Havering Ltd is involved in the manufacture of high technology computer chips and is based in

Stockton$-$on$-$Tees.

It is considered to be one of the UK$$s premier high$-$tech companies and have proved to be exceptionally

profitable in the past.

You have ascertained the following information about Havering Ltd$\text{'}$s activities.

It imports most of its raw materials from Japan. Its Japanese supplier insists on prompt payments, in

Yen. All other costs are incurred locally and paid for in sterling.

The major customers of Havering Ltd are spread throughout the world, although $45\%$ of their revenue

originates in Western Europe, where local companies insist on being billed in Euro$$s and require $90-$

day credit terms.

A major customer based in Iceland has fallen behind in payment of the amounts it owes to Havering

Ltd$.$

Havering Ltd have invested heavily in modern plant, most of which was financed by loans in sterling.

Loans are primarily a mixture of floating rate instruments, although there is also a substantial fixed rate

debenture.

At the end of the accounting year, Havering Ltd had some spare cash and had invested it in a portfolio

of London Stock Exchange listed companies in entirely unrelated fields.

Required

With reference to the specific circumstances of Havering Ltd$,$ discuss the categories of risk that

Havering Ltd are exposed to in connection with the disclosure requirements of IFRS $7$ Financial

Instruments.