Common use of Foreign Currency Risk Clause in Contracts

Foreign Currency Risk. Foreign currency risk is defined as the exposure to loss due to fluctuations in foreign exchange rates. Foreign currency exchange rates are generally affected by a multitude of complex factors, such as the relative strength of the economies of various nations, changes in foreign and domestic interest rates, changes in trade policies, government and central bank interventions and political developments. The Company’s investments may include foreign securities or other investments denominated in non-U.S. currencies. In addition, the Company may receive revenues or incur liabilities from outside of the United States. Consequently, fluctuations in currency rates can affect the Company. In that regard, the Company may use derivative transactions to hedge foreign currency exposure risk. To the extent the Company engages in more sophisticated derivative strategies with respect to foreign currencies, the Board must approve all strategies and testing as part of the risk management process discussed herein.