Basis risk and Paris Agreement: Difference between pages

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Basis risk usually means the risk of an unfavourable change in the relationship between the price of a derivative and the market value of an underlying asset or liability being hedged.  
An international agreement of 2015 to combat climate change and to accelerate and intensify the actions and investments needed for a sustainable low carbon future.  


For example resulting in a smaller profit being enjoyed on a hedging derivative, than the loss suffered on the underlying exposure.  
The Paris Agreement’s central aim is to strengthen the global response to the threat of climate change by keeping a global temperature rise in the 21st century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.


Good hedge design therefore seeks to eliminate or minimise basis risk in the hedged position, so far as practicable.


== See also ==
== See also ==
* [[Basis]]
* [[Climate change: testing the resilience of corporates’ creditworthiness to natural catastrophes]]
* [[Hedge effectiveness]]
* [[Climate risk]]
* [[Hedging]]
* [[Risk management]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:Manage_risks]]

Revision as of 22:36, 6 October 2018

An international agreement of 2015 to combat climate change and to accelerate and intensify the actions and investments needed for a sustainable low carbon future.

The Paris Agreement’s central aim is to strengthen the global response to the threat of climate change by keeping a global temperature rise in the 21st century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.


See also