The situation of a Currency Risk arises when the earnings and commitments of a business are in different currencies exposing the business to exchange loses. Such instances occur when the earnings of a business are in currencies exposed to frequent unexpected and volatile changes in relative international currencies in which commitments are made. This can significantly affect profitability and overall return on investment. In business valuation analysis, depending on the circumstances, currency risk may be accounted for as exchange losses in the income statement or may be included in discount rate or capitalisation rate applied to convert cash flows or adjusted incomes to value.