Risk management in financial markets plays a critical role in ensuring stability, profitability, and investor confidence. This study examines the various types of risks faced in financial markets, including market risk, credit risk, liquidity risk, and operational risk. It explores the tools and techniques used by financial institutions and investors to identify, assess, and mitigate these risks, such as diversification, hedging, derivatives, and value-at-risk (VaR) models. The research also highlights the impact of regulatory frameworks and technological advancements on modern risk management practices. Through analysis of market behavior and case studies, the study demonstrates how effective risk management strategies can minimize potential losses and enhance decision-making. The findings suggest that a proactive and systematic approach to risk management is essential for maintaining financial market efficiency and resilience, especially in times of economic uncertainty.