The concept of Market risk management has gained in importance in the recent times as it has been giving the business organizations a particular risk model that becomes all the more useful when the company is opening or closing business activities.
The process of market risk management comes with some essential features that help it to be more effective.
Uses of Market Risk Management
The process of market risk management has a number of applications in the context of today’s global market. Its most basic use lies in the fact that it furnishes the business concerns with a particular risk structure.
This risk structure comes in handy especially when a particular company is operating either in its closing or opening phase.
Main Characteristics of Market Risk Management
Following are the principal characteristics of the system of market risk management:
World limit management: This process is at the base of the various trading plans that are used across the world as well as their applications. This process also makes sure that the amount of loss that may be faced by a particular company while carrying out business transactions is not more than what is being expected by that organization.
The various market risk management systems make sure that the various information related to the market are relevant as far as the parameters of input in case of the market risk calculations are concerned.
Indicators: These are applicable only in the case of banks and certain businesses. These are normally used in order to find out the problems that may be related to market risks.
Last Updated on : 8th July 2013