1. Explain the management of financial risk faced by companies! 2. Explain the management of non-financial...

1. Explain the management of financial risk faced by companies!
2. Explain the management of non-financial risk faced by companies!
3. Provide examples of financial and non-financial risks faced at your workplace and how does it manage the risks?

Expert Solution

1.

Financial Risk faced by Companies

A. Financial risk is a term that can apply to business, government entities the financial market at a whole and the individual.

B. Financial risk is type of danager that can result in the loss of capital to invested parties.
I. For government this can mean they are unable to control monetary policy.

II. Corporation also face the possibility of default on debt they undertake.

III. Individual face financial risk where they make decisions that may jeopardize their income or ability to pay a Debt they have assumed.

IV. Credit risk occurs when customer default with their obligation to service Debt triggering a total or partial loss.

V. Liquidity risk is when the ban is unable to meet a financial commitment arising out of a Verity of situation.

VI. Interest rate risk occurs due to movements in interest rates.
C. Non Financial Risk:- Business Risk:. These are the risk that the bank willingly assuming to create a competitive advantage add value for shareholders.
D. Strategic Risk: The results from a fundamental shift in the economic or political parties

Financial & Non Financial Risk Faced at Workplace

The risk are again primarily focused on Business operating in developing countries which are Differentiated by their lack of economical and technological development, strong national and cultural affiliation and unpredictable in politics and legal.

A.   Higher potential for loss of assets by nationalizations or war
B.   Possible changes in political system on political parties
C.   Lower skills levels and lower motivation in work force in underdeveloped countries
D.   Difficulty in maintaining efficient communication and coordination.

E. Large and frequent economic swings

F. Currency exchange fluctuations

jeff jeffy answered 2 years ago

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