Market risk

Market risk arises when there is a possibility that the value of our financial assets may change due to changes in the price of a financial instrument or good in the market. This may involve changes in the prices of physical commodities (eg energy or precious metals), securities, foreign currency, or changes in interest rates. Market risk may otherwise arise from open or unprotected positions in the market or from an incomplete correlation between two instruments that are supposed to offset each other’s risk.