How do firms manage economic risk due to fluctuations in forex market?

Economic risk refers to unfavorable economic conditions in buyer or seller's country which may affect both parties in fulfilling their obligations. On the buyer side, economic risk may result in buyer's insolvency or inability to accept the goods and services. On the other hand, the seller may experience difficulty in producing or shipping the goods. Once a firm recognizes its risk, it can reduce it by using following tools: Forecasts Risk Estimation Benchmarking Hedging Netting Matching Leading and Lagging Stop loss Reporting and Review