What is Economic exposure? An exposure to swing exchange rate may affect a company’s earning, cash flow and foreign investments. A company is influenced by economic exposure depends on the specific characteristics of the company and its industry. It is the sensitivity of the future home currency value of the firm’s assets, liabilities and the firm’s cash flow to random changes in exchange rates. How do we measure it? Regression coefficient which is beta measures the relations between changes in spot exchange rates and change in cash flows. The higher is the beta, the greater the economic exposure of the company.   There are six steps to create an economic exposure strategy. First of all is to identify the exposure. Second, define the risk. Economic exposure is the combination of transactions exposure and operating exposure. Third, list the operating exposure. Operating exposure begin with new product development, a distribution network, brand name development, marketing to foreign markets, foreign supply contracts and overseas production facilities. The forth step is to measure economic exposure. To measure operating exposure requires a long-term perspective. The fifth step is to know the guidelines to create a strategy. The last step is the strategies to manage economic exposure. These steps would help us not only to create an economic exposure strategy but also give us more understanding to the exposure.   There are also several major ways to cope with economic exposure. Economic exposures are related to marketing and production. It is strategic in nature, and must anticipate problems and preplan ways to cope with them.  

 http://www.investopedia.com/terms/e/economicexposure.asp