Market Risk

Market Risk is the risk of loss in the 'on and off balance sheet' due to market price movements (changes in interest rates, exchange rates and market prices, such as stocks and commodities). 
Banks are exposed to the risk of the market due to: 
Traded market risk - the risk of loss of value of an investment bank to which the trading activity for a profit. 
Interest rate risk in the banking book - is the risk that caused the structure of a business run by banks such as the provision of credit and union funds. 
To avoid the above conditions, the Bank must perform matching between the interest rate funding and lending (hedging) to secure the value of DPK or credit, by: 
offer the same interest rate loans with interest rates DPK. Interest rates change based on the credit interest rate discount from the central bank change the interest rate or a fixed deposit rate of 5 years. 
Lend funds to other banks with a fixed rate for 5 years 
When available derivatives market, banks can do the swap transactions with other banks, which pay other banks with interbank interest rates 1 month and receive 5-year fixed rate. 

The yield curve shows the relationship between interest rates (Y) that is paid to the maturity (X) of an investment in a certain period. Yield curve is used to calculate the market price on the trading position.