How Do Firms Manage Financial Risk? (FRM Part 1 2023 - Book 1 - Chapter 2)

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After completing this reading you should be able to:
- Compare different strategies a firm can use to manage its risk exposures and explain situations in which a firm would want to use each strategy.
- Explain the relationship between risk appetite and a firm’s risk management decisions.
- Evaluate some advantages and disadvantages of hedging risk exposures and explain challenges that can arise when implementing a hedging strategy.
- Apply appropriate methods to hedge operational and financial risks, including pricing, foreign currency
and interest rate risk.
- Assess the impact of risk management tools and instruments, including risk limits and derivatives.
0:00 Introduction
0:14 Learning Objectives
1:13 Theoretical Objections to Risk Management
7:32 Reasons for Risk Management
11:48 Hedging Operations versus Hedging Financial Positions
15:58 Risk Management in Practice
21:06 Mapping the Risks
22:17 Instruments for Risk Management
25:53 Devising and Implementing a Strategy
29:12 Performance Evaluation
31:05 Book 1 - Foundations of Risk Management

[@carineforbi]

Thanks for this work.Has greatly helped me

[@analystprep]

You're so welcome!

[@kurtgisi]

Hı Thank you for perfect videos. However, I have not made decision yet as to which exam I should take FRM or PRM ? I would like to work in risk management field in multinational banks. Which certificated would be good option for me in the future? Thanks you su much in advance.

[@gulmiralenawa6860]

Hi! some chapters are not on youtube, right? please advise where can complete set can be found) thank you

[@analystprep]

Hi. All video lessons can be found at app.analystprep.com in AnalystPrep's Learn + Practice Package. I hope this helps!

[@manojbs]

How does hedging increase the debt capacity of the firm?

[@baselv8680]

Hedging makes your risk lower and cashflows more steady, hence enhances the firm’s ability to issue debt (investors accept lower interest given lower risk).

[@ankitgupta-sn3ug]

links are not working.

[@sahel1796]

Is there chapter 3?

[@yihenghuang6477]

prm?