For a collateralised transaction, the exposure amount after risk mitigation is calculated as follows:

E* = Max {0, [E x (1 + He) - C x (1 - Hc - Hfx)]}

where:
E* = The exposure value after risk mitigation
E = Current value of the exposure
He = Add-on appropriate to the exposure
C = The current value of the collateral received
Hc = Haircut appropriate to the collateral
Hfx = Haircut appropriate for currency mismatch between the collateral and exposure