An item whose value or performance changes in reaction to financial risks or developments. These reflect possible future changes in one variable or more of the following (that are specified in a contract or transaction): an interest rate, foreign exchange rate, financial instrument price, commodity price, index of prices or rates, credit rating or credit index or other variables.

For example, a transaction in which the price of a certain publicly trading stock is specified would give rise to a financial risk. An item on financial statements or books of account that involves such an instrument would have its value affected by changes in this type of financial risk.