derivative commodity instruments to manage these exposures on a portion of its activity, including firm commitments and anticipated transactions for the purchase, sale and storage of crude oil, refined products, natural gas, natural gas liquids and feedstock for company refineries. From time to time, the company also uses derivative commodity instruments for limited trading purposes. The company uses International Swaps and Derivatives Association agreements to govern derivative contracts with certain counterparties to mitigate credit risk. Depending on the nature of the derivative transactions, bilateral collateral arrangements may also be required. When the company is engaged in more than one outstanding derivative transaction with the same counterparty and also has a legally enforceable netting agreement with that counterparty, the net mark-to-market exposure represents the netting of the positive and negative exposures with that counterparty and is a reasonable measure of the company’s credit risk exposure. The company also uses other netting agreements with certain counterparties with which it conducts significant transactions to mitigate credit risk. (Chevron’s website) Overall, Chevron has done its best to manage its foreign currency exposure. Its top executives have always considered all of the factors related to exchange risk when they make the decision for the corporation.