Managing Risk

Risk management is a fundamental part of treasury and a large subject in its own right. Under the category ‘managing risk’ we take in the overarching approach to creating a risk framework, including enterprise risk management (ERM). It covers the generic concepts that can be applied to any sorts of risks and incorporates risk identification and assessment techniques e.g. likelihood/impact analysis, process mapping, portfolio theory, holistic approaches. From that starting point the risk manager typically moves onto risk policies and reporting systems; market risk modelling such as gap analysis, value at risk (VAR), PVBP, stress testing, Monte Carlo simulations; the features and valuation of risk hedging instruments; and the administration such as derivatives documentation and legal issues.