Financial risk management is the process of identifying, assessing, and managing various types of financial risks that a company may face in its operations. Financial risks can arise from a variety of sources such as market fluctuations, credit risks, liquidity risks, interest rate risks, currency risks, and commodity price risks.
Effective financial risk management involves a systematic and proactive approach to identify and analyze potential risks and implementing strategies to mitigate or manage those risks. This may involve the use of financial instruments such as hedging or insurance, diversifying investments, or adjusting the company’s financial policies and procedures.
