In the context of increasing volatility of world financial and merchandise markets companies shall not disregard the problem of risk management. Every company should employ a risk manager.
Risk takes on enormous importance in decision-making in competitive conditions so wrong decisions are manifested in financial losses. Hedging is a wish to avoid or minimize possible loss from onerous price development for goods, foreign currency and financial instruments through precisely the opposite position on the stock exchange. In other words, one of hedging goals is minimizing of uncertainty and risks.
Use of derivatives market for risk management is steadily growing as most of business partners have realized that they are subject to financial risks.
Farmers are exposed to a risk of price fall for a new output yield. Processers are exposed to a risk of purchase price rise. Exporters and importers are subject to risk of fluctuations of currency exchange rate. Creditors and borrowers are at risk of interest rate change. Securities portfolio proprietors are exposed to risk of fluctuations of stock pricing and obligations rate. Awareness of businesses of their financial risks vulnerability led to development of risk management strategies by futures and options.