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Aug 8, 2024 · Explore the factors influencing global financial stability, including regulatory measures, systemic risks, and emerging threats like cyberattacks and climate change.
Nov 13, 2024 · Types of financial risk include market risk, credit risk, liquidity risk, operational risk, legal risk, and currency risk. Managing and mitigating financial risk includes using techniques such as: diversification, hedging, learning from past crises, and regular monitoring and portfolio adjustment.
The overall risk to the financial system is broadly unchanged since November 2017. Elevated financial vulnerabilities have the potential to amplify the effects of adverse shocks on the economy and the financial system.
- Systemic and Non-Systemic Risk
- Volatility
- Counterparty Risk
- Default Risk and Interest Rate Risk
Risks are typically one of two types: systemic or non-systemic. A systemic risk is one that happens within a company or group of companies that can create havoc throughout an entire industry, sector, or economy. The financial crisis of 2007-2008 is an example, as a handful of large institutions threatened the entire financial system. This gave rise...
Volatility is the speed of movement in the price of an asset. A higher level of volatility indicates larger moves and wider changes in the value of an asset. Volatility is a non-directional value—a higher volatility asset has an equal likelihood of making a larger move up as it does down, which means they have a larger impact on the value of a port...
Counterparty risk is the possibility that one party of a contract defaults on an agreement. It is a risk, for example, in a credit default swap instrument. Credit swaps represent the exchange of cash flows between two parties and are typically based on changes in the underlying interest rates. Counterparty defaults on swap agreements were one of th...
Default risk is most often associated with bond and fixed income markets. It is the risk that a borrower may default on its loan obligations and not pay the lender outstanding amounts. Generally, a higher possibility of default results in a larger amount of interest paid on a bond. Thus, there is a risk/reward tradeoff investors must consider when ...
Feb 8, 2021 · While 78% of respondents indicated that a high impact event based on risks identified in the survey is likely to occur in 2021, 100% of them remarked that they are confident in the ability of the Canadian financial system to withstand them.
Mar 13, 2015 · These macro-financial risks — large-scale economic stresses and imbalances — can gestate for years before precipitating a crisis. Examples abound: the 2008 crisis was preceded by an 85% increase in real US home prices from 1997 to 2006 along with an unprecedented growth of mortgage credit.
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Nov 13, 2015 · We explore the determinants of equity price risk of nonfinancial corporations. Operating and asset characteristics are by far the most important determinants of risk. For the median firm, financial risk accounts for only 15% of observed stock price volatility.
