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Advanced Vocabulary
Managing Financial Risk
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In financial risk management, companies employ various strategies to minimise potential losses. One common approach is ________, where businesses invest in a variety of assets to reduce exposure to any single risk. Another strategy is ________, which involves using financial instruments like options and futures to limit losses from adverse market movements. Companies must also manage their exposure to ________, which is the risk that borrowers will fail to repay loans. During times of economic uncertainty, market ________ can increase, making it crucial for businesses to stay agile.
To ensure the ability to meet short-term obligations, maintaining ________ is critical. Furthermore, businesses must always adhere to government regulations and industry standards to remain in ________ with the law. Some companies use financial products such as ________ to hedge against unpredictable risks. Additionally, ensuring ________ in financial reporting can boost investor confidence and improve risk management.
