Business Finance,Financial Risk & Risk Management

It is more than clear that the operating activities of modem businesses can be separated with financial markets. Under the effects of financial markets, business enterprises expan.d tlieir financial activities. from internal to external. This movement can also be called financialization of business financial management. It arouses a new topicof business finance and its risk in financial activities. In the past, financial risk study focused only on macro financial risks and financial risks of financial institutions, and ignored the problems of general enterprises?financial risks. According to the movement of prices of three basic financial factors in financial markets, which are currency, currency capital and security, this article defines three basic financial risks as foreign exchange risk, interest rate risk and security price risk, and analyses their concrete forms from the angle of business enterprises. The article also discusses the management for these risks based on the diversification principle of Modem Portfolio Theory and the practical operation of four biisic hedging instruments: forwards, futures, options and swaps. In last, connecting to the situation of our country risk management, the article bring up its own constructive opinion to this issue.