The risks in proprietary trading consist primarily of market and liquidity risks. From the perspective of the banks it may be caused by unexpected market risks, adverse changes in interest rates, exchange rates and other prices.
Other not to be underestimated risks are operational risks (such as the failure of data processing systems ) and legal risks (such as unpredictable changes in laws ) .
The dimensions of market risk is measured using the value-at-risk (VaR) method. The value-at-risk of the trading book is the upper loss limit, ( eg 99 % ) is not exceeded at a given holding period with high probability.
The global proprietary trading requires particularly when multiple inventory and sequential trading a dynamic risk management process with continuous , decentralized organization considered monitoring and controlling the risks incurred .