1. SCHOOL OF FINANCE AND COMMERCE
TOPICS
SOURCE OF RISK , TYPE OF RISK DEALT BY TREASURE
MANAGEMENT, IMPLICATIONS AND LIMITATIONS OF RISK
MANAGEMENT
TOPICSOURCE OF RISK , TYPE OF RISK DEALT BY
TREASURE MANAGEMENT, IMPLICATIONS AND
LIMITATIONS OF RISK MANA
SUB CODE –MBAF6022 SUBMITTED TO –
2.
3. MARKET RISK
Market risk refers to the variability of
returns due to fluctuations in the
securities market. All securities are
exposed to market risk but equity
shares get the most affected. This risk
includes a wide range of factors
exogenous to securities themselves like
depressions, wars, politics, etc.
4. INTREST RATE RISK
Interest rate risk is the variability in a
security’s return resulting from
changes in the level of interest rates.
Other things being equal, security
prices move inversely to interest rates.
This risk affects bondholders more
directly than equity investors.
5. BUSINESS RISK
This refers to the risk of doing business in a
particular industry or environment and it
gets transferred to the investors who invest
in the business or company
FINANCIAL RISK
Financiall risk arises when companies
resort to financial leverage or the use of
debt financing. The more the company
resorts to debt financing, the greater is the
financial risk.
7. INTRODUCTION
Risk management is at the heart of most
operations, and it is helpful to situate the
by treasury within the overall risk map of
The primary financial risks for which
responsible for can be categorised into:
Liquidity risk (i.e. availability of funds)
Price risk (i.e. commodity price risk)
Credit risk (i.e. financial loss)
Operational risk (i.e. treasury processes,
etc.)
8. Liquidity risk
Liquidity risk is treasury’s main
– to ensure that the business has
funds to continue its operations
economic cycle, as well as
strategic opportunities (if required
board). The main processes for
liquidity risk are capital structure
management.
9. Price risk
Financial market price risk – the risk
busiess from changes in market prices
interest rates– is another core treasury
responsibility.
FX is the main price risk for most
because any business with
procurement will generate FX
10. Credit risk is a major focus for most
Usually treasuries are responsible for
credit risk of their financial
banks
Operational risk covers all processes,
it requires solid and holistic expertise,
policies and processes. Again, treasury
balance risk and cost to find the most
solutions for the business
12. Recovery and resolution planning (RRP)
Currently underutilized in the management process
of banks are RRP elements. COVID-19 causes
triggering of recovery indicators due to
macroeconomic developments and decline of the
liquidity position, and therefore an activation of the
escalation governance
13. Banks should review for usability and
recalibrate their recovery options and the
suitability of indicator thresholds. The current
crisis also requires an adaptation of the
recovery planning scenarios.
14. Operational resilience, compliance and non-
financial risks
Banks’ internal control systems are under extreme
stress, leaving a margin for potential losses due to
crisis-driven measures. Almost overnight, COVID-19
has become the single greatest threat to the
continuity and existence of many businesses.
15. Enterprise risk and capital management
deteriorating credit quality may lead to a massive
rise in credit impairments, and on the other, banks
are expected to continue lending and supporting the
economy – leading to higher exposures in the
downturn of the credit cycle.
In response, many regulators across the globe are
allowing banks to use their capital buffers to cover
the losses while continuing to lend. However,
eventually banks will need to refill their capital
buffers and return to a sustainable capital level.
17. Not Suitable For All Organizations
The first disadvantage of using an
management information system is
be useful for all companies. These
useful for companies that have a
profile. Some of the characteristic
companies are as follows:
18. Expensive
Risk management information systems
expensive. They are often sold as
software solutions or as solutions that
integrated with the overall enterprise
planning software.
19. Data Security Issue
Lastly, risk management information
all of the organization's important data
This creates data security risks. If the
management information system is
cause severe damage to the company
