One of the central tenets of financial economics is the necessity of some trade off between risk and expected return. Because high risk is associated with high reward, investor may potentially obtain higher profits only if he is willing to accept a higher chance of losses. Risk-return trade-off is one trading principal in financial markets.
Risk management is a process to identify and measure risk. The goal of risk management solution is to ensure that risk is under limit and there is no surprise in future. In capital markets, risk management is accountable for oversighting and monitoring the profit and loss, market risk, credit risk, liquidity risk and valuation risk activities of a firm.
Market risk is the risk of losses in positions due to market movements, whereas counterparty credit risk refers to the risk that a counterparty to a bilateral financial derivative contract may fail to fulfill its contractual obligation causing financial loss to the non-defaulting party. Value at Risk (VaR) is the regulatory measurement for assessing market risk. FinPricing offers capital market risk management products and services to help your organization effectively identify and address the risk you face in financial markets.
We share our industry knowledge through online presentations and academic papers. These materials are practitioner oriented with implementation details.
- VaR Introduction I: Parametric VaR
- VaR Introduction II: Historical VaR
- VaR Introduction III: Monte Carlo VaR
- FRTB Standardized Approach
- Standard Initial Margin Model (SIMM)
- Incremental Risk Charge (IRC)
- Market Risk Economic Capital
- Credit Value Adjustment (CVA)
- Funding Valuation Adjustment (FVA)
- Counterparty Credit Risk (CCR)
- Credit Risk Monte Carlo Simulation
- Collateral Management
- Risk Sensitivity/Greeks