Transaction risk is the possibility of incurring future gains or losses on foreign currency-denominated existing transactions, as FX rates fluctuate between the moment the transaction is agreed and the moment it is settled. Transaction risk is measured currency by currency. Transactions go through several phases: forecast, firm commitment (sales order/purchase order), balance sheet items (accounts receivable/payable), settlement. Because a firm commitment typically precedes the creation of the corresponding balance sheet item, transaction risk arises before accounting risk. Transaction risk can be hedged in any number of currency pairs and for any number of transactions, however small. This is accomplished with Currency Management Automation solutions in the three phases of the hedging process: pre-trade (exposure collection and monitoring), trade (forward transaction execution), and post-trade (reporting management).