Risk Management in Capital Markets

Risk management in capital markets involves identifying, assessing, and mitigating potential financial losses that can arise from market fluctuations, credit issues, or operational failures. By using various strategies—such as diversification, hedging, and setting limits—investors and financial institutions aim to protect their investments and ensure stability. Effective risk management helps enhance decision-making and can safeguard against significant downturns, enabling investors to pursue their financial goals while maintaining a balanced approach to potential risks in the ever-changing market environment.