Market risk management

Abstract

In the ever-evolving global financial and commercial landscape, market risk has emerged as a central concern for businesses, investors, and regulatory bodies alike. Market risk, also known as systematic risk, refers to the potential for financial loss due to movements in market variables such as interest rates, currency exchange rates, commodity prices, and equity prices. Unlike firm-specific risks, market risk affects a broad range of assets and cannot be mitigated through diversification alone. With increasing globalization and the interconnection of financial markets, businesses face heightened exposure to market volatility, making effective market risk management a strategic necessity.