Question

There are many types of risk inherent in business operations. focus on credit, market, and operational and financial risks. Identify a company representative from each group and how they would manage their risk exposure.

Answer 1

Risk can be defined as any uncertain or certain event or happening in or around the organisation that could particularly affect the working of your operations either largely or on minor basis but could create an adverse effect on your productivity. Thus, a firm should always try to maintain such strategies and objectives in its organisation that would eventually lead to risk detection and management techniques to cross over any hinderances coming up. The company representative dealing with different type of risks are mentioned below:

1. Credit basis: Credit based risks are the risks which are occupied when the organisation tries to take loans at large to increase their productivity. Such risks are very high and have to be detected to not create problems in the organisation. For the same risk, a financial manager or project manager of the particular loan or credit should be allocated to manage the risk. His duties are to learn and repel all the risky elements of the credit basis purchasing and thus create a good creditability of the organisation.

2. Market : Market risk are very prone to affect the organisation. All the market segments and analysis in the business and its external environment could create problems in the working of the organisation. Thus, either marketing manager or Sales manager have to be appointed who is in direct link with the outside market to detect the risk and solve the problem with the possible solutions for the effectivity of the organisation.

3. Operational : Operational risks are the risks which come from the daily manufacturing, production and other operations of the organisation. This is a very common type of risk and thus either human resource manager or production manager can be appointed for the same problem to detect and dissolve the problem by solving and motivating the internal workforce of the employees.

4. Financial Risk: Financial risks are the risks which can be attained by all the borrowings or capital you have maintained in the organisation. Having a huge share capital would lead to many risks associated with it too thus financial manager should be responsible enough to tackle all the problems effectively and efficiently to create good working environment for organisation where flow of funds are easier.