Risk Management

5224 words - 21 pages

Table of ContentPagesExecutive Summary 04Veiling Some Concepts regarding Risk 05Why Should Firms Manage Risk? 06An Example of Merrill Lynch 07The Aims/Objectives of Risk Management 09The Current Economic Downturn 14Current RBS Failure and Risk Management 15Recommendations 17Conclusions 18References 19Executive SummaryAs per a Chinese Proverb,A smart man learns from his own mistakes,A wise man learns from the mistakes of others,And a fool never learnsFrom the last decade risk management is the most researched and exciting area in the financial industry as it elaborates how to minimize and avert the hazard of risk from the portfolios of different assets and from the operations of financ ...view middle of the document...

I will provide a list of recommendations to overhaul on the problems. I have included one old and one new example of the default of the industries, one is of Merrill Lynch and my second example is Royal Bank of Scotland.Veiling Some Concepts regarding RiskRisk, which we define as the uncertainty surrounding the outcome of an event, is an integral and inevitable part of business. Companies and governments operating in the complex economic environment of the 21st century must contend with a broad range of risks. Some do so in an adhoc or reactive fashion, responding to risks as they appear, whilst others are proactive, planning in advance the risks that they wish to assume and how they can best manage them. Since it has become clear over the past few years that risk can be financially damaging when neglected, anecdotal and empirical evidence suggests that institutions increasingly opt for formalized processes to manage uncertainties that can lead to losses. Risk can be classified in a number of ways and though we do not intend to present a detailed taxonomy of risk, a brief overview is useful in order to frame my discussion. To begin, risk can be divided broadly into financial risk and operating risk. Financial risk is the risk of loss arising from the movement of a market or performance of a counterparty and can be segregated into market risk (the risk of loss due to movement in market references, such as interest rates, stock prices or currency rates), liquidity risk (the risk of loss due to an inability to obtain unsecured funding or sell assets in order to make payments) and credit risk (the risk of loss due to non-performance by a counterparty on its contractual obligations). A rise in funding costs, an inability to sell financial assets at carrying value or the default by a counterparty on a loan are examples of financial risks. Operating risk, in contrast, is the risk of loss arising from events that impact non-financial business inputs, outputs and processes. Lack of electricity needed to power assembly lines, collapse of a computer network, disruptions in the sourcing of raw materials or misdirection of payments or orders are examples of operating risks. Risk can also be classified in the pure or speculative form. Pure risk is any exposure that results either in a loss or in no loss, but can never generate a gain; speculative risk is an exposure that can result in a gain, a loss, or no loss. In general, operating risks are often pure risks (e.g. if an assembly line fails to function as expected loss results and if it functions as it should no loss occurs), while financial risks are often speculative risks (e.g. if interest rates rise the cost of funding rises and a loss occurs, if interest rates decline the cost of funding declines and a saving or 'gain,' results). Risk can also be classified by frequency and severity. Though the specter of risk is present in virtually all business activities, the frequency of occurrence can vary wide...

More like Assignment On Risk Management

Paper On Financial And Risk Management

4507 words - 19 pages ... Student Number: s173768 Module: Financial and Risk Management Module Leader: Dr. Atul Shah Assignment Title: John Lewis Partnership Assignment Weighting: Assignment 1: Semester 1 Hand-out Date: 14th May 2017 Hand-in Date: 12:00 Noon, 29th May 2017 Assignment Length: 4000 words +-10% Actual word count: 4126 Words Table of Contents 1. Evaluate the core business of JLP and its key sources of Risk, Profit, and Financial Value. Critically analyze ...

It Tools Of Operations Mangement Risk Management - Fanshawe - Excel

1143 words - 5 pages ... risks. 3. Climate change 4. Contamination 5. Foreign matters 6. Bacteria 7. Allergens Supply chain risk 8. Creating a standard growth. 9. Removing the child labour. 10. Storage 11. Independent and credible third-party verifications. 12. Code of business conduct. 13. Making 100% sustainable cocoa by 2020 Financial risks 14. Foreign exchange rates 15. Employee wage rates 16. Inventory management 17. Commodity pricing 18. Credit risks when associating ...

NCAA Wins In Trademark Infringement Case Against Kizzang - Legal Issues And Risk Management In Sport - Case Summary

641 words - 3 pages ... Rebecca Stainislawczyk SPM397- Legal Issues and Risk Management in Sport Final Homework NCAA Wins in Trademark Infringement Case against Kizzang The National Collegiate Athletic Association (NCAA) administers inter-collegiate sports across the United States and is most known for the Division 1 Men's Basketball Tournament, held in March each year known as “March Madness.” In 2015, CBS news reported through its passionate fan base, “March ...

Econometrics And Risk Management. - Analytics - Assignment

1105 words - 5 pages ... Homework 1 solution for MSA 8200 spring 2017 1. a. Show that E(βˆ|X) = β if X ′X is nonsingular and the zero conditional mean assumption E(u|x) = 0 is satisfied. b. In addition to the assumptions from part a, assume that V ar(u|x) = σ2. Show that V ar(βˆ|X) = σ2(X ′X)−1. Solution: a. The OLS estimator is βˆ = (X ′X)−1(X ′y) = (X ′X)−1[X ′(Xβ + u)] = β + (X ′X)−1(X ′u) So we have: E(βˆ|X) = β + (X ′X)−1X ′E(u|X) = β + (X ′X)−1X ′0 = β. b. V ar(βˆ ...

Econometrics And Risk Management. - Analytics - Assignment

742 words - 3 pages ... Homework 2 – due 3/7 before class 1. (Question 5.3 in the textbook) Consider the following model to estimate the effects of several variables, including cigarette smoking, on the weight of newborns: log(bwght) = β1 + β2male+ +β3parity + β4lfaminc+ β5packs+ u (1) where male is the binary indicator equal to one if the child is male. parity is the birth order of this child, lfaminc is the log of family income, and packs is the average number of ...

Risk Management Insurance 2101 Temple University - 2101 Rmi - Essay

516 words - 3 pages ... employees for their business. Companies do not want to lose their best workers because it will be very tough on the management team to find good replacements. Another reason employer provides benefits to employees because it is mandatory to do so. Employers are made mandatory by law to provide particular benefits to all employees. For instance, it is mandatory for employers to provide employees with workers compensation and unemployment benefits to ...

Initial Risk Assessment

1869 words - 8 pages ... internal or external depending on the risk at hand. With every risk it is important to analyze how internal organization dynamics influence business.A multitude of factors influence how efficiently an organization is managed and how prosperous it will become, from the inner, core management to the employees' moral. The organizational dynamics of an organization, like Kudler Fine Foods, influences the business continuity and planning in many ways ...

Country Risk And Strategic Planning Analysis Paper

2132 words - 9 pages ... called E-Mexico in 2001 (Tomzap, 2008). This initiative has been very beneficial to the residents and businesses of Mexico. Internet and cell phone service availability has increased during the last few years. Computer access and internet service should not be an issue to the management team of the resort or the resort's guests.How to Manage these Risks Risk management involves planning or strategizing how to deal with a likely future event that will ...

Minimizing Tort And Regulatory Risk At Covidien

1697 words - 7 pages ... This purpose of this document is to plan for minimizing tort and regulatory risk for the global organization, Covidien. Using the information gathered from the "Business Regulation" simulation regarding Alumina Inc. as a foundation for seeking potential issues, one will identify the legal principles that applies to a strategic action plan for minimizing risk. This plan will clearly identify common torts and other regulatory risks as to best ...

In The Business About Hedge Risk Analysis - Unisa - Assignment

815 words - 4 pages ... . 2018) Apart from this, credit spread products provide protection against a widening of credit spreads and offset the loss of mark-to-market value due to wider spreads. (Ebrary.net. 2018). Credit derivatives not only can searching yield and enhance the return, it also increased the diversification by buying the exposure. (Ebrary.net. 2018). Reference: Ebrary.net. (2018). Hedging Credit Risk, Trading Credit Risk - Risk management in banking ...

Mac Ville Risk Review Report Task 1 - VACTS - Report

2107 words - 9 pages Free ... properly gathering information. This report is has been made as per the CEO’s specifications that would try to give you a proper knowledge about the current functioning of the cafe and the assessment of all the risk factors that are associated with the expansion. MacVille knows that risk management is an integral part of proper goods management. The company tries to assess, evaluate and manage its risk factors, so that they can provide the best ...

Release Risk And Optimization Of Railroad Tank Car Safety Design - UMD ENME 607 - Research Paper

501 words - 3 pages ... Risk Management Report Name: Zeyu Wei Uid:114998828 Topic: Release Risk and Optimization of Railroad Tank Car Safety Design Authors: Mohd Rapik Saat and Christopher P.L. Barkan Journal:Transportation Research Record 2014 1.What is the risk that is being mitigated? Describe the specific chain of events that would lead to undesirable consequences. The release of hazardous materials caused by railroad accidents is the risk that is being mitigated ...

EBP Paper Task 2-fall Risk Assessment The Patient's Perspective - WGU C361 - Essay

2612 words - 11 pages ... , p 1). This study found that patients 65 years of age and older perspective of fall risk influenced their participation in fall prevention planning. Studies show that older adults are more aware of their risk of falling once they have already experienced a fall (Samples, 2015, p 2). Patients in this study were identified by the hospitals risk management system as having a fall during their current stay at the hospital. The patients were then ...

“what Is The Point Of Learning About Risk And Return If I Am Planning To Be An Accountant”. - Afin253 - Essay

1095 words - 5 pages ... Word counts: 1003 words According to Arora (2010), accounting could be considered as a sub-function of finance as it generates information or data related to the activities of an organization. Once it is related to finance, there are many issues to deal with, including risk and return, which are very common components in financial management. This assessment will analyze the question what is the point of learning about risk and return for an ...

Risk Factors Of Cardiovascular Disease

411 words - 2 pages ... How is it a risk factor?Lack of ExercisePeople who are aerobically fit have larger, strong hearts with clearer and more elastic arteries which means that the heart does not need to deliver as many beats to deliver the same amount of blood than people who are less aerobically fit, therefore this saves more heart beats every year and so it won't wear out and tear the heart as easily.OverweightFor the people who are overweight, there's an extra ...