Section 763C — Corporations Act 2001: Meaning of manages financial risk

A person manages financial risk if they: (a) manage the financial consequences to them of particular circumstances happening; or (b) avoid or limit the financial consequences of fluctuations in, or in the value of, receipts or costs (including prices and interest rates). Note 1: Examples of actions that constitute managing a financial risk are: (a) taking out insurance; or (b) hedging a liability by acquiring a futures contract or entering into a currency swap. Note 2: An example of an action that does not constitute managing a financial risk is employing a security firm (while that is a way of managing the risk that thefts will happen, it is not a way of managing the financial consequences if thefts do occur).