Risk management for derivatives
frances.cowell@morleyfm.comFor conjuring fear, few aspects of investments rival derivatives. This is not surprising given the history of august institutions humbled or even demolished as a result of poor risk management of their derivatives exposures. While some types of derivatives strategies certainly demand a very specific approach to risk management, it cannot be said that derivatives defy risk management.
This paper
—describes how derivatives are used in portfolio management;
—explains how to measure the effective economic value of the investment achieved by a derivative transaction and the role of collateral;
—discusses the different types of risk associated with derivatives, the interaction between derivatives and conventional instruments and, from this,
—addresses the question of how derivatives risk can be measured, managed and, where necessary, controlled.
Read this report
Labels: credit derivatives, derivatives, regulation, risk management, trading
posted by Victor Lloyd Smith @ 12:01 PM
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