CHAPTER 1

The Importance of Financial Risk Management

What Is Financial Risk Management?

Financial risk management is managing the financial variables that affect the firm. It is an ongoing and continual process of identifying financial risks, assessing their potential for harm or opportunity, making a decision of the best managing technique, implementing the chosen risk management strategy, assessing the effectiveness of the strategy, creating a communication network and an associated level of transparency about the risks, and developing impactful risk management reports.

Financial risk management incorporates a set of tools, metrics, and best practices that have been developed over time. Although financial risk management is well developed ...

Get Essentials of Financial Risk Management now with the O’Reilly learning platform.

O’Reilly members experience live online training, plus books, videos, and digital content from nearly 200 publishers.