Final answer:
The risk of not hedging funds against international currency transactions is currency risk.
Step-by-step explanation:
The risk of not hedging funds against international currency transactions is known as currency risk. When a company is engaged in international transactions and does not hedge against currency fluctuations, they are exposed to the potential loss or gain resulting from changes in exchange rates.
For example, if a company in the United States is importing goods from a country with a different currency, such as Japan, and the value of the Japanese yen depreciates against the U.S. dollar, the company will need to pay more in dollars to purchase the same amount of goods.
This risk can negatively impact a company's profits and financial stability, as they may end up paying more or receiving less than expected, depending on the direction of the currency exchange rate.