Learn about some of the different types of financial risk management solutions, including hedging and insuring. Additionally, learn about the financial market risks you can hedge.
- Companies are up against financial market risks…driven by global factors like central banks,…OPEC, and the weather.…Understandably, companies want to insulate themselves…from these risks, and they use global financial market…instruments to do it.…Being aware of these risks,…and potential risk management solutions…could save your company from a lot of financial pain.…Pain that could put a company out of business.…This happened to a number of small oil producers…when the price of crude oil fell sharply in 2015 and 2016.…
Companies that didn't hedge their downside oil price risks…at a high enough oil price to keep their businesses afloat…went bankrupt or were pushed to the edge of bankruptcy.…In this video we'll look at solutions…that corporations use to manage…their financial market risks,…and to avoid the pain train that big swings,…and commodity prices, currency rates,…and interest rates can bring.…Corporations manage risks that they don't want to own…by hedging them.…Hedging is a specific way…companies reduce financial market risks…
Jason Schenker of Prestige Economics discusses nine types of corporate risk, including financial and nonfinancial risks. He explains the difference between direct risks that companies face constantly, as well as indirect risks that usually come from vendors, competitors, and counterparties. Then he covers how risks are typically resolved, either by elimination (divestiture or acquisition), transfer (hedging or insuring), offset (creating a natural hedge), or ownership (keeping the exposure). Finally, he reviews how corporations can actively measure and monitor risk by appointing dedicated risk managers, officers, and committees.
- Understanding risk in corporations
- Risk management process
- Nine different types of corporate risks
- Financial market risks
- Direct and indirect risks
- Risk management solutions
- How corporations actively manage risk