Risk Sensitivity

Risk Sensitivity, also referred to as Greek, is the measure of a financial instrument’s value reaction to changes in underlying factors. The value of a financial instrument is impacted by many factors, such as interest rate, stock price, implied volatility, time, etc. Sensitivities are risk measures that are more important than fair values. Greeks are vital for risk management. They can help financial market participants isolating risk, hedging risk and explaining profit & loss.