For a business operating internationally, currency risk hits your bottom line when exchange rates fluctuate between the time you set your annual budgets—or price your products—and the moment you actually pay a supplier or receive funds. If the market moves the wrong way at that time, your profit margins can disappear.
You're a UK business wanting to buy $100,000 of goods from a US supplier in three months' time. Today, £1 buys $1.35, so the order would cost about £74,074. If the pound weakens to $1.30 by the time you pay, it would cost you about £76,923, roughly £2,849 more, for the exact same goods. That swing comes directly off the bottom line.
Left unmanaged, FX exposure makes profits unstable and unpredictable. The same product or contract can be profitable one month and loss-making the next, even though your business remains unchanged.