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When you are taking financial risk homework help on financial risk management, you will be able to study more at your home about financial risk management. Financial risk management is such a subject which is vast, and the entire syllabus cannot be covered in the classroom. First, you need to study the management structure of different organizations and then study about the risks arising out of them. You need to do your part of the research and study widely and profusely.
By providing you with assignment, your teacher makes sure that you do your part of your studies and understand the subject. But, letâ€™s admit it. Finishing all the homework without any help is a task which is next to impossible. This is where online homework help services come to your rescue.
Before we discuss the sources of financial risks and how they can be eliminated, let us first know what financial risk management is.
An introduction to financial risk management
Financial risk management is a subject which deals with computing the risk and studying those sectors of management which get affected due to risk exposure. The probability of deviation from the expected outcome is termed as risk. Risk is a parameter which anticipates the loss, which an organisation may face.
But there is a positive factor too which is associated with risks. When a financial organization is stuck by an exposure to a risk, it strategises and comes up with plans which result in gaining benefits over the competitors, and ultimately lead to the profitability of the organization. A glimpse through financial risk homework help can help solve the queries in detail.
Financial risk management covers both the qualitative and quantitative aspects.It is all about monitoring financial risks and managing their impact. Many financial instruments are used to curb the effect of risk exposure.The organization also employs strategies and tools to mitigate the risk.
Transaction of financial activities like purchases and sales, investments and loans gives rise to financial risks. With the increase in the prices of the goods, the profitability of the organization gets affected which leads to increased costs and reduction of revenue. Due to the fluctuation in the price, budget planning, pricing of goods and services, and allocating the capital becomes difficult.
Understanding risk management with examples
Let us try to understand the concept of risk management by taking an example. When you invest in shares, you are not sure whether the prices will go up or down. Though fixed deposits are considered to be less risky assets, because there is a return of an amount at a fixed interest rate, still there is a risk of investment in equity. Therefore, it can be said that there is a risk factor involved in every investment decision you make.
Sources of finance risk situation
Now that we have understood what risk management is, let us focus on the sources of financial risk.There are many sources of financial risks. Some of these sources have been discussed by financial risk homework help experts:
- An organization is always vulnerable when it comes to change in interest rate and exchange rate. Exposure to such changes poses a risk.
- Failure of some of the internal activities of the organization which includes activities of the people, systems, and process, is what arises as a risk.
- Actions and transactions performed within the organization and with other organizations, which includes customers, vendors and counter parties, is also a source of risk.
These sources of finance risk and the ways by which they can be eliminated will be discussed by financial risk homework help experts.
Topics covered by financial risk management homework help experts
- Risks and returns: Risk is defined as the chance that the actual return will be different from the expected return. Return is defined as the loss or the gain from a security in a particular period of time.
- Structure of risk management: The structure of risk management involves analyzing risk allocation, capital budgeting and studying capital structure decisions.
- Role of residual risk: The modified risk which remains even after monitoring and implementation of internal control comes under the subject of residual risk.
- Statistical measurement of credit risk: The risk of loss arising from the borrowerâ€™s incapability to meet the obligation is called credit risk. It arises from lending and acceptance activities such as outstanding loans and leases, inter bank transactions, retail and investment settlements. Correlation coefficient, coefficient of determination, coefficient of variation and standard deviation are the tools which are used in statistical measurement of credit risk.
Ways to reduce financial risk:
If you want to earn profits, you have to take a risk. However, there are many ways to reduce financial risk which the financial risk homework help experts will teach you. Letâ€™s take a look at some of these ways:
- Be familiarized with different types of risks.
- Learn about systematic and non-systematic risks.
- Know about different classes of assets.
- Understand the financial risk arising out of assets.
- Calculate the level of risks associated with your investments.
- Calculate how much risk you are willing to take and your risk tolerance level.
- Allocate the assets and reduce the level of portfolio risk.
- Hedge your investment.
- Diversify your assets and lower the risk.
- Consider your time horizon.
- Change your asset allocation with time.
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