According to Jon Gregory, author of ‘’Counterparty Credit Risk’’, Market Risk ‘’[..] arises from the (short-term) movement of market prices. It can be a linear risk, arising from an exposure to the direction of movement of underlying variables such as stock prices, interest rates, foreign exchange rates, commodity prices or credit spreads. Alternatively, it may be a non-linear risk arising from the exposure to market volatility as might arise in a hedged position.’’ (Gregory, 2011) This first subcategory is particularly interesting to someone looking to research financial risks management, for the simple reason that it one of the widest subcategories – for examples, some people differentiate among Interest rate risk, Equity risk, Commodity The third category of risks is broadly named as ‘’Operational Risks’’; the name derives from the fact that this kind of risk is intrinsic in the company since it derives from ‘’the firm’s internal deficiencies, or through the breakdown of its systems.’’ The types of risk comprising this category are Fraud risk (both internal and external), Model risk, People risk and Legal risk – as evident by the subcategories, they are all related both to the internal systems of an organization, as well as the environment it operates into. This is relevant because, while all types of Financial risk are more-or-less interacting with the external environment, the subcategories that make up Operational risk are among the ones that literally ‘’sit on the line’’ between internal and external environments (a line often blurred in this case), and thus often require specific attention on part of the financial risk manager of an organization, coupled with the expertise of experts of other
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