Market risk (financial instruments) — Accounting glossary

IFRS 7 identifies currency risk, interest-rate risk and other price risk as types of market risk. Assess the entity’s exposure, how management manages it and the applicable qualitative and quantitative disclosures. Market risk for a financial instrument is not necessarily identical to the finance concept of systematic risk used in a portfolio or CAPM. A risk can affect fair value, future cash flows or both.

Worked example

A company holds a floating-rate loan and faces higher interest payments if market rates rise. It assesses its interest-rate exposure and the disclosures required by IFRS 7.

Common mistake

Treating market risk as only equity-price risk, or automatically equating the IFRS 7 disclosure definition with portfolio systematic risk.

Where it appears in your exams

Qualification	Exam	Relationship	Period
ACCA	FR	Supporting	September 2026–June 2027
ACCA	SBR	Supporting	September 2026–June 2027