To manage the risk of foreign exchange exposure, we must first measure the risk exposure. Foreign exchange assets (or liabilities) may increase or decrease in value due to exchange rate changes, and may be offset naturally or written off artificially through some measures. Among them, foreign exchange assets (or liabilities) that cannot be offset naturally and have not been artificially written off are exposed to the risk of exchange rate changes, resulting in exchange rate risk exposure. The net exposure to foreign exchange risk depends on the nature of financial company's assets (or liabilities) and the scope and manner of its influence when the exchange rate changes.

For the measurement of total net foreign exchange exposure, there are usually three measurement methods: net total exposure, total total exposure and total short exposure. The net total exposure is the absolute value of various long positions and short positions offsetting each other. When the currency changes in the foreign exchange exposure portfolio are highly correlated, the exchange rate risk between long foreign currency exposure and short foreign currency exposure can offset each other. Under this combination, the net exposure measurement method is suitable for measuring exchange rate risk. When the currency changes in the foreign exchange exposure portfolio are completely irrelevant, the risks between foreign currency long positions and foreign currency short positions cannot offset each other, and the exchange rate risk should be measured by the total summary exposure of long positions and short positions.

The risk exposure of financial companies can be divided into two parts according to their own business and preferences: one is self-retaining exposure, which means that financial companies are willing to bear exchange rate risks according to their business needs and preferences, and this exposure does not need hedging; One is hedging exposure. Financial companies are unwilling to bear exchange rate risks and need to hedge through risk hedging. Generally speaking, exchange rate risk management is mainly for hedging exposure.

The exchange rate risk of foreign exchange assets can be avoided by hedging and eliminating risk exposure, and the risk can also be measured on the basis of forecasting exchange rate fluctuations, actively maintaining risk exposure and realizing risk profit. For example, when the forecast exchange rate is compared with the forward exchange rate, buy and sell forward foreign exchange and adjust the term structure of foreign exchange portfolio; Adjust the foreign currency asset structure according to the exchange rate forecast of different currencies. Some foreign commercial banks' foreign exchange portfolio models include "five-five system" (that is, 50% position hedging and 50% position exposure) and "three-three system". Whether the risk exposure is eliminated or not, the prediction of exchange rate fluctuations and the corresponding risk measurement are the basis of foreign exchange risk management.