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Finance & Banking vocabulary · Risk Management

Market risk

Meaning in finance & banking, with examples

nounCommon term

In finance & banking, market risk means: The risk of losses caused by changes in market prices, such as interest rates, exchange rates, share prices and commodity prices.

In Turkish: piyasa riski

How it is used

One of the main risk types in banking, next to credit risk and operational risk. Market risk teams measure it with tools such as Value at Risk (VaR) and stress scenarios, and regulators require capital for it.

Example sentences

  1. Market risk increased after the bank bought more long-term bonds.

  2. The market risk team reports daily VaR figures to the treasury.

Common collocations

  • market risk limit
  • measure market risk
  • market risk capital
  • market risk team
  • credit riskThe risk that a borrower or another party will not pay back money it owes on time or in full, causing a loss for the lender.
  • operational riskThe risk of loss from failed internal processes, human error, system breakdowns or outside events such as fraud, cyberattacks or natural disasters.
  • hedgeTo reduce the risk of losing money from changes in prices, interest rates or exchange rates, usually by taking an opposite position with derivatives.
  • exposureThe amount of money a bank could lose to a particular borrower, sector, country or market if things go wrong.

More terms: Risk Management

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This page explains English vocabulary for learners. It is not financial advice.