Effective risk control and consistent management of market risks in a bank

Market risk is defined as the risk that the value of a portfolio will decrease due to the change in the value of market risk factors. As with other forms of risk, the potential loss amount due to market risk may be measured in a number of ways or conventions.

Measuring the potential loss amount

In FlexFinance, all market risk factors (risks incurred by exchange rates, interest rates, share prices, prices of options, commodity prices) are covered in line with standard procedure.
 
Internal models based on value at risk (VaR) are also supported. The FlexFinance Value at Risk calculation is fully integrated into the static analysis for market risk. The user can combine static "what-if" scenarios with a VaR calculation to ensure a comprehensive view of potential future risks.

The FlexFinance splitting concept for hybrid products, in compliance with regulatory standards, allows all innovative financial instruments to be mapped accurately, including the valuation of products with complex interest rate agreements, as are inherent to corridors, snowballs, ratchets and digitals.

FlexFinance provides a consistent overview of all market risks, ensures effective risk control in compliance with legal requirements and develops potentials for market risk minimisation.