Enterprise risk management The process of enterprise risk management relies on a variety of activities and instruments characterized by specific and often confusing meanings. To ensure that the meaning of these terms are clear in your mind, match the terms relating to the basic terminology and concepts associated with the process of enterprise risk management on the left with the descriptions of the terms on the right Read all descriptions first and then make the best match between each description and term. Type the letter of the description in the Answer column next to the correct term. Note: These are not necessarily complete definitions, but there is only one possible answer for each term.) Description Term Answer Derivative A. A financial, risk-reduction transaction, this is designed to provide greater protection against price movements in one direction (for example increases) than against price movements in the other direction (for example, decreases, or vice versa Enterprise risk management B. This security's value is determined by the yield or market price of another security or asset Hedge C. This nonstandardized financial contract allows a business or individual to purchase or sell an asset today at a price agreed on today but with the physical delivery of the asset occurring at some agreed-on date in the future D. This is a standardized contract to buy or sell a specific asset Swap of a standardized quantity and quality, at a price that is agreed on today but for delivery at a specified future date, that is traded in on an exchange and marked-to-market daily Futures contract E. This phenomenon occurs when the gain or loss on a hedged transaction exactly offsets the loss or gain on the unhedged position Perfect hedge F. These are the methods and process by which organizations manage risks and capitalize on opportunities to achieve their objectives Natural hedge G. In this transaction, a business or individual invests in two different assets or cash flow-generating activities, and the cash flows produced by the assets are mirror images of one another. As a result of this transaction, the risk associated with one asset can be reduced or exactly offset by the second asset