Risk Management: Introduction

Most treasurers would consider that their primary role in the organizations they work for is the management of financial risk. This financial risk, as far as it affects the corporate treasurer, can be defined as the extent to which an organization may incur losses as a result of: ■ An adverse movement in prices or rates in certain financial market, such as foreign exchange rates, interest rates or commodity prices.■ An adverse change in financial markets. For example, the appetite of lenders in certain debt markets may change so that the company is no longer able to raise finance in its preferred market, or the cost of its finance increases substantially.