Dynamic Financial Risk Management

For many years, financial markets have been part of people’s everyday life. Information on the major securities can be found easily in the daily press or on internet. The different actors of the economy look closely at some fundamental parameters, such as interest rates, currency rates, stock prices..., which may affect the management of their firms, especially after the deregulation process initiated in the United States in the 1970s. The accrued international dimension and efficiency of the communication means have extended this phenomenon to the entire world economy. Small investors savings and pensions are also exposed to the risks generated by variations in these factors. Financial institutions are aware of the importance of managing these risks. They offer different solutions, which will be presented below. For instance, the following product can help small investor to deal with variations of the stock markets: In 2005, bank XYZ offered the following product, which is a 5 years guaranteed capital fund: