imported>Doug Williamson |
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| 1. ''Corporate finance.''
| | (S&P). |
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| In the corporate finance context, risk refers to the degree to which future returns may vary.
| | The historic name of the business now incorporated into S&P Global, a leading credit rating agency and business analytics provider. |
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| Risk is often measured by the standard deviation of forecast returns.
| | Among other work, it publishes an annual Corporate Sustainability Assessment. |
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| It is often estimated by the standard deviation of <u>historic</u> returns, though this process is inherently error-prone when used for <u>forecasting</u> or for risk management purposes.
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| 2. ''Capital asset pricing model.''
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| In the Capital Asset Pricing Model, relevant risk is measured by beta.
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| 3. ''Unknown occurrences.''
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| In a more general sense, risk refers to the unknown (or unknowable) nature of future outcomes involving, for example, market prices or market rates.
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| 4. ''Adverse effects.''
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| Risk can also refer to the possibility of <u>adverse effects</u> resulting from:
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| - Changes in market prices or rates, or
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| - Changes in other general conditions in the market, or
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| - Other economic factors specific to the business or other organisation (such as the failure of a key supplier).
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| 5. ''Opportunity and hazard.''
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| More broadly, risk can refer to the possibility of any event occurring that will have an impact on the achievement of objectives.
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| This includes both the upside opportunity and the downside hazard which could either move us towards or drive us away from achieving our objectives.
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| Risk in this context is measured both in terms of (1) its impact and (2) its likelihood.
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| ==Treasury's role in risk management==
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| No organisation can eliminate all risk, so risk has to be managed effectively. This is best done through a risk-aware culture.
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| Generally, treasury is about managing risk rather than taking risks.
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| Many risks should be managed. Risk management is a key activity of the treasury function.
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| == See also == | | == See also == |
| * [[Agency risk]] | | * [[Analytics]] |
| * [[Alienation of assets]] | | * [[Corporate Sustainability Assessment]] |
| * [[Asset risk]]
| | * [[Credit rating]] |
| * [[Basis risk]]
| | *[[Credit rating agency]] |
| * [[Beta]]
| | * [[S&P 500]] |
| * [[Black swan]]
| | * [[S&P Global]] |
| * [[Business risk]]
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| * [[Call risk]]
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| * [[Capital asset pricing model]]
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| * [[Capital risk]]
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| *[[Cash]]
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| *[[Cash balance]]
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| *[[Cash flow]]
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| * [[Climate risk]]
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| * [[Commercial risk]]
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| * [[Commercial credit risk]]
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| * [[Commodity risk]]
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| * [[Compliance risk]]
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| * [[Concentration risk]]
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| * [[Conduct risk]]
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| * [[Confiscation risk]]
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| * [[Consequential risk]]
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| * [[Counterparty risk]]
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| * [[Country risk]]
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| * [[Credit migration risk]] | |
| * [[Credit risk]] | |
| * [[Currency risk]] | |
| * [[Custody risk]]
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| * [[Cyber risk]]
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| * [[Default]]
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| * [[Delivery risk]]
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| * [[Diversifiable risk]]
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| * [[Diversification]]
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| * [[Documentation risk]]
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| * [[Downside risk]]
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| * [[Economic risk]]
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| * [[Effective annual rate]]
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| * [[Enterprise risk management]]
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| * [[Environmental risk]]
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| * [[Equity risk]]
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| * [[Equity risk premium]] (ERP)
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| * [[Event risk]]
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| * [[Financial market risk]]
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| * [[Financial market price risk]]
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| * [[Financial risk]]
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| * [[Fiscal risk]]
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| * [[Foreign exchange risk]]
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| * [[Franchise viability risk]]
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| * [[Funding risk]]
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| * [[Gap risk]]
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| * [[Geopolitical risk]]
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| * [[Global risk]] | |
| * [[Guide to risk management]]
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| * [[Herstatt risk]]
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| * [[Inflation risk]]
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| * [[Insurance]]
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| * [[Insurance risk]]
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| * [[Interest rate risk]]
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| * [[Interest Rate Risk in the Banking Book]]
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| * [[Intraday risk]]
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| * [[Key risk indicator]]
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| * [[Legal risk]]
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| * [[Liquidity risk]]
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| * [[Location basis risk]]
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| * [[Market price risk]]
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| * [[Market risk]]
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| * [[Market Risk in the Banking Book]]
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| * [[Market risk premium]] (MRP)
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| * [[Migration risk]]
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| * [[Model risk]]
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| * [[Non-diversifiable risk]]
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| * [[Non-transferable risk]]
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| * [[Off balance sheet risk]]
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| * [[Operational risk]]
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| * [[Opportunity risk]]
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| * [[Option risk]]
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| * [[Pensions risk]]
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| * [[Physical risk]]
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| * [[Pipeline risk]]
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| * [[Political risk]]
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| * [[Pre-transaction risk]]
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| * [[Prepayment risk]]
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| * [[Principal risk]]
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| * [[Rating risk]]
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| * [[Refinancing risk]]
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| * [[Regret risk]]
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| * [[Regulatory risk]]
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| * [[Reinvestment risk]]
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| * [[Replacement risk]]
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| * [[Reputational risk]]
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| * [[Response to risk]]
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| * [[Return]]
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| * [[Rewarded risk]]
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| * [[Risk analysis]]
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| * [[Risk appetite]]
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| * [[Risk averse]]
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| * [[Risk budget]]
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| * [[Risk evaluation]]
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| * [[Risk free]]
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| * [[Risk-free rates]]
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| * [[Risk free rate of return]]
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| * [[Risk identification]]
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| * [[Risk management]]
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| * [[Risk map]]
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| * [[Risk mitigation]]
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| * [[Risk policy]]
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| * [[Risk premium]]
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| * [[Risk register]]
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| * [[Risk reporting]]
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| * [[Risk tolerance]]
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| * [[Risk transmission]]
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| * [[Risk Weighted Assets]]
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| * [[Rollover risk]]
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| * [[Settlement risk]]
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| * [[Social risk]]
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| * [[Sovereign risk]]
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| * [[Specific risk]]
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| * [[Spread risk]]
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| * [[Spreadsheet risk]]
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| * [[Stranding risk]]
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| * [[Structural risk]]
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| * [[Systematic risk]]
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| * [[Systemic risk]]
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| * [[Systems risk]]
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| * [[Standard deviation]]
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| * [[Supply chain risk]]
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| * [[Tail risk]]
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| * [[Tax risk]]
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| * [[Transaction risk]]
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| * [[Transfer risk]]
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| * [[Transferable risk]]
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| * [[Transition risk]]
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| * [[Translation risk]]
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| * [[Treasury]]
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| * [[Treasury risk]]
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| * [[Uncommitted risk]]
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| * [[Unrewarded risk]]
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| * [[Value at risk]]
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| * [[Weather risk]]
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| * [[Wrong way risk]]
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| * [[Yield curve risk]]
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| [[Category:Risk_frameworks]] | | [[Category:Treasury_operations_infrastructure]] |