Market Risk

Market Risk is the potential for financial loss due to fluctuations in the market value of assets or investments. It arises from changes in factors such as stock prices, interest rates, currency exchange rates, and commodity prices. Market risk is typically divided into two main categories: systematic risk, which affects the entire market (e.g., economic downturns), and unsystematic risk, which is specific to individual assets or sectors (e.g., company news). Effective management of market risk involves strategies like diversification, hedging, and the use of financial instruments to minimize exposure to adverse market movements.

Basel scope:

Pillar 1
Pillar 2

Capital requirements:

Mitigated by Capital