Financial Risk Management
Overview
Financial risk management makes threats to value and survival visible and manageable. It is not about eliminating all risk — it is about conscious risk-taking.
When to Use
- Enterprise or financial risk assessments
- Liquidity and market risk policy
- Board risk reporting
- Pre-mortem on major financial commitments
Core Categories
- Market risk (rates, FX, prices)
- Credit risk (customers, counterparties)
- Liquidity risk
- Operational risk in finance processes
Principles
- Measure before you manage
- Mitigations should match the size of the risk
- Concentration is a recurring hidden risk
- Risk culture matters more than risk paperwork
Verification
- Top financial risks are identified and owned
- Material risks have metrics or indicators
- Mitigation and appetite are explicit