The importance of risk management in theinternational financial markets

As small and medium sized enterprises (SMEs) are increasingly involved in international markets, theyhave become new research setting on forex risk management. Given that SMEs have limited access toresources, skills and capabilities, internal hedging techniques could be favored by SMEs. There islimited research on this matter, and the extant literature on forex management generally considersderivatives as major hedging techniques for large firms. This article primarily investigates howexporting SMEs manage forex risk. In addition, approaches to forex management could be changed asa firm becomes more experienced internationally. When forex exposure is not considered as a toppriority, exporting SMEs tend to disregard other financial facets of hedging, for example, tax benefitsand under-investment problems. forex risk management is a dynamic and current topic. This shouldidentify an exciting research area for future research, and one which would also be of value to policymakers and managers as SMEs continue to play such critical roles in their economies.