Translation exposure, or translation risk, is the possibility that a company's equities, assets, liabilities, or income will change in value as a result of changes in exchange rates. This risk exists when a firm denominates a portion of its equities, assets, liabilities, or income in a foreign currency. Translation risk can lead to what appears to be a financial gain or loss that is not a result of a change in assets, but in the current value of the assets based on exchange rate fluctuations.