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Market Risk and Market Risk Management: Objectives and Considerations
Understanding the nature of market risk
- Absolute return perspective
- Relative return perspective
Market arenas that contain market risk
- Interest rate
- Equity
- Currency
- Commodity
Risk/return evaluation in perspective
- Degree of return potential vs risk potential
- Probability overlay
- Judgment applied
Parties engaged in market risk-taking and/or management
- Objectives
- Market focus
- Time horizon
- Nature of Exposures
Considerations underpinning market risk
- Function of role
- Factors that govern the management
Market risk management
- Derivatives
- Leverage
- Hedging
- Methods for managing risk
Overview of the webinar
Traders, proprietary positioners, banks, investment banking firms, corporate treasurers, investors, portfolio managers and asset management firms are all subject to market risk. Market risk is the potential for an asset being reduced in value, the cost of funds rising or the potential for an investment or balance sheet to underperform its benchmark or target. Market risk is primarily associated as being present in the following areas: interest rates, security values, currency values and commodity values all of which have defined market prices. However, it can also exist with respect to the value of other assets such as real estate, art, antiques and jewelry to name a few.
Market risk management in macro terms with respect to those assets with defined market values is managing the risk/return associated with an asset which has the potential of experiencing price changes. Individuals commissioned to take market risk or manage market risk must take into consideration the management objective governing their responsibilities, the markets to which they are exposed, the method of market risk being taken, the expected time horizon for the subject market risk and the management principles that should guide their market risk management judgment. Market risk can take many forms given the market arena in which the market risk is present. Understanding the nature of the market risk and an acceptable risk/return relative to the potential degree of market risk is critical to the market risk management thought process.
Who should attend?
- Treasurers
- Portfolio managers
- Investors
- Traders
- Senior management of financial market business activities
- Risk managers with market risk oversight
- Compliance managers with compliance oversight
- Auditors
- University Risk Management Educators
- Regulator Staff
Why should you attend?
To fully understand market risk and the various contexts in which it exists as well as to examine market risk management practices.
Market risk is probably the most significant type of risk that banks, asset management firms and investors face, but all corporations are exposed to market risk to some degree which can be minor or significant. Market risk can be very complex in nature and be one of the most difficult types of risk to manage. This presentation provides for a thorough understanding of market risk in terms of its nature, its types and the thought process for addressing it. It also provides for a review of market risk in the context of the manner in which traders, proprietary positioners, treasurers, investors and investment mangers are exposed to market risk and how each must deal with it. It focuses on the management considerations of each of these parties and the market risk management thought process they must use to manage market risk relative to their roles and responsibilities. It offers a particularly detailed review of market risk considerations in the context of investments. It further addresses market risk in terms of derivative usage, hedging and the general management of market risk as well as a detailed examination of leverage.
Faculty - Mr.Robert Geary
Robert Geary is the founder of Greenwich Risk Management Advisory Services, LLC, and serves as the principal consultant on many of the firm’s consultancy mandates. He has been a banking and finance industry professional for 41 years and has spent 34 years with JP Morgan Chase & Co in various roles pertaining to senior treasury, financial market, asset management and risk management.
Earlier in his career, Mr. Geary managed Chase Manhattan Bank’s Euro and other offshore funding activities and was the bank’s first Asia/Pacific area treasury and financial markets executive located in Hong Kong. There for five years, he had overall functional management responsibility for the treasury, currency trading/sales activities and securities portfolios of Chase’s branches in nine countries in the region that included the major centers of Japan, Hong Kong and Singapore.
He has served on the board of directors of Chase Manhattan Overseas Banking Corporation as well as on numerous senior committees that included Chase’s Portfolio and Investment Strategy Committee, Tax Committee, International Asset/Liability Management Committee, Chase Investment Policy Committee, and Capital Markets & FX Risk Management Committee. Prior to joining Chase, he held positions at Chemical Bank, Chrysler Financial Corporation and National Bank of North America. Mr. Geary holds a BA degree in economics from Pace University and did graduate studies in finance at New York University Graduate School of Business. He is also currently a member of the Executive Advisory Board of St. John’s University Department of Accounting and Taxation.