4 What is Risk? เข้าใจความเสี่ยง In Personal Life: Unexpected CostsHow bad, within reason, might this problem get?In Corporate: Unexpected Loss“We are willing to countenance a 1 percent chance of a $50 million loss from our trading desks on any given day”
5 Risk Management Process Identify Risk Process- Find InstrumentMeasure and Estimate Risk ExposuresAssess Effects of ExposureFrom a Risk Mitigation Strategy A, T, M, KEvaluate Performance
18 Credit Risk Credit risk is the ….risk that a change in the credit quality of a counterparty will affect the value of a security or a port folio ….orThe risk of economic loss from the failure of an obligor to perform according to the terms and conditions of a contract or agreement
19 Liquidity RiskFunding Liquidity Risk relates to a firm’s ability to raise the cash to roll over its debt: to meet the cash , margin, and collateral requirements of counterparties.Asset Liquidity Risk is the reisk that an institution will not be able to execute a transaction at the prevailing market price.
20 Operational Risk Loses results from Inadequate system – Accounting RiskManagement failureFaulty controlsFraudLegal RiskReputation riskHuman Error
21 Legal and Regulatory Risk Change in tax or regulatoryLoss due to legal expense
22 Business Risk Change in Demand change in prices market change competion
23 Strategic RiskStrategic risk refers to the risk of significant investments for which there is a high uncertainty about success and profitablility.