Published Paper Details:

The goal of risk management is to manage risk, which involves picking the risks that the business is most at ease with and reducing the ones that it does not want. Financial derivatives were helpful in achieving risk management goals. Risks from conventional instruments may be effectively unbundled and controlled separately by using derivatives. Derivatives may save expenses and boost profits when used properly. Financial derivatives can be used to speculate by taking positions in anticipation of market movement or to hedge against undesirable risk. Organizations may now deliberately seek out certain risks and bet on the direction of interest-rate or exchange-rate fluctuations using financial derivatives, or they can use derivatives to protect themselves against unwelcome risk. Derivatives trading help improve market liquidity, raiseskills and knowledge among market players, and are vital ingredient of market reforms such as thetransition to rolling settlement. Derivatives trading include Futures contract, Option Contract, IndexFutures,IndexOptions,CommodityDerivatives,andSwaps.Whenusingfinancialderivatives,however, organizations should be careful to use only those instruments that they understand and that fitbest with their corporate risk management philosophy. The main objective of this paper is to study theimportance of derivative in risk management of the business.