ISDA promotes risk management through various initiatives:
1. Standardized Documentation: By providing standardized terms and conditions, ISDA reduces the complexity and legal risks associated with derivative transactions. 2. Best Practices: ISDA publishes guidelines and best practices for risk management, including the management of credit risk and operational risks. 3. Netting and Collateral Arrangements: ISDA supports the use of netting and collateral arrangements to mitigate counterparty risk. This involves offsetting positive and negative values of multiple transactions to reduce exposure. 4. Regulatory Advocacy: ISDA engages with regulators globally to advocate for policies that promote market stability and efficiency.