"Life is risk. Where there is no risk, there is no life." These words are written by Alan Hobson in his book "From Everest to Enlightenment." Risk is an integral part of the universe, from the risk of a planet's (e.g., Earth) being hit by an asteroid, to the risk of being damaged on a Colorado ski slope, to the risk of a financial loss. But on the bright side of these risks lie the greatest rewards associated with our taking the risks, e.g., the very existence of the Earth with all her nature, the enjoyment derived from zooming down the snow-covered mountain tops of the West, and---more to the point---the returns we expect to earn from facing the financial risk.

Essential as it is for everything that's worth anything, risk must be managed. Risk management is concerned with reducing the risk relative to the reward it is expected to produce and with avoiding the exposure to unnecessary risks. Risk management is not about eliminating all risks, as such an action is likely to eliminate all expected rewards and make a worthy enterprise worthless.

The latest developments in quantitative finance provide us with a variety of tools to manage risks. Those developments include the concept of Value-at-Risk; the variety of financial and non-financial derivative securities; the techniques of analyzing real options; as well as a variety of popular risk-management techniques, to include Monte-Carlo simulations, bootstrapping, stress-testing, etc. We focus of three types of risk management: market risk, credit risk, and operational risk.