Financial Derivatives And Risk Management

The financial derivatives is the inevitable outcome of the high speed development of economy, as the lubricant of economic globalization and financial integration, it assuredly promotes the development of economic entity and the financial market, and make credit market, real estate market and derivatives markets formed into interdependence and mutual promoting risk chain. Financial derivatives have become an important component indispensable to the international financial market. On the premise that economic development is rapid and the real estate market is running well, the financial derivatives really brings considerable income for investors. But, like the " double-edged sword ", the financial derivatives inject vigor in the economic development, but also brings great negative effect. Since the 1990s, huge losses incident occurs more than once because of the international financial derivatives, especially the America's mortgage crisis in 2007 which caused the global financial crisis.Although the high risk of the financial derivatives, it's not to be sneezed at the strong promotion to the economic development. Against the background of the global economy integration and financial market internationalization, the development of financial derivatives markets is still the inevitable choice of economic development in China, and how to scientifically and rationally using of financial derivatives, preventing the risk of financial derivatives is the priority in the development of financial derivatives markets. In view of this, the financial derivatives and risk management are studied in this paper in order to provide guidance for the future development of financial derivatives markets.The article consists of the following parts:the first chapter for introduction, mainly introduces the background and significance and the research status at home and abroad, and introduces the research frame. Chapter 2 is the basic theory of financial derivatives, and it mainly includes the connotation, types and characteristic of the financial derivatives and the positive and negative effects using financial derivatives, and analyzes the development course and prospects of the financial innovational products. The third part is theoretical basis of the risk using financial derivatives, it's about risk types and characteristics, analysis of risk reasons and to gain better understanding of the process and influence of financial derivatives with actual case, and derive inspiration from it. The fourth part introduces several common risk measurement model, and carries on the comparative analysis. The fifth part put forward some suggestions of risk management from three angles including accounting treatment, internal controls and external supervision based on the analysis the status of risk management of financial derivatives. Finally, this paper summarizes the contents and encourage active development of financial derivatives markets in china.