Risk Management
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Terms in Risk Management
Accepting Risk
Accepting risk occurs when a business acknowledges that the potential loss from a risk is not great enough to warrant spending money to avoid it.Ā read more
Audit Risk
Audit risk is the risk that financial statements are materially incorrect, even though the audit opinion states that there no material misstatements.Ā read more
Beta Risk
Beta risk is the probability that a false null hypothesis will be accepted by a statistical test.Ā read more
Capital Risk
Capital risk is the potential of loss of part or all of an investment. Discover more about the term "Capital Risk" here.Ā read more
Certainty Equivalent
The certainty equivalent is a guaranteed return that someone would accept, rather than taking a chance on a higher, but uncertain, return.Ā read more
Collar Agreement
A collar agreement is a series of financial transactions aimed at locking key variables within a range of outcomes, hence, a collar. Ā read more
Correction
A correction is a drop of at least 10% in the price of a stock, bond, commodity, or index.Ā read more
Counterparty Risk
Counterparty risk is the likelihood or probability that one of those involved in a transaction might default on its contractual obligation.Ā read more
Credit Risk Certification
Credit risk certification is a professional certification awarded by the Risk Management Association (RMA).Ā read more
Credit Derivative
A credit derivative is a financial asset in the form of a privately held bilateral contract between parties in a creditor/debtor relationship.Ā read more