Financial risk

Swedbank offers customers various kinds of qualified financial services and products in several markets. Financial risks arise as a natural consequence of these operations. This means that Swedbank’s earnings and cash flows can be affected by fluctuations in exchange rates, interest rates, equity prices and the liquidity situation. Consequently, managing (that is, identifying, measuring, analyzing and monitoring) these risks is an important part of Swedbank’s operations. Swedbank maintains a low risk profile with respect to financial risks.

Financial risks are divided into two main classes: market risk and liquidity risk.Market risk refers to the risk that changes in interest rates, exchange rates and equity prices will lead to a decline in the value of Swedbank’s net assets and liabilities, including derivatives. Liquidity risk refers to the risk that Swedbank cannot fulfil its payment commitments on any given due date, without significantly raising the cost to fund payments.