Risk management (or Enterprise Risk Management -ERM)

The processes by which the board and management of an institution manages its various sources of risk i.e. the identification, evaluation of alternative regulatory and non-regulatory risks and acceptance or offsetting of the risks threatening the profitability or existence of an organization. The selection process necessarily requires the consideration of legal, economic and social factors. With respect to foreign exchange risks involves among others consideration of market, sovereign, country, transfer, delivery, credit, and counterparty risk. The processes include internal controls and procedures, tools to reduce or mitigate risks and the policies a company adopt to reduce potential risk exposures.