Financial risk management is developed within a framework of enterprise risk management. In this section, we discuss that framework.
This is defined as the variability of risks and opportunities when firms conduct business operations. It is a double-edged sword, as it focuses on both an upside and a downside. The focus is:
• Missed opportunities. The failure to undertake a business venture when it provides economic value possibilities at an acceptable level of risk
• Financial losses. The exposures that arise from business operations that can cause losses to current economic value
Financial risk is a subset of enterprise risk that encompasses the financial ...