Market Risk is the risk that the value of an investment will decrease due to moves in market factors. There are four standard market risk factors;

• Equity Risk -The probability that stock prices will change.
• Interest Rate Risk -The probability that interest rates will change.
• Currency Risk -The probability that foreign exchange rates will change.
• Commodity Risk -The probability that commodity prices (i.e. grains, metals, etc.) will change.

Even more specific types of market risk include;

• ALM Risk (Asset Liability Management Risk) -The probability that fluctuations of prices have different impacts on the values of assets and liabilities. For further details, see Liquidity Risk.
• Basis Risk - The probability that yields on instruments of varying credit quality, liquidity and maturity do not move together.
• Reinvestment Risk - The probability that interest or dividends earned from an investment may not be able to be reinvested in such a way that they can earn as much as the same rate of return as the invested funds that generated them.

Credience offers Training, Consulting and Software products that cover Market Risk. In particular is the Credience Market Risk Engine (C-MRE™).

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