The operations of a reporting entity that are based in a foreign country or are denominated in a currency other than the currency under which the entity prepares its financial statements. Foreign operations include subsidiaries, associates, joint ventures or branches of a reporting entity, that are located outside the country in which the entity operates or that conduct transactions in a currency other than the currency of the reporting entity- that is, the activities of such operations are based or conducted in a country or currency that differ from those of the reporting entity.

Such operations raise a foreign exchange risk exposure (namely, foreign currency risk of the net investment in foreign operation). Such a risk has to be hedged (by means of a net investment hedge, including any recognized goodwill).