Module 1 : Introduction To Financial Risk Management
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Business risk in its broadest sense is defined as anything that will prevent the organization
from achieving its objectives. Its effect of uncertainty on objectives.
Every decision, activity and initiative that aims to create value carries a degree of risk.
Accordingly, risk management is about understanding the material risks faced by the
organization and ensuring they are appropriately managed in line with the board’s risk
appetite.
Financial risks are defined as any financial-related matters that will prevent the organization
from achieving its objectives. Financial risks are typically grouped into the following seven
categories:
 liquidity risk
 funding risk
 interest rate risk
 foreign exchange risk
 commodity price risk
 credit risk or counterparty risk
 associated operational risk.
Under International Financial Reporting Standard (IFRS) sustainability standard IFRS S1
General Requirements for Disclosure of Sustainability-related Financial Information, an
organization must disclose information about all sustainability-related risks and opportunities
that could reasonably be expected to affect its cash flows, access to finance or cost of capital
over the short, medium or long term.