Operating exposure: Definition o The effect of random changes in exchange rates on the firms competitive position, which is not readily measurable a good definition of operating exposure is the extent to which the firm 's operating cash flows are affected by the exchange rate McGraw-Hilylrwoin 12-7 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rightsMcGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 12-7 Operating Exposure: Definition ⚫ The effect of random changes in exchange rates on the firm’s competitive position, which is not readily measurable. ⚫ A good definition of operating exposure is the extent to which the firm’s operating cash flows are affected by the exchange rate