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, financial, risks, risk management":
... 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 financial instruments to manage risk ... include Foreign exchange, 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 ...
... 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 ... 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 outside of the firm ...
Famous quotes containing the words management, financial and/or risk:
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