What is meant by the term "Hedging" ?

Basically as Payal Seth has mentioned hedging mean to reduce risk with use of certain course of actions, these actions are taken in response to a future happening, more likely to result in a loss of value.

Hedging procedures are followed in:

1- Foreign exchange transactions.

2- Purchasing Put Options

3- Purchasing Call Options etc

Hedging means to reduce risk.

A financial instrument used to mitigate risk.