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Username: ForexGuy Rating:  Asked to: Anton Luyten Date Created: 17 Jul 2015 |
| Category | 46 |
| Tag | Forex |
| Question | Please explain the term "risk management". |
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Hi Forex Guy, Simply put, risk management is a two-step process - determining what risks exist in an investment and then handling those risks in a way best-suited to your investment objectives. Risk management occurs everywhere in the financial world. It occurs when an investor buys low-risk government bonds over more risky corporate debt, when a fund manager hedges their currency exposure with currency derivatives and when a bank performs a credit check on an individual before issuing them a personal line of credit. Inadequate risk management can result in severe consequences for companies as well as individuals. For example, the recession that began in 2008 was largely caused by the loose credit risk management of financial firms. |
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