Risk And Corporate Financial Strategy Essay

Risk And Corporate Financial Strategy Essay
Risk and Corporate Financial Strategy The relevance of sound risk management cannot be
overstated when it comes to the effective implementation of corporate strategy. This text concerns
itself with the impact of risks on corporate financial strategy. Some of the risks that will be
highlighted in this case include but they are not limited to reinvestment risk, default risk, political
risk, interest rate risk, etc. From the onset, it is important to note that risk is part and parcel of every
business entity's corporate strategy. For this reason, in seeking to develop the corporate financial
strategy of their firms, managers must interrogate the inherent risks. One of the risks that could have
an impact on the corporate financial strategy of an entity is business risk which Bender and Ward
(2012) define as "the inherent risk associated with the underlying nature of the particular business
and the specific competitive strategy that is being implemented" (p.51). Business risks could arise
from events that take place inside or outside the organization. An entity with a significantly high
business risk according to Bender and Ward (2012) must not "adopt a financial strategy that involves
high financial risk" (p.51). Yet another risk which could have an impact on an entity's corporate
financial strategy is credit risk. For most businesses, this particular risk arises in those instances
whereby a client fails to satisfy its contractual obligations. Mostly, businesses find
... Get more on HelpWriting.net ...

Derivative Financial Instruments Employed For Risk Management
Derivative Financial Instruments Employed for Risk Management
Credit Risk
Derivatives may be traded either via an exchange (exchange traded) or alternatively, privately
negotiated contracts, which are generally alluded to as Over The Counter (OTC) derivatives.
Exchange traded and OTC–cleared derivative contracts have downgraded Macquarie's credit risk as
their counterparty is a clearing house, accountable for the handling of risk management for their
members to guarantee that the clearing house has sufficient resources to carry out its upcoming
obligations. Members are instructed to produce initial margins in agreement with the exchange rules
in the form of cash or securities, and further present daily variation margins in cash to cover
adjustments in values of the market. Macquarie has exchange traded derivatives with positive
replacement values as at 31 March 2016 of $1,794 million, whereas as at 31 March 2016 of $4,641
million.
For OTC derivative contracts, Macquarie commonly has master netting agreements (usually ISDA
Master Agreements) with specific counterparties to handle and control the credit risk associated. The
credit risk connected with positive replacement value contracts is condensed by master netting
arrangements that in an occurrence of default necessitates that balances with a certain counterparty
covered by the agreement (for example derivatives and cash margins) to be discontinued and settled
on a net basis. Macquarie frequently executes a Credit

Reviews on Financial Risk Management
A Review on Financial Risk Management Tianshu Hou FMRM 0811 Dec. 2011 【Outline】 I.
Introduction II. The definition and types of financial risk III. Risk management and the theoretical
foundation IV. The process of financial risk management V. The challenges faced by the modern
financial risk management theories 【Abstract】 Financial risks are exposures of uncertainties for
those participants in financial market. Financial risks can be divided into four categories: market
risk, credit risk, liquidity risk and operational risk. Risk management has become more and more
crucial for a market participant to survive in the highly competitive market. As the development of
the global financial market, there are many phenomena that ... Show more content on
Helpwriting.net ...
Liquidity risk arises from situations in which a party interested in trading an asset cannot do it
because nobody in the market wants to trade that asset. Liquidity risk becomes particularly
important to parties who are about to hold or currently hold an asset, since it affects their ability to
trade. D. Operational risk. Operational risk is the risk of loss resulting from inadequate or failed
internal processes, people and systems, or from external events. Nowadays, the study and
management of operational risk is getting more attention. The organizations are trying to perfect
their internal control to minimize the possibility of risk. At the same time, the mature theory of other
subjects, such as operational research methods, are also introduced to the management of
operational risk. Overall, financial risk management is a process to deal with the uncertainty
resulting from financial markets. It involves assessing the financial risks facing an organization and
developing management strategies consistent with internal priorities and policies. Addressing
financial risks proactively may provide an organization with a competitive advantage. It also ensures
that management, operational staff, stockholders, and the board of directors are in agreement on key
issues. III. Risk Management and the Theoretical Foundation Financial market participant's attitude
towards risk can be basically divided into the following categories. A. Avoid risk. It is irrational for

Acme Iron's Risks And Financial Statements
This analysis examines the trends and evaluates the value of the ACME Iron's risks and financial
statements. The information provided is based on the assumptions that these trends and value will be
constant throughout the life of the company.
I. Financial Statement Analysis
Analysis of ACME Iron's financial statements (balance sheet and income statement) will help in the
assessment of the company's financial health. It will also provide a foundation for management
and/or investors in their decision making. This analysis, though horizontal, is necessary to review
the profitability, longevity and performance of the company.
Based on the liquidity ratios for ACME Iron for 2014 and 2015 we can evaluate the company's cash
flow ability to cover

Company Risk Management : Pfizer Chief Financial Officer...
In January 2015, Pfizer Chief Financial Officer Frank D 'Amelio said that foreign exchange rates
will hurt 2015 sales by $2.8 billion, or 17 cents a share, if the dollar remains at its current high
levels.
Pfizer operates like most MNCs by most likely utilizing hedging to reduce the volatility spawned by
fluctuations in foreign exchange rates. But what you really need to understand is that there are risks
involved in FX hedging itself. Most analysts tend to prefer long–term hedging over short–term
hedging, the long–term variety can lead a MNC to be over–hedged. Understanding FX risk in the
context of enterprise risk management enables finance chiefs to not fall into the trap of over–
hedging their FX risk.
One way to avoid over–hedging is to hedge only the minimum known payment involved in the
future transaction. By hedging a portion of the transactions, a company can reduce the sensitivity of
its cash flows to exchange rate movements without creating serious mismatches between the hedge
and the risk. In this way, ERM – which consists of managers taking a holistic view of their
company's various risks, prioritizing the material ones, and devising ways to curb them – can help
CFOs identify the most volatile foreign exchange rates and reduce some of the guesswork involved
in deciding how much of their foreign exchange risk to hedge.
Companies like Pfizer exposed to the risk of overestimating their future foreign sales, may negotiate
currency hedges that end up being far

Financial Risk Management
JONATHAN MUROMBA
2012178104
FINANCIAL RISK MANAGEMENT
Management of Financial Institutions and The Banking Crisis
Risk is uncertainty. The more risk one takes, the more he or she stands to lose or gain. One cannot
expect high returns without taking substantial risks.
The outcomes are thrown open to uncertainty. In general, when we talk about risk, we focus on
financial risk. In financial terms, it is the risk that a company or individual could lose some or all of
the original investment, possibly resulting in inadequate cash flow to meet financial obligations. All
wise investments follow risk consideration. To be successful, every investor must be able to identify
and understand the types of risk they face across their entire portfolio. ... Show more content on
Helpwriting.net ...
It had been widely known that problems with the banks in the US were due to the phenomenon of
sub–prime lending for housing. Many of the loans had turned into toxic assets as borrowers failed to
meet repayments.
Similar to Northern Rock, the banks continued to give loans in this manner as they too chose to
securitize their loans because this method of trading appeared so profitable. This was a highly
successful mechanism to operate until the number of defaulters increased to the point where these
assets began to turn illiquid. Investors started to avoid securities as it was now evident many were
flawed. Moreover, Northern Rock in their quest for greater financial returns found securities that
attractive they also invested in them.
With trading slowing in the financial markets, many institutions began to react to the impending
crisis by taking a more cautious approach to lending. In comparison Northern Rock were so focused
on returning profits and generating growth that, at a time when monetary policy was tightening
faster than expected, the bank had agreed to issue a tranche of mortgages at interest rates that were
lower than those it had to eventually pay in the markets to finance them (The Economist, 2007,
Lessons of the fall, 20/10/2007). In hindsight, this was a disastrous decision, which contributed to
the impending shortfall in cash and ultimately the need to be bailed out.
The managerial failings of Northern

Financial Risks That Are Faced By Modern Firms
In this essay I will assess the key financial risks that are faced by modern firms and illustrate the
ways in which firms go about managing these risks so that they overcome the possibility of a loss in
profits. The key risks that I will analyse, will be the fluctuations in inflation, commodity price,
exchange rates and interest rates. I will then identify the key problems face by firms in managing
these risks. One key risk faced by firms, is the risk in the fluctuation of interest rates over the
borrowing of sums. The fluctuation of interest rates can effect businesses due to the uncertainty of
the rate of interest increasing. The effect of changes in interest rates can depend on many factors
such as; the amount that a business has borrowed and for what period of time for, the amount of
cash that a business holds and also whether the business operates in certain markets where demand
is sensitive to changes in the interest rates. The effect of fluctuating interest rate on businesses can
lead to borrowing becoming expensive as a result of a high rate, therefore it makes it much more
financially difficult to receive the necessary funds needed for the business operations. One way in
which these risks of fluctuations are managed by businesses, is that they use a method of hedging
called 'swaps'. Seen in figure 20.11–fundamentals of corporate finance, it shows how two firms can
use the 'swap' contract to limit and/or manage the exposure to the fluctuation of interest rates, or

Financial Risks for Banks
Table of content
Question 1 3
How can the regulator i.e. the Central Bank mitigate these risks?
Question 2 5
Discuss the various kinds of risks involved in outsourcing of financial services which in your
opinion, Standard Chartered Bank needs to take note of?
Question 3 6
What are the principles and procedures Standard Chartered Bank should put in place before
outsourcing their activities?
Question 4 8
What are the key issues which emerged in the Standard Chartered Bank case?
References 9
Question 1
How can the regulator i.e. the Central Bank mitigate these risks?
There are number of the risk types which can influence to this situation. In its operations bank meet
many types of risks as following:
Credit risks
Market risks
Liquidity risks
Operational risks
Reputational risks
Political risks
General legal risks
Main of them is the operational risk. This type of the risk includes internal and external factors.
Also, they are subdivided into the

Risk Is Commonly Defined As The Chance Of Financial Loss
Risk is commonly defined as the chance of financial loss. Opening a new Subway franchise location
is far from a safe bet and comes with a variety of different risks. In this section I will describe a
number of the most common types of risks that could potentially affect the business as well as what
can be done to prevent or minimize the risks.
Financial risk is "the chance that the firm will be unable to cover its financial obligations" (Gitman,
2009, p. 229). The primary driver of financial risk is "the predictability of the firm's operating cash
flows and its fixed–cost financial obligations" (Gitman, 2009, p. 229). From the owner and
managers' perspective, the financial risk is a real concern during the first years of being in business.
... Show more content on Helpwriting.net ...
Therefore, it is crucial that the startup capital includes enough of a cushion to meet all obligations
during times when operating cash flow is inconsistent or lacking. To minimize the financial risk of
opening the Subway franchise restaurant, the startup capital was increased to include enough cash to
get through the first few years.
Interest rate risk is defined as "the chance that changes in interest rates will adversely affect the
value of an investment" (Gitman, 2009, p. 229). From the perspective of an outside investor, rising
interest rates would mean the opportunity to earn a higher return on a new investment. However,
existing investments earning returns that are now below the current market return will lose value as
they become less attractive. Preventing changes to the interest rates as not something the business
would be able to control. However, minimizing the interest rate risk could be done by consistently
earning a return at or above the market rate, which would ensure that the investment maintains its
value. Internally, rising interest rates may also mean higher costs of financing the business. To
minimize the risk, fixed rate loans should be utilized in times of low

Assessing Risk Of Manipulating Over Financial Reporting
Using of M – Score formula in assessing risk of manipulating over financial reporting.
Financial statement audit is very important in the functioning of our economy and society expects
auditors to exercise due care in their work.
Many readers of financial statements believe that auditors have a responsibility to detect all errors,
fraud and illegal acts. This is not true. The auditor has a responsibilities to plan and perform the
audit to obtain reasonable assurance about whether the financial statements free of material
misstatement, whether caused by error or fraud.
Based on knowledge of the entity and it is environment, the auditor should assess risk of material
misstatement at the assertion level and determine the audit procedures ... Show more content on
Helpwriting.net ...
In this paper I will discuss mostly about misstatement from manipulating of financial reporting.
The auditor performs the following steps to identify the risks of material misstatement due to fraud:
– Discussion among the audit team members regarding the risk of material misstatement due to
fraud
– Inquire of management about the views on the risk of fraud and how it is addressed
– Consider any unusual or unexpected relationship identified during analytical procedures in
planning the audit
– Understand period end closing process and investigate unexpected period end adjustments
Three conditions are generally present when material misstatements due to fraud occurs:
1) Management or other employees have an incentive or are under pressure that provide a reason to
commit fraud
2) Circumstances exist that provide an opportunity for a fraud to be carried out
3) Those involved are able to rationalize committing a fraudulent act.
Management has the ability to perpetuate a fraud because it is in a position to directly or indirectly
manipulate the accounting records and prepare fraudulent financial reports. In most cases also
involves some management override of controls.
Risk factors that may suggest that management have incentive to manipulate financial reporting:
– Financial stability or

Art As An Alternative Investment : Returns, Risks And...
2.2 Art as an Alternative Investment: Returns, Risks and Correlation with Financial Market 2.2.1
Return Rate and Risk Based on art market indices, attention has been drawn to investigate the risk–
return rate of art investment and the correlation between the art market and other markets in the
academic field. Some representative researches on return rate and risk of artwork investment were
considered to be the starting point of growing interest in art investment among academics.
Goetzmann (1993) estimates an average annual return rate of 3.2% during 1916–1986, which is
higher than the stock return but still lower than bonds. He further claims that artwork investment can
achieve a high return rate in the long term. Buelens and Ginsburgh (1993) divide the data that was
constructed by Baumol (1986) into different schools time periods and examine the return rate
respectively. Their results show that except the period of war and general insecurity, paintings
achieve higher return rates than financial assets. Mei and Moses (2002) estimate an annual real
return rate of 4.9% from 1900–1999, which is outperforming certain fixed–return securities while
underperformed stocks. They point out that art returns are above inflation and tend to be greater than
government bonds but less than equities. In contrast to the findings that artwork is a profitable
investment comparing to conventional financial assets, a number of academic studies address the
issue of art price movement over time

Financial Risk Management
–––––––––––––––––––––––––––––––––––––––––––––––––
–––––––––––––––––––––––––––––––––––––––––––––––––
–––––––––––––––––––––––––––––––––––––––––––––––––
Financial Risk Management using Derivatives; A case of selected financial institutions in Uganda
–––––––––––––––––––––––––––––––––––––––––––––––––
–––––––––––––––––––––––––––––––––––––––––––––––––
–––––––––––––––––––––––––––––––––––––––––––––––––
–––––––––––––––––––––––––––––––––––––––––––––––––
Abstract
The RAP examines the management of financial risks using derivative instruments in the selected
financial institutions in Uganda. Three key research objectives were examined. These included; an
examination of the institutions' objectives for financial risk management, an ... Show more content
on Helpwriting.net ...
The primary source of interest rate risk stems from timing differences in the repricing of bank assets,
liabilities, and off–balance–sheet instruments. These repricing mismatches are fundamental to the
business of banking and generally occur from either borrowing short term to fund long–term assets
or borrowing long term to fund short–term assets.
Financial derivatives provide banks with an effective way to manage interest rate risk without
incurring additional capital charges. Derivatives can be used to hedge asset and liability positions by
allowing banks to take a position in the derivatives market that is equal and opposite to a current or
planned future position in the spot or cash market. Therefore, regardless of the movement in prices,
losses in one market will be offset by gains in the other. Banks can also take a derivative position
uncovered by potential earnings or losses. In this case they are speculating on interest rate changes
that the market doesn't anticipate. 1.3 The financial services industry in Uganda
Uganda's financial services industry which mainly comprises the Banking, Insurance, Microfinance
and investments sectors remains dominated by the banking sector. The banking Sector has been
described as generally sound and well capitalized. The sector has experienced tighter BOU
supervision, more stringent requirements and higher capital requirements with the

Risk Assessment For A Financial Institution Essay
Part A
For the purpose of this paper, I choose U.S Bank, a financial institute. A risk assessment for a
financial institution measures and helps manage compliance, financial and operational risks
associated with both internal and external, activities and events. In today's operating environment,
numerous regulations and standards make risk assessment not only logical but vital for financial
institutions. These are examples of regulation and laws that governs financial institutions,
Regulatory compliance, Enterprise risk management, Internal audit, Bank Secrecy Act (BSA)/Anti–
Money, Laundering, Fair lending practices, Remote Deposit Capture (RDC), Lending and credit
administration, function, FDICIA compliance, Community Reinvestment Act (CRA), Automated
Clearing House, Information technology, E–Banking (Internet banking), Information
security/Gramm–Leach–Bliley Act, Vendor management, Lobby operations, and etc.
During the initiation phase the client, U.S bank, identified that GLBA (Gramm–Leach–Bliley Act)
compliance is their priority for this assessment while they are implementing Enterprise resource
planning (ERP). As a result, the purpose of the Risk Assessment is identification and measurement
of risks related to implantation of ERP and state of the financial institution toward Gramm–Leach–
Bliley Act compliance. Then evaluate their likelihood and impact of Risks. Finally, the last step is to
implement a strategy to eliminate or manage and mitigate risk.
The term "RISK"

Financial Risks Of The Financial Risk Of Companies Listed...
1. Introduction Financial risk is a major concern world–wide and there are numerous studies to
support the necessity to investigate it. Lee (2006) defines financial risk as the additional risk that the
firm's stockholders bear when the firm is financed with debt as well as equity. Clarke (2010)
explains that the recent turmoil, bank–runs, global equities sell–off and the "credit crunch"
demonstrate sophisticated and interconnected nature of the financial markets making the seemingly
localized problem to become a global financial risk. This reiterates the importance of studying the
financial risk of companies listed onthe securities market. Studies show that a financial crisis
although not explained by any one single cause, emanates from poor financial management which
eventually spreads to other areas of the economy (McGuigan, McNally & Wyness, 2012). Studies on
the developing countries indicate that it is necessary to change policies and controls in financial risk
management. Gemech, et al. (2011) point to the impact of high uncertainty of commodity prices on
financial risk management in developing countries as an effort to prevent or reverse the deterioration
in their balance of trade, and mitigate short term volatility. 2. Background The Nairobi Securities
Exchange (NSE) individually and cumulatively affects the economy of Kenya. DiBella (2011)
points out that an inadequate number of investors

Allocating Financial Risk
Allocating Financial Risk 2
Select one of two recent airport PPPs – St. Petersburg, Russia, or Rio de Janeiro, Brazil. Describe
the PPP process used and what were the critical issues that needed to be overcome? Assess the
factors that will be crucial to the PPP's future sustainability.
This memo examines the public private partnership used to develop the Pulkovo airport in St
Petersburg, Russia.
Pulkovo was the first airport to be developed in Russia using a PPP. The contract is between three
parties: the St. Petersburg City Government, the Pulkovo Airport Company (100% city owned) and
the Northern Capital Gateway Consortium (NCG), the airport operator with the duty of organizing
the management and development of the airport. The contract started in April 2010 and will remain
in force until 2039.
St. Petersburg is Russia's second largest city after Moscow with around 5 million inhabitants. The
city is home to many domestic and international companies, but its economy also relies heavily on
tourism, hence transport links are crucial to the city's growth. Transport infrastructure had suffered
from long term under–investment (KPMG estimated the depletion of Russia's national airport assets
between from 40% to 80%) and in 2008, amid double digit growth in passenger traffic, the existing
airport suffered from overcrowding and would be unable to cater for the 11 million annual passenger
traffic projected for 2012. It was also seen as unable to meet the increased

Financial And Social Environment Risk
Several elements and factors about financial and social environment risk should be considered when
a portfolio is chosen. In this section, we present the nature and classification of risk in the impact
investment portfolio.
Nature of impact investment risk
Risk profile is determined by impact thesis and financial targets. It is believed that the types of risk
in impact investments are similar to risks in traditional investment in the same sector, region and
instrument. Although the impact pursuit will not lead to additional risks compared to general
investment, perhaps the impact thesis can decide the scope of investment portfolio, then influence
the risk profile indirectly.
Cross–market risks exists. The market does have some ... Show more content on Helpwriting.net ...
It can be divided into systematic risk and unsystematic risk. And in CAPM model, professional
investors will take market risk into consideration when calculating return in a quantitative way.
CAPM model (Ang, A., & Chen, J. (2007). CAPM over the long run: 1926–2001. Journal of
Empirical Finance, 14(1), 1–40.) is: =risk free rate; =expected market return; =Beta of the security,
which represents its systematic risk, valuating the return viation compared to the whole market;
=expected security return; =market risk premium
Default risk
Default risk means if the company files for bankruptcy of if the municipality is mismanaged, it's
possible that investors won't receive the return promised. In general investments, default risk is not
rare when investment managers invest in bonds, even pensions. As for impact investment, this usual
risk also exists. To know about the default risk of a security, a regular way is to watch its bonding
rates, like Moody's and S&P.
Inflation risk
Financial planners like to assume that inflation runs about 3 or 4 percent a year over long periods of
time. This allows planners and investors to calculate expected "real" returns for an impact
investment.(http://www.consumerismcommentary.com/four–risks–of–investing/?WT.qs_osrc=FBS–
126802610ChromeHTMLShellOpenCommand) Using Fisher's equation(Levi, M. D., & Makin, J.
H. (1978). Anticipated

Risk Assessment: Mcbride Financial Services
McBride Financial Services is a virtual organization at University of Phoenix that provides
mortgage services for its members. McBride has as its stated goal to be a "preeminent provider of
low cost mortgage services using state–of–the–art technology in the five state areas of Idaho,
Montana, Wyoming, North Dakota, South Dakota." McBride provides serves for three primary
groups of mortgage seekers: professionals purchasing a primary or secondary residence, retirees
purchasing a primary or secondary residence, and families and/or individuals purchasing
recreational properties.
The goal of the company is to provide mortgage services at a fixed low rate of $1500 to approved
applicants. In order to be able to optimally provide these services, ... Show more content on
Helpwriting.net ...
• Consider the use of a limited–capacity warm site with simple backup and line–rerouting
capabilities.
• Invoke effective insurance policies.
Risk Assessment: Security
Security can be considered in three major areas:
• Physical security which includes access to the plants, to the rooms housing servers and other
computing devices.
• External threats to the computing network
• Access and permission to authorized users of the system
Physical security will involve the company securing its assets by devices such as alarm system for
off hour use, and identification cards for employees. A process should be in place to make sure that
guests are properly identified before gaining assess to the facility. Users cannot take computer home
unless they are protected by encryption software. Downloading proprietary information onto
floppies, CD, thumb/flash/memory drives and other portable media should be disallowed unless
such transactions are pre–approved and proper security measures are taken.
Any enterprise has to pay special attention to computer security. Computer security is a field that is
concerned with the control of risks related to computer use. A primary focus should be on the
external threats to the computing environment. In enterprise with branches cross country, it is
important to allow information from "trusted" external sources, and disallow intrusion from
anonymous or non–trusted sources. In a secure system, the authorized users of that system are still

Essay on Risk Assessment: Mcbride Financial Services
McBride Financial Services is a virtual organization at University of Phoenix that provides
mortgage services for its members. McBride has as its stated goal to be a "preeminent provider of
low cost mortgage services using state–of–the–art technology in the five state areas of Idaho,
Montana, Wyoming, North Dakota, South Dakota." McBride provides serves for three primary
groups of mortgage seekers: professionals purchasing a primary or secondary residence, retirees
purchasing a primary or secondary residence, and families and/or individuals purchasing
recreational properties. ... Show more content on Helpwriting.net ...
• It has to define a measure of risks in each business consistently across the firm.
• Initiate procedures for risk managing at the point nearest to the assumption of risk.
• Develop databases and measurement systems in accord with business practices.
• Install comprehensive risk management system to evaluate individual, business, and firm level
performance.
Therefore, a Risk Assessment and Management project team must be formed to conduct a thorough
analysis of the system and provide recommendations and policies to deal with disaster. At McBride,
the design of the system network will affect security, auditing and disaster recovery, therefore a
comprehensive analysis of the network design, security and disaster recovery will go a long way to
mitigate against possible risks.
Disasters, Backup and Recovery Plan
McBride has to have data based on analysis of risk factors based on their likelihood and progressive
nature of occurrence available to develop the backup and recovery plans. This data may be used to
develop effective and balanced measures for loss prevention, mitigation, and recovery.
Disasters can be classified into three broad categories:
• Technical Disasters: Equipment Failure, Database Service Failure, Software Failure, Loss of
Power, Loss of A/C.
• Natural Disasters: Fire, Tsunami, Flood, Earthquake, High Winds, Airplane Impact, Human–
Caused Disasters: Theft, Vandalism,

Countrywide Financial Risk Essay
Credit Risk: Countrywide Financial Corporation
All in all, it is very true that risk are an inherent part of business. Thereby looking at the various
types of risk, many entities are impacted by all types of risk.
A company representative of credit risk are that I find to exhibit credit risk is Countrywide Financial
Corporation. Essentially, this company displayed much credit risk especially disbursing loans at the
expense of the borrowers. In general, Countrywide was known for their slick advertising and smooth
talking operators which lured consumers into the deception of what they simply thought were honest
and affordable loans. All the more, this was a scheme to advance the loan officer 's commission
amounts. More so, by ... Show more content on Helpwriting.net ...
Furthermore, the lenders of Countrywide were profiting off the loans being issued to the borrowers.
However, the borrowers did not see the actual effects until little too late and then they were left with
high interest rates and loan amounts they could not afford to pay back. Therefore, the borrowers
became delinquent because they could not afford to pay off these high interest rate loans. All the
more homeowners were losing their homes as a result.
Equally important, this financial entity was dishing out highly unfavorable loans that pushed for
higher commissions for the Countrywide team members.
According to Morgenson (2007) contends the following: potential borrowers were often led to high–
cost and sometimes unfavorable loans that resulted in richer commissions for Countrywide's
smooth–talking sales force, outsize fees to company affiliates providing services on the loans, and a
roaring stock price that made Countrywide executives among the highest paid in America (para. 2) .
Managing credit risk exposure:
Likewise, it is pivotal for Countrywide to manage their risk exposure by ensuring that the borrowers
they provide loans to are able to pay back what they have borrowed. Thereby, in order to do this,
Countrywide lenders will need

Carlos and Nissan: Managing Global Financial Risk
What Carlos and Nissan did in order to manage global financial risk and why? Carlos and Nissan
managed global financial crisis by changing the way the company did business by shifting from the
Japanese culturally approved concept and moved to the American way of cutting cost and increasing
productivity which helped them to prosper and since Carlos Ghosn came from a multicultural
background he didn't find difficulty doing that. Carlos Ghosn first determined how deep financial
stagnation was and decided to set up cross functional Renault and Nissan management teams in
sectors such as engineering, design and sales to solve the problems and set the new realistic but
tough performance goals and objectives of the company which were to boost the company's sales.
He therefore made it clear to everyone that he will have one stand and that whoever felt it wasn't
favorable was at liberty to leave the company because he wasn't ready to tolerate backsliding
anymore. Carlos did all the above because the company was experiencing a loss of about $6 billion
annually for seven out of eight years which led to company's massive debts that were giving doubts
to the suppliers and the financiers of the company. Carlos and Nissan also did whatever they did
because the company's brand name was fading away in the minds of the consumers due to the
problems the company was experiencing for those seven years which were more scary to them
because they were not sure if the solution will ever be

Risks Faced By Financial Institutions
UNIVERSITY OF SARAJEVO
FACULTY OF ECONOMICS
UNIVERSITY OF BOLTON
ISLAMIC BANKING MASTER STUDIES
"CREDIT RISK IN ISLAMIC FINANCE"
Module title: Risk Management in Islamic Finance
Student: 3669/15 IB
Tutor: Mohammad Sabri, PHD
Risk
Risk is contemporary and continuous challenge in the world of finance. In general, risk is
understood as a situation where an uncertainty of desired results exists, as well as the undesirable
consequences. Risk is studied as a subject within several social sciences and these include statistics,
economics, financial management and insurance. Examination of risk in each of these sciences has
specific aspects that differ from those in others.
Credit Risk
Risks faced by financial institutions (both conventional and Islamic financial institutions) in the
operations that they perform are of different nature and types: exchange rate risk, trade risk (or
market risk), political risks, risks that represent changes in the value of assets and good, etc. Credit
risk is deemed to be the most significant type of risk which is faced by financial institutions and in
their relationship with the owners of wealth. Credit risk relates to the debtor's ability to repay the
debt at the specified time, and in accordance with the conditions stipulated in the contract signed
and agreed upon to. The debtor's inability to abide by his obligations will lead to a loss, breach of
contract and therefore will become a risk for the institution.
The existence of

Risk Analysis : Financial Analysis Of The Stock Market And...
Introduction
According to Rosvall & Bohlin (2014:1), risk is the price of opportunities provided by the stock
market for investors. If investors would like to minimize risks of stock trading process, the portfolio
investments are vital to be concentrated on (Anghelache & Anghelache, 2014:8). Besides,
Goetzmann & Kumar (2008:433) also stated that portfolio investment is a great choice for investors
to eliminate risk.
This study has provided simulation of investment and process of establishing a portfolio. According
to Markowitz (1952:77), the rule of portfolio selection is investors should maximize the value of the
future profits. Therefore, researchers utilized various analysis techniques to monitor performance of
the portfolio selected ... Show more content on Helpwriting.net ...
Despite strengths, some weaknesses also should be discussed. According to Murray & Frenk
(2012:98), health–care system of US is only ranked at 37th in the world based on The World Health
Report 2000. However, it should not be ignored that the cost of US health–care system is the highest
in 2006. Main problem of health–care system is the large gap between pay and gain.
Moreover, there are also some opportunities and threats of US economy. First of all, electronic
device and medical service in worldwide market are much larger than before (Kaasinen, 2013:79).
According to world report of Industry and information from 2016 to 2017, wireless communication
equipment has a significant growth rate at 2.89% (Baller et al.,2016:59). Furthermore, the
combination among countries becomes tighter. The rules of APEC, G20 and other international
organizations force other countries to open their domestic market to multiple companies like APPLE
and Microsoft, unless they are willing to be separated from global market and provide convenient
way to American companies to go through service trade barrier.
Additionally, some threats also cannot be ignored. For example, though American companies are
competitive in global market, there are also some challengers from newly–developing countries like
Huawei & Alibaba with more flexible strategies and lower costs. Portfolio structure
According to the research of

How The Financial Risks Of Your Business
How to Assess the Financial Risks of Your Business
By Reinafe Anne P Ofrin | Submitted On February 06, 2013
Recommend Article Article Comments Print Article Share this article on Facebook Share this article
on Twitter Share this article on Google+ Share this article on Linkedin Share this article on
StumbleUpon Share this article on Delicious Share this article on Digg Share this article on Reddit
Share this article on Pinterest
Expert Author Reinafe Anne P Ofrin
When a potential investor or creditor asks how risky your business is, how will your financials
answer the question? The financial risks of your business can be assessed by answering these two
questions:
How liquid is our company?
How are the company 's assets being financed?
HOW LIQUID IS YOUR COMPANY?
Your company is liquid when you have the ability to pay your debt obligations as they become due.
The liquidity of your company can be assessed in two ways
Compare the assets of your company that are relatively liquid in nature against the amount of your
debts that are coming due in the near term
Determine how quickly you can convert your liquid assets into cash.
Current Ratio
Current assets (found on the Balance Sheet) include cash and other assets that can be converted to
cash or to be used up within one year. It commonly includes temporary investments, accounts
receivable, inventory and prepaid expenses.
Current liabilities (also found on the Balance Sheet), on the other hand, are obligations that are

Financial Risks Of Online Banking
2.2 Fraud risks in online banking
The threat landscape
The section above traced the evolution of the banking industry's adoption of IT based innovations
with the aim of offering a suite of products and services to delight their retail and corporate
customers and to gain cost reduction and market share. Whilst these developments have grown the
market universe exponentially it has also created opportunities for crime syndicates and fraudsters to
take advantage of the wider canvas and customer ignorance thrown up by the variety of online
banking applications. According to Financial Fraud Action UK (2014), in the first six months of
2014, losses on remote banking fraud rose to £35.9 million, up 59 per cent from 2013 in the U.K.
Online banking fraud comprised £29.3 million of that total, up 71 per cent from 2013. This has
made the online banking service retailers sensitive to the erosion in their profits as well as the
increased levels of anxiety in customers. To arrest this trend the banks are constantly endeavouring
to evolve their payment and transaction rules in the hope of thwarting the criminal and fraud activity
and to stay ahead. The fraudsters are never far behind as they constantly shift their focus from the
well defended to less defended targets or the weakest links in the market. With time to market
pressures the banks often launch new products and services without adequate safeguards or defence.
Indeed, the newness of the services, and the unknowns about how

Why Firms Should Manage Financial Risks?
Q) Why firms should manage Financial Risks?
INTRODUCTION: The etymology of the word "RISK" can be traced to the Latin word "RESCUM"
meaning danger at sea or that which cuts. Managing business in a highly volatile environment is like
navigating a ship on stormy seas. The modern business is confronted with many risk, some of which
are basic eg., loss of property due to natural calamities, civil unrests etc., and some are strategic
risks. Strategic risks may manifest themselves in several ways like foreign exchange rates or interest
rates or commodity prices impacting the expected value or the real cash flow. In recent years, life
has become a lot more complicated. Today firms are confronted with business risks that are ... Show
more content on Helpwriting.net ...
The term "risk" really covers two things which, in there casual relations to the phenomena of
economic organization.
Risk management with regard to firms In enterprise risk management, a risk is defined as a possible
event or circumstance that can have negative influences on the Enterprise in question. Its impact can
be on the very existence, the resources (human and capital), the products and services, or the
customers of the enterprise, as well as external impacts on society, markets, or the environment.
Risk– sensitive industries Some industries mange risk in a highly quantified and numerate way.
These include the nuclear power and aircraft industries, where the possible failure of a complex
series of engineered systems could result in highly undesirable outcomes. The usual measure of risk
for a class of events is then, where P is probability and C is consequence. The total risk is then the
sum of the individual class–risks. In the nuclear industry, 'consequence' is often measured in terms
of off–site radiology release.
Objective of Risk Management
Though it may be difficult to outline specific targets for risk management, some of the main
objective of Risk management is to reduce different risks related to a pre–selected domain to the
level accepted by

Why Financial Risk Management Online
How to Find Financial Risk Management Online
Financial Risk Management Ideas
So as to make a genuine estate investment, you should gauge the risk involved. By managing
financial risks, an organization can concentrate on its key activities as well as operations, instead of
on forecasting rates of interest, exchange rates, and future commodity costs. In a practical manner,
they are not capable of being a perfect market.
Translation risks describe the changes within the value of the foreign asset because of changes in
financial rates, including the foreign exchange rate. Many traders will opt additionally to cut the
position in place of adding to their own account. Investors seek their advantage by considering the
lengthy term.
Life insurance covers risk as a result of premature death together with income after retirement. Over
the last three years SUMIT 's strategies have caused improved loss ratios. There are various methods
to manage loss.
The Pain of Financial Risk Management
Besides that, my organization might have to be accountable to our shareholders as well as the media
too, since we are a local listed company. Today, you might use the assistance of various financial
manager in addition to financial risk management software before you intend to make an
investment. In case you are seriously regarding a career in financial consulting, you have to know
the clients you will be serving.
Service providers make certain you 'll never need to think too much about the

Financial Globalization and Risk Essay
Introduction:
From the beginning of the 1990s, the global financial system has entered a phase of unprecedented
restructuring, marked by the increasing integration of financial markets and increased economic
interdependence. This process, known under the name of financial globalization allows companies
better access to financing, offers investors a greater possibility of investment and thus increases the
liquidity of the global economy.
However, this financial globalization has enormous risks. Indeed, creating an interconnection
between national financial systems, it facilitates the transmission of shocks, contagion . Thus, a local
imbalance turns immediately into a systemic crisis as shown by the recent financial crisis.
Disruption in ... Show more content on Helpwriting.net ...
The Basel committee was established by the central bank governors 40 years ago and since tried to
strengthen the regulation, supervision and risk management of the banking sector. The Basel 3 is
basically rules built on top of the Basel 2 and 1 framework and contains primarily 5 key
improvements that will be explained in details further down the project. Basel 1 and 2 will shortly
be explained but the main focus will be on the Basel 3.
The bursting of the housing bubble in 2007 and the crisis that ensued highlighted the shortcomings
of the banking regulation and forced the international authorities to consider a new agreement on it.
Thus the Basel Committee decided to force banks to implement this new agreement.
Problem area:
Basel III establishes a set of standards for the implementation of a liquidity ratio for international
banks , a leverage ratio , counter–cyclical measures , a redefinition of equity and a review of the
coverage of certain risks . This set of standards will help to strengthen the resilience of the financial
and banking sector in anticipation of further financial and economic stress , regardless of the source.
All of its new measures that the Basel Committee has developed to strengthen the regulation,
supervision and risk management in the banking sector aims to strengthen transparency and
communication within banks,

A Country 's Political And Financial Risk
Country risk refers to the economical, political and risks that are unique to a country, and that might
result in losses which are quite unexpected.
CHAPTER OBJECTIVES
1. To identify the common techniques used by Tesla to measure a country's political and financial
risk while launching Tesla's new section of motorcycles.
2. To explain the methods used to measure country risk.
3. To explain how the measurement of country's risk is used by TESLA when deriving and
validating the financial decisions for its new motorcycles.
4. Country shows the potential impact of a country's impact on the tesla motor's cash flow.
PESTEL RISK ANALYSIS
Political risk: This risk is the risk to the political arguments and policies made within a country that
might turn out to be an loss to the company. While economic risk is said to be a country 's ability to
reimburse its dues. Even if a country 's economy is strong, if the political climate is unstable or
unreliable to outside investors, the country where the investment is taking place may not be a good
place for investment.
Political factors go hand in hand with national administration a political parties altogether.
International bodies such as European union and World trade organizations. In order to influence
industrial sector, United states government promotes motor vehicles under the Regulation of EC No.
1475/95 and furthermore helps the research ideas of motor bikes manufacturers by sixth framework
Program (2002–2006).

Third Party Payment Platforms Financial Risk : A...
THIRD–PARTY PAYMENT PLATFORMS FINANCIAL RISK:A PREVENTION STUDY
1. Introduction
When network entered into people 's daily lives, people started to go shopping online and concern
the risk of third–party payment platform. Third–party payment platform is based on trust and a
third–party payment platform needs more time to build independent agencies to pay trading
platform. Third–party payment is not a financial institution, it builds a connection between
merchants and banks as banks and merchants as technical support services and credit guarantees
while facilitates public payment and reduces transaction costs. With the development of online
shopping transactions, third–party payment platform generated and plays a vital role(Wang and Zhu,
2014). It is not only to the success of every transaction but also much money related to a range of
security and social stability. According to a formal statistics, China 's third–party payment platform
transaction amount has got 274.3 billion yuan, more than 976 billion yuan in 2007 181% in
2008(Wang and Zhu, ibid).
2.Background of third–party payment platforms 2.1 Payment in China–Alipay In 2003,focusing on
Taobao 's credit problems and users ' online shopping needs, there is a mode called "secured
transactions" that buyers in the confirmation satisfaction purchased products after the payments
were transferred to sellers to reduce online shopping transaction risk(Yu and Li, 2015).
In December 2004, the former CEO of Alibaba

Financial Risks
The successful management of financial institutions (FIs) demands an understanding of the relevant
structures, operations, and the associated risks. In particular, the assessment of the risks is necessary
to make the appropriate steps to maintain the solvency of FIs (Saunders & Cornett, 2007). One of
the steps involves the application of off–balance sheet (OBS) activities. OBS refers to the properties
of the FI which are considered assets, but which do not feature in the balance sheets and thus are not
used in balancing the ledger (at most, they may appear at the bottom of the balance sheet). OBSs are
extremely useful since they often assist in leveraging the commercial banks in times of crisis,
especially when the financial markets are ... Show more content on Helpwriting.net ...
The operations also include future contracts, structured in such a way so as to execute organized
exchanges that involve payment for assets at a later date (Saunder & Cornett, 2016). Finally, the
OBS items include commitments, guarantees, and other derivative financial instruments that
sometimes serve as significant sources of revenue for the commercial banks (Papanikolaou & Wolff,
2014).
Furthermore, an off–balance sheet item can move onto the balance sheet after the agreed conditions
are met. For instance, when the accepted obligations are met by the parties involved in the
transaction, the OBS assets transform into the balance sheet assets, hence moved accordingly
(Bučková, 2012). The future contracts are therefore terminated, valid from the moment when the
pre–requisite conditions are met. In most cases, the OBS items are joined to the credit risks. More
importantly, the derivative instruments are introduced into the balance sheet in their real values, but
reflected in the OBS in their nominal values (Bučková, 2012).
Finally, it is vital to assess the risk of the particular OBS item before implementing it. Nevertheless,
an accurate evaluation of any OBS activity and its risk implications is an extremely difficult process
since every separate OBS item possesses complex contingent claim

Risk And Financial Impact Of Under Armour
Risk & Financial Impact Under Armour is exposed to numerous risks entering the golf equipment
industry. Despite, the organization already having a footprint in the sport as they are in the apparel
market, they are still susceptible to the risks that plagued Nike. Under Armour can be exposed to
manufacturing, assembling, distribution, and marketing deficiencies that without proper planning
could become detrimental to their product launch. "The biggest problem we've encountered is lack
of preparation: Companies are so focused on designing and manufacturing new products that they
postpone the hard work of getting ready to market them until too late in the game" (Schneider &
Hall, 2011). It is critical that when Under Armour is read to launch into the golf equipment industry
that the equipment is top notch, there is a plan for marketing, and Under Armour is ready to follow
through on their claims and delivery of golf equipment. Potential Risks: The first exposure is
presented to Under Armour is their relationship with the overseas manufacturing partner. Shortages
of raw materials, delays, and inefficiencies in the manufacturing process can disrupt the product
launch. If Under Armour is going to make claims to deliver top notch equipment in a period of time,
they have to rely on overseas communication, manufacturing and delivery to do so. There is a
concern that the increases in the manufacturing costs can start reducing profit–margins. As seen over
the past election debates,

Risk Management Program For A Financial Institution . As
Risk Management Program for a Financial Institution As time has shown, financial institutions
undertake an abundance of uncertainty causing unpredictable risk consequences. As a result,
executives instill risk management programs to assist in managing the organizations risks so they
align with the company's goals. Commonly sought goals include legal and regulatory compliance,
tolerable uncertainty, survival, business continuity, earnings stability, profitability and growth, social
responsibility and economy of risk management operations. Through the implementations of goal
oriented programs, an organization can effectively minimize risk uncertainty. All organizations
including financial institutions encounter risks from each risk ... Show more content on
Helpwriting.net ...
Furthermore, outdated technology would impact the facilities ability to prevent cyber–attacks,
compete with competitors, provide superior customer service, and maintain workplace efficiency.
Additionally, events influencing the economic and political environment could impact financial
stability for the organizations. External environmental hazards include extreme weather conditions
that affect customer and employee safety. In addition, factors within ABC Community Banks
internal environment include communications channels, as well as, the facilities culture.
Communication channels impact the institutions policies, procedures and trainings, which when
inadequate may cause work place errors. Moreover, assessing the culture will determine the general
attitude and viewpoints of employees (Elliott, 2012). In scanning the environment of ABC
Community Bank, the organizations can identify areas of weakness and adapt, in order to maintain
tolerable uncertainty, while increasing business continuity and ultimately survival. Therefore, ABC
Community Banks internal and external analysis will provide the groundwork for creating a risk
management program that aligns with the organizations goals and risk aptitude.
Identifying Risks Through the examination of ABC Community Banks environments, both internal
and external risks of the organizations can be identified. External

Financial Aspect Of Climate Risk Management
Financial Aspect of Climate Risk Management
Climate change is a lethal and destructive force. In the recent past major climatic events like floods,
tsunamis etc. have led to substantial destruction of wealth. Such events have highlighted the need of
mechanisms for risk sharing of the losses and restoring the lost human and infrastructural capital.
The climate change agreement declared on December 12, 2015 was one of the highlights of the year.
It showcased the resolve of various nations in fighting climate change. It was a welcome change
from Copenhagen.
Climate Change and its Effects
The major target for financial sector is to provide jobs, economic welfare to the thriving population,
without damaging environmental balance. It is the role of the financial sector to help in managing
climate risk and help society recuperate from it. Any climate risk directly or indirectly affects the
financial sector in a huge manner. Whenever a climatic catastrophe occurs, the number of insurance
claims rise exponentially. Global Insurance claims have risen from 5.1 billion US dollars annually in
the 1970's to 27 billion US dollars per year in 2014.
Figure 1: Losses due to various climate scenarios Source: World Resources Institute
Climate variability also affects agricultural sector in a major way. It affects food availability and
security and may lead to rise of poverty as well. As a natural calamity affects the agricultural sector,
it leads to loss of income of agriculture

The Effect Of Financial Risks On Anz's Business
Market risk is unfavourably effect to ANZ's business operations and their financial condition
Fluctuations of interest rates, foreign exchange rates, equity prices, debt securities and other
financial contracts may materially adverse effect on the ANZ. Especially they are conduct business
in several currencies, fluctuation of exchange rate may affected to ANZ (ANZ Bank, 2015).
Operational risk and reputational risk may adversely affect to ANZ's business operation and their
financial condition
Losses from operational risk such as fines, penalties, loss or theft of funds or assets, legal costs, loss
of shareholder value, loss of property or information may adversely affect for the group's financial
results (ANZ Bank, 2015).
Information

Banking Industry Meltdown: The Ethical Financial Risk...
Banking Industry Meltdown: The Ethical Financial Risk Derivatives
Objective
This work will examine the case 'Banking Industry Meltdown: The Ethical Financial Risk
Derivatives" and determine which moral philosophy is most applicable to an understanding of the
banking industry meltdown and explain the rationale. The case study will be analyzed and white–
collar crimes considered as to whether they are different in any substantive manner from other more
blue–collar crimes. This study will determine and discuss the role that corporate culture played in
banking industry scenario and the response will be supported with specific examples. This work will
postulate how leaders within the banking industry could have used their influence to avert the
industry meltdown.
Introduction
According to the work examined in this study the global recession that occurred in 2008 and 2009
was partially a result of the financial industry's failure to be responsible for the decision it made in
using financial instruments that were risk and very complex in nature. The culture of corporations
were constructed on risk–based rewards instead of rewards that resulted in value for stakeholders.
The financial risks that banks took on were not well comprehended by the public or regulators and
the mass media also failed to understand the risks that the banks had entered into with certain
financial agreements.
The Subprime Market
The problems in the subprime mortgage market came under notice in 2008

A Brief Note On Risk And Financial Impact Essay
III. Risk and Financial Impact "Since 2013, Under Armour has spent nearly $1 billion acquiring
three fitness and activity apps. The purchases of MapMyFitness, MyFitnessPal, and Endomondo are
a part of Under Armour 's strategy of connecting with customers and increasing awareness and sales
through its wholesale and direct–to–consumer channels" (Nijjar, 2016). "Under Armour intends to
leverage the data from its 160 million registered Connected Fitness users to boost engagement and
monetize these apps. The company is off to a good start in terms of growing its digital business. In
its most recent quarter, revenue in its Connected Fitness category grew 119% to $18.5 million. Still,
while Connected Fitness makes up less than 2% of the overall business, its absence would have
resulted in an increase of 47% in overall operating income. In the first quarter of 2016, Connected
Fitness ' contribution to operating income was a loss of $16.5 million" (Nijjar, 2016). When Under
Armour first acquired the fitness applications they needed to way all of the pros and cons that came
with this purchase. Within the last few years the fitness applications and things that assist the
consumer in their fitness goals have become more main stream than before. The consumer is able to
either add an application on their smart devices or a smart watch. These applications will track such
things as your phone calls, steps, heart rate, and blood pressure just to name of few. "Fitness trackers
have seen an

Effects Of Credit Risk On Financial Institutions
A common saying tied to many new endeavors, "Without risk, there is no reward". Financial
institutions are no exception to this rule. The major risks that all financial institutions are exposed to
are credit risk, liquidity risk, operational risk, market risk, business risk, reputational risk, systemic
risk, and moral hazard (Perez, 2014). Of these top eight scenarios, credit, market, and operational
risks are the three major risk factors that Jeanne D'Arc is focused on mitigating during and
following the business service project.
Credit risk indicates a decline in the credit assets' values before default that arises from the
deterioration in a financial institution's portfolio quality. Credit risk can also represent the volatility
the loss in the credit asset's value and the loss in the current and future earnings from the credit
(Perez, 2014). To prepare and accommodate inevitable losses stemming from our business credit
card Jeanne D'Arc has budgeted for a loan loss reserve to help protect the financial integrity and
assets of the credit union.
Operational risk occurs in all day–to–day activities in banking. As the credit union is looking to
attract a new type of member, this risk is can be caused by inadequate internal processes, people,
systems, and external events. Some examples of operational risk include people risk, hacking of the
core processing system, errors in information processing, data transmission, data retrieval, and
inaccuracy of outputs (Perez, 2014).

Information Risk And Its Effects On Financial And...
11. Information risk refers to the potential harm that can be done by employees, third parties, data
breaches, etc. The information risk puts a lot of pressure on financial and investment policies.
Therefore, it should be properly managed to reduce the occurrence of events that can negatively
influence the company internal or external processes. The information risk can be mitigated by
technologies (Fraser & Simkins, 2010, p. 510 – 511).
12. Internal environment – includes conditions, events, and factors within the company that affect
the organizational culture, activities, and employees' behavior and choices. The internal
environmental factors can be management changes, employee morale, financial changes, etc. The
internal environment affects employees' motivation, efficiency, and performance (Fraser & Simkins,
2010, p. 518).
13. People risk – refers to the costs that arise as a consequence of things that happen due to
employees. People are the most important asset in any business, but they are also the most
vulnerable asset. Moreover, people are also a key source of risk. The employee must be a top
priority for business leaders. The company should to have a strategic approach to manage people
risk. It will allow reducing the disruptions and costs to the business (Fraser & Simkins, 2010, p.
510).
14. Proactive Risk Culture – includes proactive planning to ensure risk events can be converted into
business opportunities. Important to have an efficient governance system to

Multinational Financial Management by Alan Shapiro:...
CHAPTER 6
Country Risk Analysis
EASY (definitional)
6.1 The degree of political risk faced by a firm operating in a foreign country
a) can be determined by using a political risk index
b) depends on the benefits provided by the firm
c) both a and b
d) depends on how the firm has structured its operations
Ans: d
Section: Measuring political risk
Level: Easy
6.2 One good indicator of political risk is
a) the seriousness of capital flight
b) the level of local interest rates
c) the level of local tax rates
d) a large middle class population
Ans: a
Section: Capital flight
Level: Easy
6.3 Capital flight occurs for several reasons, most of which have to do with
a) government regulations on interest rates
b) high taxes on ... Show more content on Helpwriting.net ...
a) currency controls
b) privatization of public utilities
c) changes in tax or labor laws
d) regulatory restrictions
Ans: b

Level: Difficult
6.17 Which one of the following is NOT a measure of political instability?
a) the number of political parties in one nation
b) frequency of changes of government
c) the level of violence
d) conflicts with neighboring states
Ans: a
Level: Difficult
6.18 Which of the following foreign investments would be least subject to expropriation?
a) an oil well in an LDC that is providing needed foreign exchange
b) a coffee plantation that is producing beans for export
c) an assembly plant for automobiles located in an LDC
d) a tire making plant in an LDC that is substituting for tire imports
Ans: c
Section: Key indicators of country risk
Level: Difficult
6.19 A U.S. company whose foreign property has

Risk And Corporate Financial Strategy Essay

Recommended

Recommended

More Related Content

Similar to Risk And Corporate Financial Strategy Essay

Similar to Risk And Corporate Financial Strategy Essay (13)

More from Carmen Martin

More from Carmen Martin (20)

Recently uploaded

Recently uploaded (20)

Risk And Corporate Financial Strategy Essay