Korkoriskeihin

Korkoriskeihin is a Finnish term used in finance to describe the group of risks that arise from fluctuations in interest rates and the corresponding measures to manage those risks. It encompasses the potential impact on asset values, liability costs, cash flows, and profitability caused by movements in reference rates such as interbank or benchmark rates. The concept is commonly applied in banking, pension fund management, and corporate finance to define both exposure to interest rate changes and the strategies used to mitigate it.

The term is formed from korko (interest rate) and riski (risk) with the illative plural suffix -iin, indicating “to high interest rate risks” or the domain of those risks. In Finnish risk-management literature korkoriskeihin appears in discussions about hedging, measurement, and governance of interest rate risk, often in relation to regulatory requirements and internal control frameworks. It is frequently paired with broader risk categories such as market risk and liquidity risk.

Management practices for korkoriskeihin include hedging with interest rate derivatives (swaps, futures, options), asset-liability management, and duration or convexity matching to balance rate sensitivity between assets and liabilities. Scenario analysis and stress testing are used to assess earnings and capital impacts under sudden rate shifts. While these methods reduce exposure, they also introduce model risk, basis risk, and complexity, necessitating ongoing monitoring and governance within financial institutions.