Which of the following is an element of 'market risk'?

Market risk encompasses the potential for losses due to fluctuations in market prices, and one significant element of this is currency exchange rates. When the value of a currency changes, it can affect the returns on investments made in foreign currencies. For example, if a company holds assets or conducts business in a foreign market, changes in the exchange rate can either enhance or diminish the value of those investments when converted back to the company's home currency. This fluctuation poses a risk to the overall profitability and financial health of the organization.

In contrast, the other options pertain to different types of risks. Regulatory changes are related to compliance risk, which pertains to how new laws or regulations can affect operations and profitability. Supplier reliability concerns operational risk, focusing on the risks arising from disruptions in the supply chain, while product recalls due to quality issues are associated with product liability and operational risk, related to consumer safety and brand reputation. All of these elements fall outside the scope of market risk as they do not directly relate to market price fluctuations.