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Counterparty risk management needs a closer relook
Counterparty risk is the risk that a counterparty in a transaction will default prior to the expiration of the contract and will be unable to make agreed contractual payments
Experience has shown, normally banking and financial crises have their...
Foreign Exchange Exposures
Foreign Exchange exposure is a measure of the potential for a firm’s profitability, net cash flow and market value to change because of a change in exchange rates. An important task of the financial manager is to measure foreign exchange exposure...
Foreign Exchange Risk Management
The peculiarities of foreign exchange markets are
– An Over The Counter market
– Only market open 24 hours, seven days a week, 365 days a year
– No single location; no barriers
– ...
Trends in Risk and Margin
Any activity is associated with risk – a loss or gain. Financial risk management is not about avoiding risk. Rather, it is about understanding and communicating risk, so that risk can be taken more confidently and in a better way. (David Koenig,...
Principles for sound stress testing practices in banks
According to Bank for International Settlements, stress testing is an important risk management tool that is used by banks as part of their internal risk management exercise. It is especially important after long periods of benign economic and...
Risks associated with investments
In any investment, an investor is exposed to several kinds of risks. The risks associated with investments are liquidity risk, market risk, credit risk, operational risk, prepayment risk and extension risk. If the investor decides to go in for...
Risks in international trade
As a practitioner, I have encountered many risks while handling international trade in different locations (domestic and foreign included). I was amazed and at the same time swayed by these risks in international trade. I have meticulously documented...
Stress testing on banks
Stress testing is the topic of the day.
This blog makes an attempt to demystify the topic stress testing.
A banking organization holds capital to guard against uncertainty. Capital reassures an institution’s depositors, creditors and counterparties‐‐and...
Functional Model – Prime Broking (xls)
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Country Risk is an Evolving and Dynamic Risk
Country risk analysis, as it is practiced is far from perfect. For example, the country risk of the United States fails to properly take into account the country’s aging population and strained Social Security system — as well as its huge...
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