Foreign exchange risk
Foreign currency transaction risk arises from currency flows, assets and liabilities denominated in currencies other than the domestic currency. Transaction risks arise from cash flows and balance sheet items where changes in exchange rates will have an impact on earnings and cash flows. Translation risk arises when the currency denominated income and balance sheet items of Group companies located outside the euro area are consolidated into EUR. The transaction risk is hedged mainly using foreign currency forwards. The Group’s most significant transaction currency risks arise from the Swedish krona, the Canadian dollar and the U.S. dollar.