A stable, well-functioning financial market for allA stable, well-functioning financial market for allMarket risks management
During 2011, Finansinspektionen (FI) investigated how 11 financial companies market risks management. ‘Market risk’ refers to the risk of loss-incurring value changes in assets and liabilities due to fluctuations in interest rates, foreign exchange rates, stock prices and commodity prices.
Market risks often arise during normal business transactions, e.g. within client-driven trade or during lending/borrowing transactions. In some cases, companies actively expose themselves to market risks in order to earn money, which is referred to as 'proprietary trading'. To a certain extent, companies can choose the level of market risk exposure via hedging, an investment strategy used to mitigate or eliminate risk.
