The document discusses various techniques for identifying risks, including flowcharts, organizational charts, questionnaires, checklists, physical risk inspections, and event inventories. Flowcharts and organizational charts can help locate areas of risk concentration and dependencies. Questionnaires are useful for collecting information from different staff but need to be designed carefully. Physical risk inspections allow assessing risks firsthand but are time-consuming. Event inventories examine past loss events to identify trends. The techniques have advantages and disadvantages, so a combination is often best to comprehensively identify risks.
Financial risk management is the practice of protecting economic value in a firm by using financial instruments to manage exposure to risk: operational risk, credit risk and market risk, foreign exchange risk, shape risk, volatility risk, liquidity risk, inflation risk, business risk, legal risk, reputational risk, sector risk etc. Similar to general risk management, financial risk management requires identifying its sources, measuring it, and plans to address them.
Financial risk management can be qualitative and quantitative. As a specialization of risk management, financial risk management focuses on when and how to hedge using financial instruments to manage costly exposures to risk.
Financial risk management is the practice of protecting economic value in a firm by using financial instruments to manage exposure to risk: operational risk, credit risk and market risk, foreign exchange risk, shape risk, volatility risk, liquidity risk, inflation risk, business risk, legal risk, reputational risk, sector risk etc. Similar to general risk management, financial risk management requires identifying its sources, measuring it, and plans to address them.
Financial risk management can be qualitative and quantitative. As a specialization of risk management, financial risk management focuses on when and how to hedge using financial instruments to manage costly exposures to risk.
Q120 years In the late 1990s the gold price reached its lowe.docxmakdul
Q1:
20 years: In the late 1990s the gold price reached its lowest level in real terms for two decades. The reasons why it was so weak during the so-called “Clinton boom” from 1995 to 2001 come surprisingly from MMT (modern monetary theory), a theory that in many points opposes gold, in particularly because its proponents are in love with fiat, “the lawful act to declare paper as money”. However, they do not like excessive private debt, which is an idea common to Austrian economists.
But much of the stage was set in 2008 for gold’s rise in 2009 – and for the next few years – when the global financial crisis was entering its darkest days. To recap what happened in the last quarter of 2008, the U.S. Treasury seized control of mortgage lenders Fannie Mae and Freddie Mac in September 2008 and said it offered a $200 billion cash injection for firms dealing with mortgage default losses. The most immediate reason for gold’s woes is the strong dollar. Gold is priced in dollars, so if the American currency goes up, investors mark down the yellow metal accordingly. An added factor is that the dollar is rising because of the revival of the American economy, which is bringing the prospect of higher interest rates.
6 menthes: In December, the price of gold was at the top level and that due to at the end of December the price of gold was decreased suddenly. The big news of course is that the Fed hiked rates another 25 basis points. So far, stock market speculators don’t seem to care. They should. The present value of all future earnings depends on the interest rate, and every upwards tick is a substantial downward revision of earnings in out years. However, the bull is so strongly entrenched that it may take a while for this to sink in. We also think of the companies who were borrowing to buy their own shares, and for that matter borrowing to pay dividends.
Q2:
a. Credit risk: is the type of risk of evasion on a debt that may emerge from a borrower failing to do needed payments. Firstly, the risk is that of the lender which includes lost principal and interest, interruption to cash flows, together with improved collection costs. This loss may be complete or partial. In an efficient market, higher points of credit risk will always be related with huge borrowing costs in an efficient market type. Following this measures of borrowing costs which includes yield spreads can be used to surmise credit risk levels grounded on assessments by current market participants. A good existing example is what happens in local retail shop where buyer in this case will lend money or take goods on credit suggesting to pay later but unfortunately fail to respect that deal.
There actually two kinds of risks associated with bonds that is interest risk and credit risk. They can have very dissimilar impacts on various assets within the bond market. As earlier learnt that interest is the vulnerability of a bond or fixed income asset class to movements in the prevailing rates
b. In ...
Week-1 Into to Money and Bankingand Basic Overview of U.S. Fin.docxalanfhall8953
Week-1 Into to Money and Banking
and Basic Overview of U.S. Financial System
Money and Banking Econ 311
Instructor: Thomas L. Thomas
Financial markets transfer funds from people who have excess available funds to people who have a shortage.
They promote grater economic efficiency by channeling funds from people who do not have a productive use for them to those who do.
Well functioning financial markets are a key factor in producing economic growth, where as, poor functioning financial markets are a major reason many countries in the world remain poor.
Financial Markets
A security or financial instrument is a claim on the issuer’s future income or assets.
A bond is a debt security (IOU) that promises to make payments periodically for a specified period of time.
The bond market is especially important economic activity because it enables businesses and the government to borrow and finance their activities and because it is where interest rates are determined.
An interest rate is the cost of borrowing money or the price to rent (use someone else’s) funds.
Because different interest rates tend to move in unison, economist frequently lump interest rates together and refer to the “interest rate”.
Interest rates are important on a number of levels:
High interest rates retard borrowing
High interest rates induce saving.
Lower interest rates induce borrowing
Lower Interest rates retard saving
Information Asymmetry and Information costs
Why Financial Intermediaries
In the neo-classical world economists have argued financial intermediaries are not necessary. Savers (investors) could manage their risks through diversification.
The logic rests on the perfect market assumption – that is investors can always through their own borrowing and lending compose their portfolios as they see fit, without costs. In such a world there are no bankruptcy costs.
In such a world if taken to the extreme, perfect and complete markets imply that there is no need for financial institutions to intermediate in the financial (capital markets) as every investor (saver) has complete information and can contract with the market at the same terms as banks. E.g. Information Asymmetry
Why Financial Intermediaries Bonds
A common stock (usually called stock) represents a share of ownership in a corporation.
It is usually a security that is a claim on the earnings and assets of the corporation.
Issuing stock and selling it to the public (called a public offering) is a way for corporations to raise the funds to finance their activities.
The stock market is the most widely followed financial market in almost every country that has one – that is why it is generally called the market – here “Wall Street.”
The stock market is also an important factor in business investment decisions, because the price of shares affects the amount of funds that can be raised by selling newly issued stock to finance investment spending. (Note impact examples..
6
Running Head: FINANCIAL RISK MANGEMENT
Joy Nissan
11/2/15
Risk management
Introduction: Financial Banks are very important in today’s economic it is a need for security it is first priority. It saves people hard earned money it is used for the future for the future. Bank’s are important to customers credit and reputation in the market. This risk management is required to confidential data and wrong doing. It is to save the credit and the trust of the customers. Therefore it is required by risk management to protect the customers rights. This paper will explain the financial risk management and the risk that the management factor’s such as credit, operational risk, and also commodity and increase the knowledge and understanding. This will help and increase the knowledge of future exploration of this topic.
Financial risk is a term including transaction from company loans that risk default.
The financial risk is a qualitative and utilized to solve issues as problems arise. The financial risk are specially focuses on how to use instruments to handle cost to exposure that is at risk. The financial risks not only identifies the risk that are potential but also it takes precautionary risk that reduce the risks.
If you make an investment by financial institution it itself is exposure to the risks internally and externally that is possible inflation and to the capital markets as well as bankruptcy and volatility as well as recession.
The Financial Risks and Analysis of Factors
The financial risks that pertains to industry that are the main aspects need to be considered, effectively and efficiently to resolve any order that ensures business success. The following will describe the three risk factors below.
Credit: This is basically related to the loss of the principal of the borrower’s loan that is repay to meet the contractual obligation of the bank. Its is credit that whenever a borrower is expecting to repay a debit. It is considered a credit risk that issuers or borrowers of debt obligation.
This shows the banks inability to return funds to the depositors also termed as risk to the credit. In most cases the insolvent banks shows that inability to return funds to the depositors also termed as a credit risk. In most cases the government grants bankruptcy and government grants.
It also gives protection to the customers for the business and insurances in the form of the mortgage and insurance of guarantees of third parties.
Commodity
It is substance that is grains, and metals that is interchangeable with other products, in which a investors buy or sells usually through futures contracts. Risk is actually reason exchange trading the basic agricultural products. It is also a product that trade on exchange for foreign currencies and instruments and indexes.
This is a risk that basically referring to the uncertainties in the future. Its affects the size a.
De los 15 mercados objeto de estudio, sólo Sudáfrica y Turquía muestran debilidad en los tres factores de riesgo.
Cinco mercados, Brasil, Chile, Hungría, México y Polonia, se muestran vulnerables en dos de los tres factores de riesgo.
Ocho mercados, Hong Kong, India, Indonesia, Israel, Malasia, Rumanía, Rusia y Corea del Sur, muestran salvedades en uno de los tres factores de riesgo.
Interest rate risk management what regulators want in 2015 7.15.2015Craig Taggart MBA
Areas covered in this section
Why Interest Rate Risk (IRR) should not be ignored
• Forward Rate Agreements (FRA’s) Forwards, Futures
• Swaps, Options
Why Bank Regulators continue to have a poor handle on interest rate risk
• Interest Rate Caps, floors, Collars
• LIBOR and UBS & Barclays rigging rates
• How should Financial Institutions determine which IRR vendor models are appropriate?
IRR Measurement methodologies are institutions
Q120 years In the late 1990s the gold price reached its lowe.docxmakdul
Q1:
20 years: In the late 1990s the gold price reached its lowest level in real terms for two decades. The reasons why it was so weak during the so-called “Clinton boom” from 1995 to 2001 come surprisingly from MMT (modern monetary theory), a theory that in many points opposes gold, in particularly because its proponents are in love with fiat, “the lawful act to declare paper as money”. However, they do not like excessive private debt, which is an idea common to Austrian economists.
But much of the stage was set in 2008 for gold’s rise in 2009 – and for the next few years – when the global financial crisis was entering its darkest days. To recap what happened in the last quarter of 2008, the U.S. Treasury seized control of mortgage lenders Fannie Mae and Freddie Mac in September 2008 and said it offered a $200 billion cash injection for firms dealing with mortgage default losses. The most immediate reason for gold’s woes is the strong dollar. Gold is priced in dollars, so if the American currency goes up, investors mark down the yellow metal accordingly. An added factor is that the dollar is rising because of the revival of the American economy, which is bringing the prospect of higher interest rates.
6 menthes: In December, the price of gold was at the top level and that due to at the end of December the price of gold was decreased suddenly. The big news of course is that the Fed hiked rates another 25 basis points. So far, stock market speculators don’t seem to care. They should. The present value of all future earnings depends on the interest rate, and every upwards tick is a substantial downward revision of earnings in out years. However, the bull is so strongly entrenched that it may take a while for this to sink in. We also think of the companies who were borrowing to buy their own shares, and for that matter borrowing to pay dividends.
Q2:
a. Credit risk: is the type of risk of evasion on a debt that may emerge from a borrower failing to do needed payments. Firstly, the risk is that of the lender which includes lost principal and interest, interruption to cash flows, together with improved collection costs. This loss may be complete or partial. In an efficient market, higher points of credit risk will always be related with huge borrowing costs in an efficient market type. Following this measures of borrowing costs which includes yield spreads can be used to surmise credit risk levels grounded on assessments by current market participants. A good existing example is what happens in local retail shop where buyer in this case will lend money or take goods on credit suggesting to pay later but unfortunately fail to respect that deal.
There actually two kinds of risks associated with bonds that is interest risk and credit risk. They can have very dissimilar impacts on various assets within the bond market. As earlier learnt that interest is the vulnerability of a bond or fixed income asset class to movements in the prevailing rates
b. In ...
Week-1 Into to Money and Bankingand Basic Overview of U.S. Fin.docxalanfhall8953
Week-1 Into to Money and Banking
and Basic Overview of U.S. Financial System
Money and Banking Econ 311
Instructor: Thomas L. Thomas
Financial markets transfer funds from people who have excess available funds to people who have a shortage.
They promote grater economic efficiency by channeling funds from people who do not have a productive use for them to those who do.
Well functioning financial markets are a key factor in producing economic growth, where as, poor functioning financial markets are a major reason many countries in the world remain poor.
Financial Markets
A security or financial instrument is a claim on the issuer’s future income or assets.
A bond is a debt security (IOU) that promises to make payments periodically for a specified period of time.
The bond market is especially important economic activity because it enables businesses and the government to borrow and finance their activities and because it is where interest rates are determined.
An interest rate is the cost of borrowing money or the price to rent (use someone else’s) funds.
Because different interest rates tend to move in unison, economist frequently lump interest rates together and refer to the “interest rate”.
Interest rates are important on a number of levels:
High interest rates retard borrowing
High interest rates induce saving.
Lower interest rates induce borrowing
Lower Interest rates retard saving
Information Asymmetry and Information costs
Why Financial Intermediaries
In the neo-classical world economists have argued financial intermediaries are not necessary. Savers (investors) could manage their risks through diversification.
The logic rests on the perfect market assumption – that is investors can always through their own borrowing and lending compose their portfolios as they see fit, without costs. In such a world there are no bankruptcy costs.
In such a world if taken to the extreme, perfect and complete markets imply that there is no need for financial institutions to intermediate in the financial (capital markets) as every investor (saver) has complete information and can contract with the market at the same terms as banks. E.g. Information Asymmetry
Why Financial Intermediaries Bonds
A common stock (usually called stock) represents a share of ownership in a corporation.
It is usually a security that is a claim on the earnings and assets of the corporation.
Issuing stock and selling it to the public (called a public offering) is a way for corporations to raise the funds to finance their activities.
The stock market is the most widely followed financial market in almost every country that has one – that is why it is generally called the market – here “Wall Street.”
The stock market is also an important factor in business investment decisions, because the price of shares affects the amount of funds that can be raised by selling newly issued stock to finance investment spending. (Note impact examples..
6
Running Head: FINANCIAL RISK MANGEMENT
Joy Nissan
11/2/15
Risk management
Introduction: Financial Banks are very important in today’s economic it is a need for security it is first priority. It saves people hard earned money it is used for the future for the future. Bank’s are important to customers credit and reputation in the market. This risk management is required to confidential data and wrong doing. It is to save the credit and the trust of the customers. Therefore it is required by risk management to protect the customers rights. This paper will explain the financial risk management and the risk that the management factor’s such as credit, operational risk, and also commodity and increase the knowledge and understanding. This will help and increase the knowledge of future exploration of this topic.
Financial risk is a term including transaction from company loans that risk default.
The financial risk is a qualitative and utilized to solve issues as problems arise. The financial risk are specially focuses on how to use instruments to handle cost to exposure that is at risk. The financial risks not only identifies the risk that are potential but also it takes precautionary risk that reduce the risks.
If you make an investment by financial institution it itself is exposure to the risks internally and externally that is possible inflation and to the capital markets as well as bankruptcy and volatility as well as recession.
The Financial Risks and Analysis of Factors
The financial risks that pertains to industry that are the main aspects need to be considered, effectively and efficiently to resolve any order that ensures business success. The following will describe the three risk factors below.
Credit: This is basically related to the loss of the principal of the borrower’s loan that is repay to meet the contractual obligation of the bank. Its is credit that whenever a borrower is expecting to repay a debit. It is considered a credit risk that issuers or borrowers of debt obligation.
This shows the banks inability to return funds to the depositors also termed as risk to the credit. In most cases the insolvent banks shows that inability to return funds to the depositors also termed as a credit risk. In most cases the government grants bankruptcy and government grants.
It also gives protection to the customers for the business and insurances in the form of the mortgage and insurance of guarantees of third parties.
Commodity
It is substance that is grains, and metals that is interchangeable with other products, in which a investors buy or sells usually through futures contracts. Risk is actually reason exchange trading the basic agricultural products. It is also a product that trade on exchange for foreign currencies and instruments and indexes.
This is a risk that basically referring to the uncertainties in the future. Its affects the size a.
De los 15 mercados objeto de estudio, sólo Sudáfrica y Turquía muestran debilidad en los tres factores de riesgo.
Cinco mercados, Brasil, Chile, Hungría, México y Polonia, se muestran vulnerables en dos de los tres factores de riesgo.
Ocho mercados, Hong Kong, India, Indonesia, Israel, Malasia, Rumanía, Rusia y Corea del Sur, muestran salvedades en uno de los tres factores de riesgo.
Interest rate risk management what regulators want in 2015 7.15.2015Craig Taggart MBA
Areas covered in this section
Why Interest Rate Risk (IRR) should not be ignored
• Forward Rate Agreements (FRA’s) Forwards, Futures
• Swaps, Options
Why Bank Regulators continue to have a poor handle on interest rate risk
• Interest Rate Caps, floors, Collars
• LIBOR and UBS & Barclays rigging rates
• How should Financial Institutions determine which IRR vendor models are appropriate?
IRR Measurement methodologies are institutions
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Modern Database Management 12th Global Edition by Hoffer solution manual.docxssuserf63bd7
https://qidiantiku.com/solution-manual-for-modern-database-management-12th-global-edition-by-hoffer.shtml
name:Solution manual for Modern Database Management 12th Global Edition by Hoffer
Edition:12th Global Edition
author:by Hoffer
ISBN:ISBN 10: 0133544613 / ISBN 13: 9780133544619
type:solution manual
format:word/zip
All chapter include
Focusing on what leading database practitioners say are the most important aspects to database development, Modern Database Management presents sound pedagogy, and topics that are critical for the practical success of database professionals. The 12th Edition further facilitates learning with illustrations that clarify important concepts and new media resources that make some of the more challenging material more engaging. Also included are general updates and expanded material in the areas undergoing rapid change due to improved managerial practices, database design tools and methodologies, and database technology.
Oprah Winfrey: A Leader in Media, Philanthropy, and Empowerment | CIO Women M...CIOWomenMagazine
This person is none other than Oprah Winfrey, a highly influential figure whose impact extends beyond television. This article will delve into the remarkable life and lasting legacy of Oprah. Her story serves as a reminder of the importance of perseverance, compassion, and firm determination.
2. Possibility of events that may have impact
(negative or positive) on objectives and
strategies.
Events are potential incidents or occurrences
resulting from internal/external sources that
effect implementation of strategies or
achievement of objectives.
Events can be both positive and negative.
3. Organizational objectives are
1. Reliable financial reporting.
2. Efficiency and Effectiveness of operations.
3. Safeguarding of assets.
4. Compliance with laws and regulations.
4. Events has to be identified from external or
internal environment.
External conditions: Political, Economic,
Social andTechnological factors lead to
events.
Internal Factors: Processes, Persons and
Infrastructure lead to possibility of events.
5. Business or operational risks:related to
activities of business-Functions
Financial risks: relating to financial
operations.
Environmental Risks: related to changes in
the political, economic, social and financial
environment.
Reputational Risks:
6. Means assignment of risk into categories.
There is no one widely accepted set of
categories, it can vary according to the nature
of business and its industry.
List of risks can be endless.
7. By grouping risks, they can be managed in
common by use of similar controls.
Categorization forces managers to be more
proactive for managing risks.
Categorization helps manager to use their
past experience applied to one category
before.
8. This provides a framework that can be used
to define who is responsible, design controls
and assist in simplified and consistent risk
reporting.
A systematic approach may help identify risks
in the same category.
It can help identify which risks are inter
related.
9. Relates to activities carried out within the
company arising from structures, systems,
people, products or processes.
BASEL committee on banking supervision
defined it as the risk of loss resulting from
inadequate or failed internal processes,
people, systems and external events.
10. Largely subjective.
It includes business interruptions, errors or
omissions, product failure, health and safety,
failure of IT system, Fraud, loss of key people,
litigation, loss of suppliers etc.
Generally within control of the company
through risk management practices including
internal controls and insurance
11. Financial risk is an umbrella term for any risk
associated with any form of financing.Typically, in
finance, risk is synonymous with downside risk and
is intimately related to the shortfall or the
difference between the actual return and the
expected return (when the actual return is less)
Financial risks arise from an organization’s
exposure to financial markets, its transactions with
others, and its reliance on processes, systems, and
people.
12. Financial risk arises through countless
transactions of a financial nature, including
sales and purchases, investments and loans,
and various other business activities. It can
arise as a result of legal transactions, new
projects, mergers and acquisitions, debt
financing. the energy component of costs, or
through the activities of management,
stakeholders, competitors or foreign
governments.
13. There are three main sources of financial risk:
Financial risks arising from an organization’s
exposure to changes in market prices, such as
interest rates, exchange rates, and commodity
prices.
Financial risks arising from the actions of, and
transactions with other organizations such as
vendors, customers, and counterparties in
derivatives transactions
Financial risks resulting from internal actions or
failures of the organization, particularly people,
processes, and systems.
14. Organizations manage financial risk using a
variety of strategies and products. It is
important to understand how these products
and strategies work to reduce risk within the
context of the organization’s risk tolerance
and objectives.
16. Interest rates are a key component in many
market prices and an important economic
barometer.They are comprised of the real rate
plus a component for expected inflation, since
inflation reduces the purchasing power of a
lender’s assets.
Higher risk=higher interest rate
The greater the term to maturity, the greater
the uncertainty.
Interest rates are also reflective of supply and
demand for funds and credit risk.
17. Interest rates are particularly important to
companies and governments because they are
the key ingredient in the cost of capital.
Most companies and governments require debt
financing for expansion and capital projects.
When interest rates increase, the impact can be
significant on borrowers. Interest rates also
affect prices in other financial markets, so their
impact is far-reaching.
18. Other components to the interest rate may
include a risk premium to reflect the
creditworthiness of a borrower. For example, the
threat of political or sovereign risk can cause
interest rates to rise, sometimes substantially, as
investors demand additional compensation for
the increased risk of default.
19. Expected levels of inflation
General economic conditions.
Monetary policy.
Foreign exchange market activity.
Foreign investor demand for debt securities.
Levels of sovereign debt outstanding.
Financial and political stability
20. Foreign exchange rates are determined by
supply and demand for currencies.
Supply and demand, in turn, are influenced
by factors in the economy, foreign trade, and
the activities of international investors,
capital flows, given their size and mobility,
are of great importance in determining
exchange rates.
21. Factors that influence the level of interest rates also
influence exchange rates among floating or market-
determined currencies.
Currencies are very sensitive to changes or anticipated
changes in interest rates and to sovereign risk factors. Some
of the key drivers that affect exchange rates include:
• Interest rate differentials net of expected inflation
•Trading activity in other currencies
• International capital and trade flows
• International institutional investor sentiment
• Financial and political stability
• Monetary policy and the central bank
• Domestic debt levels (e.g., debt-to-GDP ratio)
• Economic fundamentals
22. Purchasing power parity, based in part on “the
law of one price,” suggests that exchange rates
are in equilibrium when the prices of goods and
services (excluding mobility and other issues) in
different countries are the same.
If local prices increase more than prices in
another country for the same product, the local
currency would be expected to decline in value
vis-à-vis its foreign counterpart, presuming no
change in the structural relationship between
the
countries.
23. The balance of payments approach suggests
that exchange rates result from trade and
capital transactions that, in turn, affect the
balance of payments.The equilibrium
exchange rate is reached when both internal
and external pressures are in equilibrium.
24. The monetary approach suggests that
exchange rates are determined by a balance
between the supply of, and demand for,
money.
When the money supply in one country
increases compared with its trading partners,
prices should rise and the currency should
depreciate.
25. The asset approach suggests that currency
holdings by foreign investors are chosen
based on factors such as real interest rates, as
compared with other countries.
26. Physical commodity prices are influenced by
supply and demand. Unlike financial assets,
the value of commodities is also affected by
attributes such as physical quality and
location.
27. 1. Expected levels of inflation, particularly for precious
metals.
2. Interest rates
3. Exchange rates, depending on how prices are
determined.
4. General economic conditions.
5. Costs of production and ability to deliver to buyers.
6. Availability of substitutes and shifts in taste and
consumption patterns.
7. Weather, particularly for agricultural commodities
and energy.
8. Political stability, particularly for energy and precious
metals
28. Credit risk is an investor's risk of loss arising
from a borrower who does not make
payments as promised. Such an event is
called a default. Another term for credit risk
is default risk.
Higher credit risk reduce value of securities.
It increases as time to maturity, settlement or
expiry increases.
Organizations are exposed to credit risk
because of business and financial
transactions.
29. Investor losses include lost principal and interest,
decreased cash flows and increased collection costs which
arise in a number of circumstances:
A consumer does not make a payment due on a mortgage,
credit card, line of credit or other loan.
A business does not make a payment due on a mortgage,
credit card, line of credit, or other loan
A business or consumer does not pay a trade invoice when
due.
A business does not pay an employee's earned wages when
due
A business or government bond issuer does not make a
payment on a coupon or principal payment when due.
An insolvent insurance company does not pay a policy
obligation
An insolvent bank won't return funds to a depositor.
30. Asset Liquidity
is the risk that a given security or asset cannot be
traded quickly enough in the market to prevent a loss
(or make the required profit).
Funds Liquidity
Risk that liabilities cannot be met when they fall due.
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.
31. A process to
1. Identify
2. Assess
3. Manage and
4. Control potential events or situations
----to provide reasonable assurance regarding
the achievement of organizational objectives.
35. Enterprises doing risk management using a
framework can be more successful.
By formally organizing risk management
responsibilities, an organization is better
positioned to achieve its strategic objectives.
Use of framework ensure RM activities are
focused.
36.
37. This involves driving events/conditions from
External Environment
-Economic-Price movements, lower barriers
-Natural Environment-Floods, Fire
-Social-changing demographics, life priorities
-Technological
Internal Environment
-Infrastructure, personnel, process.
38. Consider events at activity and enterprise
level.
Look at history and future estimates.
39. Flow Charts
Organizational Charts.
Questionnaires
Event Inventory-events common to similar companies.
InternalAnalysis-detailed analysis of information.
Facilitated workshops.
Process flow analysis
Leading event indicators (monitoring loan payment for
defaults.
Loss event data methodologies (examining data on past
individual loss events to identify trends and root causes of
events.
Physical Risk Inspection
40. Flow chart is a micro level technique. Better
detailed activities can be known through the
help of flow chart. Organizational chart is unable
to give a clear picture of the risks lying in the
organization and it also cannot identify the
impact of the risk on the organization. The flow
chart will remove these drawbacks which are
found in organizational chart. The flow chart
also shows that where the most important and
crucial dependencies are in the process of
production.
41. The organizational chart is very useful in
identifying the risk as it explains the activities of
organization and structure of the organization.
The organizational chart can be limited to the
organization and it can also be extended outside
the organization to show that on which suppliers
and other departments the organization
depends.The organizational chart will help the
risk manager to locate the area where there will
be risk concentration
42. Flowchart sequentially and graphically depicts
the activities of a particular organization. Any
loss or any risk which will cause disruption in the
operations and will therefore be the bottlenecks
can be clearly identified through this technique.
Flow chart shows the clear picture of the internal
activities of a particular organization, particular
activity of the organization and also the
organization’s complete chain of economic
activities.
43. Now let us take the example of paper making
industry. In which the raw material is collected
which includes straw and used paper.These are
then stored in store room. After that processing
is done on the raw material and pulp is
produced. From pulp, tissue paper, corrugated
paper and fax paper will be made. From
corrugated paper, corrugated sheets are
prepared.Corrugated sheets are then converted
into paper reels, which can be used internally for
packing a product or can be used for selling it.
44. This flow chart is drawn below and will explain that
how risks can be identified from a flow chart. Used
paper is normally stored under the sheds and straw in
not stored under sheds, straw can itself ignite when
temperature is near 40 C, therefore the risk manager
will try to reduce the risk of self ignition by installing a
network of hydrants around straw, which sheds water
twice a day. Risk manager will try to locate the area of
risk concentration and risk dependencies. Pulp
making is a non-hazardous process as water is used as
a raw material in it.This is how the risk manager will
locate the risk in the production process by the help of
a flow chart.
45.
46. Checklists and Questionnaires is also a
technique which is widely used to search and
understand the risk internally.This technique is
also used to understand the impact of the risk,
its frequency and its severity. Questionnaires
should ideally be in either yes or no but
practically it is difficult because sometimes we
need details about a particular question to
clearly identify the risk.The questionnaire
should be very much simple and less time
consuming.
47. Key questions should be involved and all important
factors should be covered while making a
questionnaire.Whenever a questionnaire is being
constructed, it should involve as many people or staff
as possible because everyone has its own thinking and
perception about risk. By Involving different staff
levels, important questions can be created which can
then be very helpful for a risk manager for example
the guard of the organization will also be useful for
the risk manager as he can tell about the risks at his
level.The technical skill of the users should be kept in
mind while constructing the questionnaire.
48. The benefits of checklists and questionnaires
are numerous as they can be extremely
efficient way of collecting information from a
wide range of people which are scattered in
different areas. Large amount of information
can be widely collected by this tool. It is a
simple and easy way to use and it can be used
to update the information and to see the
trends against the previous surveys.
49. There are certain disadvantages of checklists and questionnaires
as well.These can be completed by someone who is not skilled
and do not have knowledge to fill the questionnaire or completed
by person who do not understand the objective of those
questionnaires.These checklists can be ambiguous to the reader
and they could understand the questions according to
perceptions.These questionnaires are also at a risk of being
completed by the person who may have some reasons for holding
back the risk information. All these factors can create problem for
risk manager for identifying the risks.Therefore the risk manager
should be very much vigilant during the construction of
questionnaires and checklists; it should be designed in such a
format that could extract as much information as possible.
50. This is one of the most useful methods for
identifying risk areas. Physical risk inspection
allows the risk manager to have face-to-face
conversation with the workers on the floor as
well as the risk manager will have a very clear
and precise picture of the risk environment of
the organization.
51. This will not be practically possible for the risk
manager to visit each and every part of the large
organization; the risk manager can randomly
visit the areas of organization to locate risks,
change if any occur requires frequent
inspections.The picture which is made on papers
about the organization is totally different from
the actual picture. Usually a perfect situation has
been shown in the paper which in practice is not
according to that.
52. There are specialized Risk Surveyors, who can
be appointed to carry out the inspection and
then report back to the management, adding
their own assessment and suggestions.The
reports prepared by them are very useful for the
risk managers but the risk manager should keep
in mind that the report prepared by risk
surveyors for a particular purpose and they are
not embracing all the risk events which could
occur on the floor of organization.
53. The biggest advantage of physically inspecting risk is
proper risk assessment. Identification of risk along with
the suggestions of managing them is another advantage
of physical inspection.The drawback of physical risk
inspection is that it is quite expensive in terms of both the
time and money. When the risk manager will visit the
factory floor on a specific day, only the activities of that
day will be reflected and remaining day’s activities will not
be taken into account, which is a disadvantage in properly
assessing the risk.The risk manager will not be able to
physically inspect those areas which are not included in
the organization but the organization is depending on that
department for example suppliers of raw materials.
56. Benchmarking
A collaborative process that to compare
performance measures and results of events
/processes and identify improvement
opportunities.
Dimensions to check are cost, time, quality.
Internal benchmarking (compare divisions)
Competitive/Industry benchmarking
Best in Class
57. Value at Risk (VaR)
Cash flow at Risk
Earnings at Risk
58. Use subjective assumptions in estimating the
impact of events without quantifying an
associated likelihood. Examples include.
SensitivityAnalysis.
ScenarioAnalysis.
59. Also known as risk mitigation techniques or
risk response techniques.
It include;
1. Avoidance. (exist the activity)
2. Reduction.( apply internal controls)
3. Sharing and (transfer or share a portion of
risk (insurance or outsourcing)
4. Acceptance (take no action)
60. Limiting risk management to financial
hazards- not considering soft issues (HR,
social responsibility, reputation)
Identifying too many risks as a long list will
increase chances of inadequate attention to
significant risks.
Overcomplicating risk quantification.
61. ERMP changes over time.
Current responses may be irrelevant.
Controls might have lost their relevance.
Business objectives might have changed
Through monitoring activities management
determines if ERMS is effective.
63. Separate evaluations are done by functions.
Internal audits.
Depends upon competence of people
handling control activities, changes in the
processes and results of ongoing evaluations.
Reporting deficiencies.
64. On a continuum from no role to managing
risk management.
Give assurance report for risk management
processes.