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AND ITS TYPES
Understanding
Financial Risk
What is Risk?
Risk can be defined as the chance of having
an unanticipated or negative result. Any act or
event that results in loss of any kind could be
considered to be a risk project.
Types of risks
Corporate Risk
Non-Business Risk
Financial Risk
TYPES OF RISKS THAT FINANCIAL
INSTITUTIONS FACE
Market Risk Liquidity Risk Operational Risk
Legal Risk Credit Risk
1.Market Risk:
2.Liquidity Risk:
This type of risk arises due to fluctuations in the price of
financial Instruments. Risks associated with market
transactions are classified as Non-Directional Risk and
Directional Risk.
This kind of risk is borne because of the inability to
perform transactions. Liquidity risk is classified as Risk of
Asset Liquidity as well as Credit Liquidity Risk.
3.Operational Risk:
4.Legal Risk:
This type of risk can arise due to operational issues like
poor management or technical issues. Operational risk
can be divided in two categories: the categories of
Fraud Risk or Model Risk.
This is one of the commonly occurring types of risk in
project management finance. It comes out of legal
limitations, like lawsuits. When a business has to deal with
financial losses as a result of legal processes, it's a legal
risk.
5.Credit Risk:
This kind of risk occurs when an individual fails to meet the
obligations they have to their counter partners. Credit risk is
classified as sovereign Risk as well as Settlement Risk.
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Understanding Financial Risk slideshare.pdf

  • 2. What is Risk? Risk can be defined as the chance of having an unanticipated or negative result. Any act or event that results in loss of any kind could be considered to be a risk project.
  • 3. Types of risks Corporate Risk Non-Business Risk Financial Risk
  • 4. TYPES OF RISKS THAT FINANCIAL INSTITUTIONS FACE Market Risk Liquidity Risk Operational Risk Legal Risk Credit Risk
  • 5. 1.Market Risk: 2.Liquidity Risk: This type of risk arises due to fluctuations in the price of financial Instruments. Risks associated with market transactions are classified as Non-Directional Risk and Directional Risk. This kind of risk is borne because of the inability to perform transactions. Liquidity risk is classified as Risk of Asset Liquidity as well as Credit Liquidity Risk.
  • 6. 3.Operational Risk: 4.Legal Risk: This type of risk can arise due to operational issues like poor management or technical issues. Operational risk can be divided in two categories: the categories of Fraud Risk or Model Risk. This is one of the commonly occurring types of risk in project management finance. It comes out of legal limitations, like lawsuits. When a business has to deal with financial losses as a result of legal processes, it's a legal risk.
  • 7. 5.Credit Risk: This kind of risk occurs when an individual fails to meet the obligations they have to their counter partners. Credit risk is classified as sovereign Risk as well as Settlement Risk.
  • 8. Thank You Like us if you love our posts!