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The Group does not hold derivative financial instruments to hedge other market risk exposures, and does not hold or trade derivative financial instruments for speculative purposes. 

Financial risks for the Group include market risk (including price risk, foreign exchange risk and cash flow and fair value interest rate risk), credit risk, liquidity risk, and life insurance risk. 

## (a) Market risk 

## (i) Price risk 

Price risk is the risk that the fair value or future earnings of a financial instrument will fluctuate because of changes in market prices (other than from interest rate risk or currency risk, as described later). The financial instruments managed by the Group that are impacted by price risk consist of investment units held in trusts, available for sale financial assets and the share buy-back liability. 

The price risk associated with the units held in trusts is that the fair value of those units will fluctuate with movements in the redemption value of those units, which in turn is based on the fair value of the underlying assets held by the trusts. This risk is managed by choosing to invest in a mix of trusts operated by the Group that will provide an overall diversified portfolio that consists of cash, fixed income securities, equities, and listed property securities; in a mix that provides the Group consistent cash plus returns, benchmarked to exceed the UBSA Bank Bill Index, as well as some participation in opportunities for capital growth over the longer term. 

The share buy-back liability recorded at balance date is reflective of the fair value of the underlying shares of certain Perennial subsidiaries. The price risk associated with this liability is that the fair value of the particular equities could change as a result of a change in the projected profitability of those subsidiaries. It is considered impractical to manage the price risk associated with this liability, and it is worth noting that the more successful the Group is in growing its business in the relevant sectors, the greater this liability will grow. 

The Parent has no exposure to price risk. 

## Group sensitivity 

At 30 June 2012 had the price of the units / shares held by the Group in unlisted unit trusts / shares in other entities increased / decreased by 1% (2011: 1%) with all other variables held constant, post-tax profit for the year would increase / decrease by $19,000 (2011: $21,000) as a result of gains / losses recorded through profit or loss and available-for-sale reserves would increase / decrease by $50,000 (2011: $286,000). 

At 30 June 2012, had the value of the underlying equity in relation to the share buy-back liabilities increased/decreased by 1% (2011: 1%) with all other variables held constant, group equity would decrease/increase by $278,000 (2011: $431,000). 

