Exposure

Exposure is the amount and direction of economic sensitivity an account has to an instrument, asset class, currency, issuer, or risk factor.

Cash invested is not always equal to exposure: leverage can create a much larger notional position, while hedges can offset part of another holding’s sensitivity. Exposure can be measured gross, net, or by risk factor, and correlations can make apparently separate positions behave as one concentration. Monitoring exposure helps connect position size to potential account impact, but any estimate depends on current prices and assumptions.