Derivatives’ Risks and Risk Management: Part 1—Risks Relating to Derivative Instruments
Author: Matthew Kluchenek, J.D., LL.M..
Source: Volume 23, Number 04, March/April 2010 , pp.19-35(17)
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Abstract:
Derivatives, like all types of financial products, inherently encapsulate some elements of risk, and it is incumbent on financial institutions to understand the nature of those risks—and to do what is possible to minimize the potential downside. Part 1 of this two-part article identifies and discusses several major risks that grow out of or relate to derivatives’ instruments, as distinct from the organizational risks that also may arise, and suggests what firms can do to mitigate these “instrumental” risks.Keywords:
Affiliations:
1: Henderson & Lyman.