Enterprise Risk Management: Derivatives and Risk Management In business, management involves identifying events that could have adverse financial consequences and then taking actions to prevent and/or minimize the damage caused by those events. are securities amounts to betting on future events and their impact on particular securities, while hedging involves transactions to lower risk. interest rate futures. Futures contracts are divided into two classes. futures are contracts that are used to hedge against price changes for input materials. futures are contracts that are used to hedge against fluctuating interest rates, stock prices, and exchange rates