Search results
Results From The WOW.Com Content Network
Financial risk is any of various types of risk associated with financing, including financial transactions that include company loans in risk of default. [ 1 ] [ 2 ] Often it is understood to include only downside risk , meaning the potential for financial loss and uncertainty about its extent.
Financial risk management is the practice of protecting economic value in a firm by managing exposure to financial risk - principally credit risk and market risk, with more specific variants as listed aside - as well as some aspects of operational risk.
Financial risk arises from uncertainty about financial returns. It includes market risk, credit risk, liquidity risk and operational risk. In finance, risk is the possibility that the actual return on an investment will be different from its expected return. [35]
As applied to finance, risk management concerns the techniques and practices for measuring, monitoring and controlling the market-and credit risk (and operational risk) on a firm's balance sheet, due to a bank's credit and trading exposure, or re a fund manager's portfolio value; for an overview see Finance § Risk management.
Traditional forms of finance include risk transfer, funded retention by way of reserves (often called self-insurance) and risk pooling. Alternative risk finance is the use of products and solutions which have grown out of the convergence of the banking and insurance industry. They include captive insurance companies and catastrophic bonds, and ...
A counterparty risk, also known as a settlement risk or counterparty credit risk (CCR), is a risk that a counterparty will not pay as obligated on a bond, derivative, insurance policy, or other contract. [15]
In financial mathematics, a risk measure is used to determine the amount of an asset or set of assets (traditionally currency) to be kept in reserve. The purpose of this reserve is to make the risks taken by financial institutions , such as banks and insurance companies, acceptable to the regulator .
Financial risk modeling is the use of formal mathematical and econometric techniques to measure, monitor and control the market risk, credit risk, and operational risk on a firm's balance sheet, on a bank's accounting ledger of tradeable financial assets, or of a fund manager's portfolio value; see Financial risk management.