An entity’s exposure to adverse variations in costs and/ or returns as a result of “unfavorable” changes in market rates/ prices. This type of risk arises from movements in stock prices, interest rates, exchange rates, commodity prices, and other relevant variables/ fundamentals. Absolute market risk, also known as systematic risk, is beyond the control of businesses
The main types of market risk include equity price risk, interest rate risk, commodity price risk, and foreign exchange risk (currency risk).
It is also known as market risk.
