
10
Operational risk
When looking at risk in relation to any activities in the financial
markets it is usually broken down into three high-level definitions
covering market, credit and operational risk.
Market risk can be simply defined as the risk of financial loss due to
trading errors, liquidity issues, adverse market movements or breaches
of market rules and regulations.
Credit risk can be simply defined as the risk of financial loss due to
the failure of a counterparty. This loss can be failure to receive either
cash or assets, or both, and the cost of replacement.
Not surprisingly market and credit risk are high on the agenda ...