Risk management in financial markets; Risk separation: A case study

Financial risk means that regarding to the price elasticity, changes in assets and debit values of the firms and the investors. In recent past, the companies who can not manage the financial risk ( Enron, Demirbank, Worldcom, Barings etc.) failed financially. Risk management which includes currency rate risks, and the risks that results from the price changes in goods, developed recenty, and applied by non-profit organizations. Because of all those reasons, the techniques of risk management have a wide practicing area. Currency rate, interest rate and changes in prices are not only risky for profitable organizations, also public institutions and non-profit organizations. The aim of this study is that, defining two main components of risk, exhibiting differences between them and specifying the importance of risk decomposition. In this respect, performing risk decomposition is a must for individual investors and the companies who wants to maintain sustainable financial success. In this context, this study has three parts. In the first part, risk concept, types of risks and risk management are examined. In the second part, concept of value at risk, its content and value at risk calculation are studied. In the third part, this study is completed with a practicing example. Keywords: Risk, Risk Management,Value at Risk, Financial Risk, Risk Separation