# Financial risk management solution costs - Standardisation and time

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Four critical factors impact the price of risk management solutions.

![The four factors are:](https://i.imgur.com/XvGNWky.png)

1. Stardardisation
2. Time
3. Liquidity
4. Market Volatitlity

For the second half see [[Financial risk management solution costs - Liquidity and volatility| Liquidity and Volatility]]

Most commonly hedged prices are:

- interest rates
- currency rates
- commodity rates

The the prices of the instruments for hedging them:

- Options
- Swaps
- Futures
- Forwards 

Are dependent on theL

- How standard the markets are
- How long you need that instrument in place
- How liquid those markets are
- How volatile those markets are

## Standardisation

How common the requirements for risk management are

Basis Risk

- Product
- Timing
- Geography

## Time

The time until risk management contracts expire.
Cheaper the the closer to expiration.