What is front office risk management?

Front Office Risk Management refers to the processes and strategies used by financial institutions, particularly banks and investment firms, to identify, assess, and mitigate risks associated with trading, sales, and investment activities. The front office is typically responsible for revenue-generating activities such as trading, dealing, and client relationship management, so effective risk management is critical to ensure compliance with regulations and to protect the firm from potential losses. This includes monitoring market, credit, and liquidity risks in real-time, working closely with traders and portfolio managers, and implementing risk limits and controls.