Description: Enterprise risk management ERM is for the measurement and the management of all significant risks of the business holistically irrespective of types and sources. The study offers significant advances in the current debate on the performance of enterprise risk management, in particular, minimizing the existing gap between the academic understanding and practitioners’ experience on the topic.

Description: The bank’s customers viz. non-bank company often get into various kinds of derivative transactions with a bank or some other non-bank company in order to cover or hedge against the unwanted exposure to volatility in interest rates, currency rates or some other underlying rate. A non-bank company defaults when the situation goes unfavorable enough for it to have no other alternative this cascades the impact to many other non-bank companies and banks. I take forward the opinion that non-bank company defaults are more likely than those by a bank in a derivative contract. This risk in the risk management approach using derivatives can be reduced through the derivatives framework proposed in this paper. Presented at 2010 Enterprise Risk Management Symposium, Society of Actuaries, April 12-15, 2010.