Financial Risk Management

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The Financial Risk Management certification is a qualification for risk management professionals, particularly those who are involved in analyzing, controlling, or assessing potential credit risk, market risk, and liquidity risk as well as non-market related financial risks. iACT Global is providing training in Financial Risk Management (FRM) Program which has been developed as per the guidelines of GARP, and is offering to learners through an online platform. To know more about Financial Risk Management call: 0120-3843057, 9654449005 or visit
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  • 2. Agenda  Risk Management (Course Coverage)  Risk Identification, Analysis and Management Nature and Sources of Risk Types of Risk  Market Risk  Liquidity Risk  Credit Risk  Operational Risk Benefits of Risk Management Steps in Risk Management process 2
  • 3. Course Coverage 3
  • 4. Risk Return Trade off & Nature of Risk  Risk and Return Relationship Higher the risk, Higher the return  Risk and Uncertainty “Risk is measurable uncertainty” and “Uncertainty is un-measurable risk” Risk is the possibility of Actual Outcome varying from the Expected Outcome. 4
  • 5. Sources of Risk Sources and factors that brings risk  Economic Factors  Market Factors  Technological Factors  Financial Factors  Human Factors  Natural Factors 5
  • 6. Types of Risks • As a part of business activities • Related to product/service market in which firms operate • Due to Technology, competitive and consumers Business Risks • Risk over which firms have no control • Includes • Strategic and • Financial risk Non Business Risks 6
  • 7. Financial Risks Financial Risk Market Risk Price Risk Symmetrical and Non Symmetrical Risk Absolute and relative Risk Directional and Non-directional Risk Currency Risk Transactional exposure Translation exposure Economic Exposure Interest Rate Risk Commodity Risk Liquidity Risk Credit Risk Operational Risk 7
  • 8. Risk Management & Its Benefits The forecasting and evaluation of financial risks together with the identification of procedures to avoid or minimize their impact. Benefits of Risk Management  Enables quantification of risk  Helps identify extremely risky situations  Improves risk awareness  Enables performance measurement on risk-adjusted basis  Reduces earnings volatility  Maximizes shareholders’ value  Promotes job and financial security 8
  • 9. Steps in Risk Management Process Risk Management Risk Identification Risk Handling Techniques Selection & Application Risk Evaluation 9
  • 10. Risk Handling Techniques 10 Techniques available for Managing Risks Risk Avoidance Loss Control Risk Retention Non- Insurable Transfers Insurance
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