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What is Risk Management? 7 лет назад


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What is Risk Management?

What is risk management? In simple terms it is the measurement of losses. Risk managers build loss models and then use these models to help determine how much risk a company is willing to take on for the expected return. Risk models (banking) are used in four main areas of risk which are: 1) Market 2) Credit 3) Operational 4) PPNR Most people in finance learn a lot about market risk which includes a variety of types of risk such as interest rate, volatility, and liquidity. Credit risk is the loss associated with issuing loans, operational risk is the risk associated with losses around business mistakes and includes lawsuits, and PPNR is the risk around the balance sheet and income statement which are effected by the economy. There is risk in all financial products including equity, fixed income, commodities, foreign exchange (FX) including cryptocurrencies, and derivatives.

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