Market Risk

Market risk is the result of losses in case of negative changes in financial market interest rates, currency exchange rates, changes in the prices of securities. 
Market risks in the banking sector include the following risks:
Interest rate risk: The risk arising from negative changes in interest rates in the financial sector. The reasons for can be caused by factors such as: the rise of interest rate risk, interest rate fluctuations, mismatch in terms of distribution interest rates on asset-liability, changes in the interest rate margin.
Currency risk: the risk of loss as a result of negative changes in foreign currency exchange rates in the structure of the bank's foreign currency balance and off-balance sheet value of the valuables. As the most important factors affecting exchange rates is the bank's asset-liability mismatch in the structure of foreign currency, a material adverse change in the financial sector.
Equity risk: risk arising from the deterioration of the quality of the securities portfolio. It is used for the purposes of speculative risk capital in the securities market impact of derivative instruments.
As a result of the failure to manage these risks, the bank may face with serious financial losses. The banks has to control market risk and use different methods for mitigating and minimization. 
"Ziraat Bank Azerbaijan" OJSC in the process of market risk management, being adapted to suit the changes in the financial market, is taking adequate measures to minimize these risks. The bank doing analyses the interest rates, currency exchange rate fluctuations by conducting sensitivity analysis, appropriate measures to prevent the impairment losses. In order to avoid the risks of equity securities portfolio, implementation of appropriate interest rate policy, robust management, foreign exchange risk management the bank is using hedging tools.