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How to Calculate Cross Rates

The idea of cross rates implies two exchange rates with a common currency, which enables you to calculate the exchange rate between the remaining two currencies. [more…]

Output and Exchange Rates

Just to clarify the terminology, output refers to a country’s real gross domestic product (GDP). Because real GDP is adjusted for the changes in inflation [more…]

Inflation Rates and Exchange Rates

Most theories of exchange rate determination predict depreciation in the higher-inflation country’s currency. Inflation refers to an increase in the average price level of a country, which is frequently [more…]

What Is an Exchange Rate Regime?

The exchange rate between two currencies may be determined in international foreign exchange markets or in a government office. If an exchange rate — say, the yen–dollar rate — is determined in international [more…]

7 Types of Financial Risk

Thinking about financial risk tends to induce tunnel vision, especially in the wake of a market downturn or when you fear market uncertainty. However, risk, danger and opportunity are closely aligned aspects [more…]

Managing Financial Market Risk

When managing financial risk, market risk – the uncertainty about how prices will change in the market – is a constant concern. And a valid one. You should always weigh the risks before making any market [more…]

How to Manage Credit Risk in Financial Institutions

In financial risk management, the failure of an external entity to keep a promise is a credit risk you take on every day. This is expected, to a certain point. Managing that risk is the important part. [more…]

How to Manage Operational Risk in Financial Institutions

As a financial risk manager, one of the risks you need to consider is uncertainty within your own organisation. Institutional or operational risks are many – employee malfeasance, computer errors, attacks [more…]

How to Manage Liquidity Risk in Financial Institutions

Liquidity, the ability to convert assets to cash quickly, clearly affects your financial risk management decisions. If you don’t have enough liquidity, you may not be able to get out of untenable positions [more…]

How to Manage Funding Risk in Financial Institutions

Uncertainty about whether investors will provide sufficient funds is a challenge that every financial risk manager faces. Balancing these risks is essential to your success. There are a few things to consider [more…]

How to Manage Reputational Risk in Financial Institutions

How your organisation is perceived, what its reputation is, is a key component in your financial risk management strategy. The two easiest ways to get a bad reputation are to care only about reputation [more…]

How to Manage Political Risk in the Financial Field

Political risk is ever-present and uncontrollable. As a financial risk manager, you can only hope to avoid the obvious dangers and benefit from government actions. [more…]

Financial Risk Management For Dummies Cheat Sheet

Financial risk management can be very complicated, which can make it hard to know where to begin thinking about it. This Cheat Sheet distinguishes some of the key concepts such as risk versus danger and [more…]

Measuring Financial Risk

If you observe a financial risk management department in a financial institution, you may conclude that its main job is measuring risk. Indeed, that’s what most of its people are doing most of the time [more…]

4 Tasks of a Financial Risk Manager

Some jobs are named by what they do – a nurse nurses, an actor acts, a homebuilder builds homes. Financial risk managers belong to a different class of jobs, named for what they aspire to do – like a justice [more…]

Working as a Risk Manager in a Financial Institution

Being employed in a financial institution offers some attractive benefits. Whether you’re a risk manager in the middle office, or a salesperson in the front office, the pay is pretty high, and nobody dies [more…]

Communicating Financial Risk

Risk managers can’t predict or prevent disaster. They can, however, reasonably aspire to be able to say, ‘we all knew the risks’, when something bad happens, and have everyone nod in sad but sober agreement [more…]

10 Dramatic Online Illustrations of Risk

One of the fun parts of being a risk manager is that you never have to make dull presentations. Your job is to disrupt thinking and force broader consideration of potential future events, and you never [more…]


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