INMA S1.4.6 Valuation risk
(1) Valuation risk is the risk of loss resulting from an asset being overvalued and, when it matures or is sold, being worth less than was expected. Factors contributing to valuation risk include incomplete data, market instability, uncertainties in financial modelling and poor data analysis by the people responsible for determining the value of the asset.
(2) If an INMA firm is likely to be exposed to valuation risk, its risk management policy should include processes and procedures for identifying, assessing, managing and mitigating that risk.
|Derived from QFCRA RM/2014-4 (as from 1st January 2015).|