Ask Question, Ask an Expert


Ask Risk Management Expert

The Concept of Risk Management

A high risk industry is not essentially one which must be avoided by the investors. Invariably the high risk Industries provide the important opportunities for the high or rapid returns on the investment. But it is obvious that investment has to be carefully researched the first, and the risks of scheme carefully weighed. Thereafter, scheme must be watched with the constant attention. A technique for constantly monitoring and the evaluating an investment, and its risks, is called the "risk management".

The "common sense" school of the management recognizes that for every process there is a group of the potential risks which can be recognized individually and specified priority. In many cases they can be avoided by the careful concentration; for example, fire is well known to be a major cause of death and the injury, and chances of escaping and the saving property are greatly enhanced if early warning of fire is given. It is therefore rational to have smoke detectors in farm buildings. Process of managing risk is based on individual analyses of the three fundamental activities, which are taken in the sequence, and subsequent synthesis of results into a programmed of the management action. These three activities are:

1) Discovering the source or Identification of risk, from which a possible risk may occur,

2) Measuring the risk, or evaluating the crash on an individual or an organization in event of a probable risk happening, and

3) Managing and controlling the risk, or selecting most efficient methods to deal with a probable risk.

Thus these three mechanisms have, in turn, many sub-components. These all must be reviewed and analyzed when a risk management work out is undertaken. Guiding farmer in making a review and the analysis, and formulating the risk management strategy, are the subjects of following sections.

Different Types of Risks:

(1)Credit Risk - This is a risk of non recovery of the loan or risk of reduction in value of the asset. The credit risk also includes pre-payment risk resulting in the loss of opportunity to bank to earn higher interest income. The Credit Risk also arises due surplus experience to a single borrower, geographical or an industry area. The element of country risk is also present which is a risk of the losses being incurred due to the adverse foreign exchange reserve the situation or adverse the  economic or political situations in another country.

(2)Interest Rate Risk- This type of risk arises due to the fluctuations in interest rates. It can result in the reduction in revenues of bank due to the fluctuations in interest rates which are dynamic and which change differently for the assets and the liabilities. With deregulated era interest rates are market determined and the banks have to fall in the line with market trends even though it may suffocate their Net Interest boundaries.

(3)Liquidity Risk- The Liquidity is a ability to meet the commitments as and when they are due and the ability to undertake new transactions when they are gainful. The liquidity risk may originate in any of following situations-

(a)Net outflow of the funds arising out of the withdrawals/non renewal of the deposits.

(b)Non recovery of cash receipts from the recovery of loans.

(c)Translation of the contingent liabilities into the fund based commitment and

(d)Increased a ailment of the sanctioned restrictions.

(4)Foreign Exchange Risk  -  The risk may arise on the account of maintenance of positions in force operations and it involves the transaction risks (profits/loss on transfer of earned profits due to time lag), currency rate risk and the transportation risk (the risks arising out of the exchange restrictions).

(5)Regulatory Risks-   It is defined as risk associated with crash on the profitability and the financial position of a bank due to the  changes in regulatory conditions, for example introduction of the asset classification norms have the adversely affected the banks of NPAs and the balance sheet base lines.

(6)Technology Risk - This risk is connected with the computers and communication technology which is being increasingly introduced in banks. This entails risk of obsolescence and risk of losing the business to improve technologically.

(7)Market Risk-This is the risk of victims in off and on the balance sheet positions arising from the movements in the market prices.

(8)Strategic Risk-This type of risk arising out of the certain tactical decisions taken by banks for the sustaining themselves in present day scenario  for example the decision to open a auxiliary may run risk of losses if subsidiary does not do superior business.

The necessary components of the any risk management system are -

*Risk Identification- It refers the naming and defining of each type of the risk connected with a transaction or the type of service or product.

*Risk Control- It refers the framing of guidelines and policies that define risk limits not only at individual level but also for the particular transactions.

*Risk Measurement- It refers the estimation of probability, size and the timing of potential loss under the range of scenarios.

Why Is Risk Management Important?

The efficient risk management strategies allow you to distinguish your project's weaknesses, strengths, threats and opportunities. By planning for unexpected events, you can be prepared to respond if they happen. To make sure your project's achievement, define how you will grip the potential risks so you can mitigate, identify or avoid the problems when you need to do. A successful project managers distinguish that the risk management is significant, because achieving a project's goals depends on the preparation, planning, results and the evaluation that contribute to the achieving tactical goals.


Mywordsolution offers you exactly you need in your Risk Management courses if you think that you cannot cope with all the complexities Risk Management. Our team of dedicated Risk Management specialists, who have been worked in the Risk Management field for a long time, can offer UK, US, Australian, Canadian and word wide students their help in tackling what their Risk Management homework and assignment has to offer them. You just need to specify what kind Risk Management assignment help you want and what your deadlines are. Once you are done with submission of your Risk Management requirement, our specialists or experts will get back on the job, while at the same time promising things like:

  • Research relevant to your area  
  • The best prices     
  • Time on Delivery 
  • Plagiarism free Answers
  • 24x7 Supports
  • End Customer Satisfaction

In addition, the facilitates you to search and find the solution for Risk Management questions, Risk Management textbooks problems. You can search the questions in Risk Management solution library and download the answers in just little pay of the service.

Finance,Risk Management

Recent Risk Management Questions

1 against what types of risks should a wealth-maximizing

1. Against what types of risks should a wealth-maximizing firm try to purchase insurance? What types of risks should be self-insured? 2. How can patents, copyrights, and legal challenges be used to manage business risk? ...

Why must a financial manager have an integrated

Why must a financial manager have an integrated understanding of the five basic finance functions? Why is the corporate governance function considered a finance function? Why has the risk-management function become more ...

Case 17 questionsseattle cancer centerleasing decisions1 as

CASE 17 QUESTIONS SEATTLE CANCER CENTER Leasing Decisions 1. As a baseline, assume all cash flows have the same risk; that is, ignore residual value risk and use the same discount rate for all lessee and lessor cash flow ...

Risk analysisyou are a ceo of a medium sized us based

Risk Analysis You are a CEO of a medium sized US based manufacturing company looking for opportunities to expand its operations globally. Do the following to complete this assignment: • Select two countries, one develope ...

Discussionrisk managementassume you have just been assigned

DISCUSSION Risk Management Assume you have just been assigned to a project risk team composed of five members. Your task, as project manager, is to develop a process for handling risks to the project. Because this is the ...

What questions might be asked to help identify and classify

What questions might be asked to help identify and classify information assets? Which is the most important question to ask? What name is given to the process of assigning a comparative risk rating to each specific infor ...

Assignmentintermediate sanctionsfor each of the following

Assignment Intermediate Sanctions For each of the following independent situations, determine whether the organization is at risk for receiving intermediate sanctions from the Internal Revenue Service for conferring exce ...

1 identify political factors that might affect the risk to

1. Identify political factors that might affect the risk to do business in a country. 2. Identify financial factors that might affect the risk to do business in a country. 3. Discuss the statement: Any level of risk can ...

Wilson international international capital budgetingwilson

WILSON INTERNATIONAL INTERNATIONAL CAPITAL BUDGETING Wilson International is a chain of over 100 luxury hotels found mostly in developed countries.George Wilson,a former Chicago sales representative who frequently travel ...

1 what is the difference between interest rate risk and

1. What is the difference between interest rate risk and default risk? How do combinations of terms in ARMs affect the allocation of risk between borrowers and lenders? 2. Which of the following two ARMs is likely to be ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro