Financial risk management is the practice of creating economic value in a firm by using financial instruments to manage exposure to risk, particularly credit risk and market risk. Other types include Foreign exchange, Shape, Volatility, Sector, Liquidity, Inflation risks, etc. Similar to general risk management, financial risk management requires identifying its sources, measuring it, and plans to address them.
Financial risk management can be qualitative and quantitative. As a specialization of risk management, financial risk management focuses on when and how to hedge using financial instruments to manage costly exposures to risk.
In the banking sector worldwide, the Basel Accords are generally adopted by internationally active banks for tracking, reporting and exposing operational, credit and market risks.
Other articles related to "financial risk management, risk, risks, risk management, financial":
... The objective of financial risk management is to create economic value in a firm or to maintain a certain risk profile of an investment portfolio by using ... Shape, Volatility, Sector, Liquidity, Inflation risks, etc ... As a specialization of risk management, financial risk management focuses on when and how to hedge using financial instruments to manage costly exposures to risk ...
... financial economics) prescribes that a firm should take on a project when it increases shareholder value ... When applied to financial risk management, this implies that firm managers should not hedge risks that investors can hedge for themselves at the same cost ... hedging irrelevance proposition In a perfect market, the firm cannot create value by hedging a risk when the price of bearing that risk within the firm is the same as the price of bearing it ...
Famous quotes containing the words management, financial and/or risk:
“No officer should be required or permitted to take part in the management of political organizations, caucuses, conventions, or election campaigns. Their right to vote and to express their views on public questions, either orally or through the press, is not denied, provided it does not interfere with the discharge of their official duties. No assessment for political purposes on officers or subordinates should be allowed.”
—Rutherford Birchard Hayes (18221893)
“A theory of the middle class: that it is not to be determined by its financial situation but rather by its relation to government. That is, one could shade down from an actual ruling or governing class to a class hopelessly out of relation to government, thinking of govt as beyond its control, of itself as wholly controlled by govt. Somewhere in between and in gradations is the group that has the sense that govt exists for it, and shapes its consciousness accordingly.”
—Lionel Trilling (19051975)
“Im a very smart guy. I havent a feeling or a scruple in the world. All I have the itch for is money. I am so money greedy that for twenty-five bucks a day and expenses, mostly gasoline and whisky, I do my thinking myself, what there is of it; I risk my whole future, the hatred of the cops ... I dodge bullets and eat saps, and say thank you very much, if you have any more trouble, I hope youll think of me, Ill just leave one of my cards in case anything comes up.”
—Raymond Chandler (18881959)