Financial Risk Management Identification, Measurement and Management

Financial risk is the possibility of losing money on an investment or business venture. Some more common and distinct financial risks include credit risk, liquidity risk, and operational risk.

Financial Risk Management Identification, Measurement and Management

Francisco Javier Población García

Palgrave Macmillan

2017

Abstract

This book provides a quantitative overview of corporate risk management for both financial and non-financial organisations. It systematically explores a range of important risks, including interest rate risk, equity risk, commodity price risk, credit risk management, counterparty risk, operational risk, liquidity risk, market risk, derivative credit risk and country risk.

Chapters also provide comprehensive and accessible analysis of risk-related phenomena and the corporate strategies employed to minimise the impacts of risk in each case. Chapters begin with an explanation of basic concepts and terminology, before going on to present quantitative examples and qualitative discussion sections. The author leverages his lifetime’s experience of working in risk management to offer this clear and empirical guide for scholars and practitioners researching financial stability.

Financial risk is a type of danger that can result in the loss of capital to interested parties. For governments, this can mean they are unable to control monetary policy and default on bonds or other debt issues. Corporations also face the possibility of default on debt they undertake but may also experience failure in an undertaking the causes a financial burden on the business.

The various types of risk include credit risk (in which a counter-party cannot pay what it owes), liquidity risk (in which the company's cash flow is inadequate), currency risk (in terms of exposure to foreign exchange movements), foreign investment risk (where the company's overseas assets may be in danger, and asset risk (in which the value of a company's asset backing may fall).

Financial markets face financial risk due to various macroeconomic forces, changes to the market interest rate, and the possibility of default by sectors or large corporations. Individuals face financial risk when they make decisions that may jeopardize their income or ability to pay a debt they have assumed.

Financial risks are everywhere and come in many shapes and sizes, affecting nearly everyone.

Citation

Financial Risk Management Identification, Measurement and Management, Palgrave Macmillan, 2017

Collection

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