Estimate Market Risk with KPIs Packed in Excel Spreadsheet

Market Risk measurement KPI - Balanced Scorecard metrics template example In trading and investing Financial Institutions are active participants in the market, seeking to realize returns through careful management of their positions and inventories.

Market Risk is the risk that changes in financial market prices and rates will reduce the value of the bank's position. It is comprised of interest rate risk, foreign currency risk, equity risk, and liquidity risk.

The ability to recognize Market Risk in a timely manner allows mitigation of risks caused by the market conditions. This BSC is an effective tool to address the underlying factors in trading and investment activities covering market risk for Financial Institutions.

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What are the benefits of Market Risk metric:

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Market risk reflects the likelihood of the value of an investment getting diluted due to the dynamicity of market factors. Types of market risks that are generally recognized are- Equity Risk (possibility of equity prices getting fluctuating), Currency risk (probability of foreign exchange rates undergoing changes), Commodity Risk (likelihood of commodity prices showing change) and Interest Rate Risk (interest rates getting changed).

One needs to monitor the way an organization proceeds in the issue of 'market risks'. This demands a 'measurable' and 'quantitative' approach to be adopted. One of such methodologies is BSC (Balanced Scorecard) that rests on framing of KPIs (Key Performance Indicators) under suitable number of categories.

Such an act is required to devise a potent strategy for effective monitoring of the factors that have a bearing on 'risk prospects'. Once this tool is incorporated into the organizational culture, 'tracking and correction' of problems gets much simplified and fast.

However, to come up with useful metrics and indicators to take forward this 'calculative' act, one has to give a detailed-enough look to the surroundings. After this is done, values can be attached to these to be used for future reference.

More useful information for Risk Evaluation

Market Risk Evaluation Balanced Scorecard Screenshots

The Balanced Scorecard (BSC) dashboard indicates performance within each perspective and the total performance of .

This is the actual scorecard with Market Risk Performance Indicators and performance indicators.

Metrics for Risk Evaluation

This is the actual scorecard with Market Risk Performance Indicators and performance indicators. The performance indicators include: interest rate risk metrics, duration gap model, currency risk exposure, trading portfolio risk metrics, portfolio value adjustments associated with credit ratings, contractual obligations, liquidity metrics, surplus liquid position, net deposit drains.

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Free Example Template(s)

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