Managing market risk step by step

Banks are exposed to rising levels and complexity of risks. As banks grapple with implementing an effective risk management framework we take this opportunity to demystify market risk management compliance in line with the RBI guidelines.
Bank of International Settlements (BIS) defines market risk as the risk that the value of ‘on’ or ‘off’ balance sheet positions will be adversely affected by movements in equity and interest rate markets, currency exchange rates and commodity prices. However, just knowing what constitutes market risk is of little value unless we are able to appropriately quantify it and maintain adequate capital provisions for it.