The process of evaluating and managing
current and possible financial risk
at a firm as a method of decreasing the firm's exposure
to the risk. Financial risk managers
must identify the risk, evaluate
all possible remedies, and then implement
necessary to alleviate the risk. These risks
are typically remedied by using certain financial instruments as a method of counteracting possible ramifications. Financial risk management cannot prevent a firm from all possible risks because some are unexpected and cannot be addressed quickly enough.