Part 1 | Introduction to Financial Risk
This handbook serves all three purposes in the emerging field of financial risk management. Achieving these goals is rather a sizable task when we consider all the risks that organizations face. A partial and unstructured list might include the following:
• Investment risk. The firm makes an investment. The investment has risks associated with it. We may fail to earn a return or lose the invested capital.
• Currency risk. The investment was in a different country from the home country and involves a different currency. We have an exchange-rate exposure.
• Liquidity risk. We own securities or other assets that have value. Unfortunately, no one wants to buy them when we are ready to sell.
• Cash flow risk ...
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