Financial Risk Management Checklist

IDENTIFICATION OF RISKS

Market Risk

• Assess exposure to market fluctuations.

• Identify potential impacts on investment portfolios.

• Evaluate sensitivity to interest rate changes.

Credit Risk

• Review creditworthiness of counterparties.

• Monitor changes in credit ratings.

• Establish credit limits for clients and partners.

Liquidity Risk

• Analyze cash flow projections.

• Evaluate the availability of liquid assets.

• Establish contingency plans for liquidity shortages.

Operational Risk

• Identify key operational processes.

• Assess vulnerabilities in systems and procedures.

• Implement measures to mitigate operational disruptions.

RISK ASSESSMENT

• Evaluate the potential impact of identified risks.

• Analyze the likelihood of occurrence for each risk.

• Assign risk severity levels based on impact and probability.

RISK MITIGATION STRATEGIES

Market Risk Mitigation

• Diversify investment portfolios.

• Implement hedging strategies.

• Regularly review and adjust risk exposure.

Credit Risk Mitigation

• Establish a robust credit risk management framework.

• Utilize credit derivatives for risk transfer.

• Monitor and enforce credit limits.

Liquidity Risk Mitigation

• Maintain adequate cash reserves.

• Establish credit facilities for liquidity needs.

• Develop emergency funding plans.

Operational Risk Mitigation

• Implement robust internal controls.

• Conduct regular staff training on risk awareness.

• Establish contingency plans for operational disruptions.

COMPLIANCE AND REGULATORY REQUIREMENTS

• Ensure adherence to relevant financial regulations.

• Regularly update policies to reflect changes in compliance standards.

• Conduct internal audits to verify compliance with regulatory requirements.

MONITORING AND REPORTING

• Establish a regular reporting schedule for financial risk monitoring.

• Implement key risk indicators (KRIs) for early detection of potential issues.

• Communicate risk status and mitigation efforts to stakeholders.

CONTINGENCY PLANNING

• Develop comprehensive contingency plans for each identified risk.

• Conduct scenario analysis to prepare for adverse events.

• Test and update contingency plans regularly.

COMMUNICATION AND DOCUMENTATION

• Clearly communicate financial risk management policies to relevant stakeholders.

• Maintain detailed documentation of risk management processes.

• Ensure transparency and accessibility of documentation for audits.