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CIMA F3 · Strategic Level

C. Financial risks

Learn to identify, analyse and manage financial risks including interest rate, currency, and credit risks using natural hedging strategies and financial derivatives. This section equips you with practical techniques to mitigate exposure to market volatility at the CIMA Strategic Level.

  • 40 lessons
  • 4 modules
  • 5.5h of video
  • ~20% of the exam
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What you'll learn

By the end of C. Financial risks.

  • Identify and classify different types of financial risk including interest rate risk, currency risk, credit risk, and liquidity risk
  • Explain the impact of foreign exchange rate movements on international business transactions and cash flows
  • Apply forward contracts, money market hedges, and currency options to manage currency exposure
  • Analyse the use of Forward Rate Agreements (FRAs) and interest rate futures to hedge interest rate risk
  • Evaluate the effectiveness of natural hedging strategies versus derivative-based hedging approaches
  • Assess the appropriateness of different hedging instruments in various business scenarios

The lessons

40 lessons, module by module.

Financial risk

7 lessons
  1. 1 Financial risk - introduction 4m
  2. 2 Types of financial risk - part 1 5m
  3. 3 Types of financial risk - part 2 7m
  4. 4 Types of financial risk - part 3 4m
  5. 5 Quantifying financial risk - part 1 8m
  6. 6 Quantifying financial risk - part 2 7m
  7. 7 Quantifying financial risk - part 3 9m

Currency risk - Exchange rates

8 lessons
  1. 1 Currency risk - introduction 4m
  2. 2 Currency terminology - part 1 10m
  3. 3 Currency terminology - part 2 8m
  4. 4 Factors affecting foreign exchange rates - part 1 9m
  5. 5 Factors affecting foreign exchange rates - part 2 5m
  6. 6 Fisher effect 9m
  7. 7 Practical steps to manage foreign exchange risk - part 1 8m
  8. 8 Practical steps to manage foreign exchange risk - part 2 9m

Managing currency risk

14 lessons
  1. 1 Managing currency risk (hedging) - introduction 7m
  2. 2 Forward contracts - part 1 13m
  3. 3 Forward contracts - part 2 5m
  4. 4 Money market hedges - part 1 4m
  5. 5 Money market hedges - part 2 11m
  6. 6 Money market hedges - part 3 11m
  7. 7 Futures contracts - part 1 6m
  8. 8 Futures contracts - part 2 15m
  9. 9 Currency options - part 1 8m
  10. 10 Currency options - part 2 9m
  11. 11 Exchange traded currency options - part 1 8m
  12. 12 Exchange traded currency options - part 2 11m
  13. 13 Currency swaps - part 1 13m
  14. 14 Currency swaps - part 2 10m

Managing interest rate risk

11 lessons
  1. 1 Managing interest rate risk (hedging) - introduction 7m
  2. 2 Forward rate agreements (FRAs) - part 1 7m
  3. 3 Forward rate agreements (FRAs) - part 2 9m
  4. 4 Interest rate futures (IFRs) - part 1 7m
  5. 5 Interest rate futures (IFRs) - part 2 13m
  6. 6 Exchange traded options - part 1 7m
  7. 7 Exchange traded options - part 2 11m
  8. 8 OTC interest rate options - part 1 7m
  9. 9 OTC interest rate options - part 2 9m
  10. 10 Interest rate swaps - part 1 4m
  11. 11 Interest rate swaps - part 2 14m

Questions

About C. Financial risks.

What does the Financial Risks section cover?

This section covers the identification, analysis, and management of key financial risks including interest rate risk, currency risk, credit risk, and liquidity risk. You will learn to apply hedging strategies using both natural hedging approaches and financial derivatives such as forward contracts, FRAs, and interest rate futures to mitigate exposure to market volatility.

Is this section important for the F3 exam?

Yes, financial risk management is a core component of the CIMA F3 Strategic Level syllabus and features significantly in the objective test. Understanding currency risk, interest rate risk, and hedging techniques is essential for passing the F3 exam and is directly tested through scenario-based questions.

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