It refers to the design & implementation of procedure for controlling financial risks. Technological changes have arises from advances on two fronts.
Ø Physical Equipment
Ø Financial Theory
Physical Equipment: The availability of cheaper communications & computing power has led to innovations such as global 24 hours trading and online risk management systems.
Financial Theory: Modern finance theory has allowed institution to create price & control the risks of news financial instruments.
Types of Financial Risks:
- Market Risks
- Credit Risks
- Operational Risks
- Liquidity Risks
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