115 FAIRFAX MEDIA  LIMITED  2013  NOTEs TO THE FINANCIAL sTATEMENTs  RISK FACTORS FAIRFAx MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 30 JUNE 2013 The key financial risk factors that arise from the Group’s activities, including the Group’s policies for managing these risks are  outlined below. Market risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of  changes in market prices. The market risk factors to which the Group is exposed to are discussed in further detail below. 36. FINANCIAL AND CAPITAL RIsk MANAGEMENT (CONTINUED) (A) inTeReST RATe RiSk Interest rate risk refers to the risks that the value of a financial instrument or future cash flows associated with the instrument will  fluctuate due to movements in market interest rates. Interest rate risk arises from interest bearing financial assets and liabilities that the Group utilises. Non-derivative interest bearing  assets are predominantly short term liquid assets. Long term debt issued at fixed rates exposes the Group to fair value interest  rate risk. The Group’s borrowings which have a variable interest rate attached give rise to cash flow interest rate risk. The Group’s risk management policy for interest rate risk seeks to reduce the effects of interest rate movements on its asset  and liability portfolio through management of the exposures. The Group seeks to maintain a mix of foreign and local currency fixed rate and variable rate debt, as well as a mix of long term  debt versus short term debt. The Group primarily enters into interest rate swap, interest rate option and cross currency swap  agreements to manage these risks. The Group designates which of its financial assets and financial liabilities are exposed to  a fair value or cash flow interest rate risk, such as financial assets and liabilities with a fixed interest rate or financial assets and  financial liabilities with a floating interest rate that is reset as market rates change. The Group hedges the currency risk on foreign currency borrowings by entering into cross currency swaps, which have the  economic effect of converting foreign currency borrowings to local currency borrowings. Over the counter derivative contracts  are carried at fair value, which are estimated using valuation techniques based wherever possible on assumptions supported by  observable market prices or rates prevailing at the reporting date. For other financial instruments for which quoted prices in an  active market are available, fair value is determined directly from those quoted market prices. Refer to Note 16 for further details of the Group’s derivative financial instruments and details of hedging activities. At reporting date, the Group had the following mix of financial assets and financial liabilities exposed to interest rate risks: As at 30 June 2013 FloATinG RATe $’000 Fixed RATe $’000 non-inTeReST  BeARinG $’000 ToTAl $’000 Financial assets Cash and cash equivalents  533,531   –   –   533,531  Trade and other receivables  –   –   287,457   287,457  Available for sale investments  –   –   1,929   1,929  Other financial assets  10,541   –   67   10,608  Derivatives  6,325   –   12,508   18,833  Total financial assets  550,397   –   301,961   852,358  Financial liabilities Payables  –   –   235,919   235,919  Interest bearing liabilities: Bank borrowings and loans  123,549   6,003   –   129,552  Senior notes  27,338   470,870   –   498,208  Finance lease liability  10,452   –   –   10,452  Total interest bearing liabilities  161,339   476,873   –   638,212  Derivatives  43,826   23,833   7,258   74,917  Total financial liabilities  205,165   500,706   243,177   949,048  Total interest bearing liabilities  161,339   476,873   –   638,212  Notional principal hedged  (123,526)  (116,495)  –   (240,021) net exposure to cash flow interest rate risk  37,813   360,378   –   398,191 