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The AMA Handbook of Financial Risk Management by John J. HAMPTON

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Chapter1Categorizing Financial Risks

THE ENTERPRISE RISK MANAGEMENT FRAMEWORK

Financial risk management is developed within a framework of enterprise risk management. In this section, we discuss that framework.

Enterprise Risk

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 ...

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