Financial Risk Management Key Concepts

QFINANCE Revised 2nd edition. Order your copy now.

Dangers of Corporate Derivative Transactions

Derivatives, such as interest rate hedging, are highly effective tools when used correctly but, as the recent crash showed, they can also be "weapons of financial mass destruction."
Hedging Liquidity Risk—Case Study and Strategies

This article examines the definition of liquidity risk and ways of hedging against it.
Hedging Credit Risk—Case Studies and Strategies

This article examines credit risk and the instruments that may be used as hedges to reduce exposure.
A Total Balance Sheet Approach to Financial Risk

Company boards have a duty to minimize known risks and "hedging" out inflation, interest rate, and currency risks are common practice. There is more to consider, however.
Managing Interest Rate Risk

Volatility in interest rates can reduce the profit on a deal or turn it negative. Managing the risk means moving it to someone else better placed to take it on. It's a cost versus risk balance.

QFINANCE Refresher

Key Concepts

Key Concepts provide you with definitions of buzzwords appearing in the media to ensure that you are up to speed with the current finance conversation. Produced in snapshot, glossary form, Key Concepts direct you to additional material to increase your knowledge and satisfy your interest.

Currency Risk
Currency risk refers to the possibility that movements in foreign exchange rates could affect the value of a business operation or an investment. Whenever an investment or agreement is made based on one currency, movements of that currency against other currencies can have a significant impact on the value or performance for investors or partners using other base currencies. For example, a US investor choosing to invest in German equities could...
Derivatives
Derivatives are powerful financial instruments with valuations based on the level of an underlying asset or a market index. Futures and options are commonly used forms of exchange-traded derivatives that offer tightly controlled, transparent clearing and settlement processes. However, over-the-counter (OTC) derivatives can be considerably more complex in structure. Derivatives can permit the use of leverage, meaning that users of products such...
Interest Rate Risk
Interest rate risk represents the extent to which an asset or investment’s value could be influenced by movements in variable interest rates. Some investments carry greater direct exposure to interest rate risk than others; given their fixed rates of returns, bonds are more exposed to the impact of interest rate movements than equities, with the result than bond prices tend to move inversely relative to interest rates and inflation. For example,...

Travel, at least in the modern business sense, does not broaden the mind, it merely inflates the ego.
Jonathan Brown, British journalist
Source: Independent (London) (December 3, 2009)

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Integrated Corporate Financial Risk Policy
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Dangers of Corporate Derivative Transactions
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A Total Balance Sheet Approach to Financial Risk
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Quantifying Corporate Financial Risk
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Financial Risk Management Key Concepts

Topic Highlights

Dangers of Corporate Derivative Transactions

Hedging Liquidity Risk—Case Study and Strategies

Hedging Credit Risk—Case Studies and Strategies

A Total Balance Sheet Approach to Financial Risk

Managing Interest Rate Risk

QFINANCE Refresher

Key Concepts

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