Financial Derivatives Risk And Its Management

As certain of financial investment methods, Financial Derivatives takes amore & more important role within the globalization market. Developed macro-Economic factors enlarged money market risks which will trigger FDs demands and expand money supply. According to FDs' characters, we mustdesign and develop effective & flexible risk mgmt module to satisfy different monetary investment channels.The paper is composed of five chapters. Part one is a discussion of Financial Derivatives' definition, function & potential risk. It depicts FDs' functions in risk hedging and speculation whist analyses its potential risk, micro-objective factors & macro-environment. Part two talks over majority effect caused by Chinese Economics Balance System & International Hot Money. In order to demonstrate FD is more useful than harmful to financial market development cause, Part three compares FDs' utilities & risks within matured system operation & mgmt mechanism. Along with introduction to its status & advanced development, Part four researches FDs' mgmt module & upcoming condition in an all-around way. It concludes a solution in Part five.The paper develops the research in discriminated materialism, on the base of fundamental of international economics and financing. It focuses on the derivative functions & effectiveness, analyzes the relative ties between monetary risks & their causation. Finally, on the base of the research & demonstration, It results in ideology how to apply utilities of financial derivatives rationally, develop risks mgmt mechanism, enhance financial market system in China.