Financial Risk Manager Part 1

An increase in the price of gas is an example of market risk, also known as systematic risk. This is the potential for an investor to experience losses due to factors that affect the overall performance of financial markets. These factors are typically broad-based, beyond the control of individual companies or investors, and impact a large number of assets simultaneously. It includes risks associated with changes in interest rates, foreign exchange rates, commodity prices, and equity prices. Market risk can affect the value of a portfolio or individual security, resulting in losses for investors or traders.

Operational risk refers to the possibility of incurring losses resulting from operational breakdowns caused by either internal or external factors. Operational risks include legal risk, anti-money laundering risk, cyber risk, and rogue trading. Moreover, operational include corporate disasters such as operational mishaps and corporate governance scandals.