Finance in general term can be understood as money management i.e. the way money is been used and managed. It is also other word for investment. Every investor put in money or any other form of assets to gain some income and this act is known as financial management. But with financial management there is a term used which is an inclusive part in every organisation known as financial risk. Take an example of shareholders risks. In case if the company doesn’t have sufficient cash to meet its financial obligations or else financial liabilities, a shareholder always has a risk of losing their money that he had invested in the company. To get doubts cleared on financial management and financial risk, students can contact the tutors at urgenthomework.com. They deal with all the topics on finance thus helping students to obtain detailed information.
Financial risk can be divided into four broad categories market risk, credit risk, liquidity risk and operational risk. These are different types of risk an organisation need to face in the daily business.
To begin with Market risk; Market risk is the risk associated with the current market. In today’s time market is full of competition. So there can be fluctuations anytime in the financial market due to which there are chances that the value of investment might decrease. Therefore only the people with competitive mind can survive in such condition. The factors that are included in market risk are: Equity risk, interest rate risk, currency risk and commodity risk. Thus using a value at risk methodology helps in finding out market risk. Here is only a short description on market risk. If you are willing to obtain detailed information for writing your homework, you can contact the tutors at urgenthomework and get the description of topic, formula, applications and other necessarily details online.
Credit risk refers to the extent of credit provided to the customer. It is not possible to run the business on cash basis. Credit risk influences the business greatly as we are never aware when the debtors turn doubtful.
The third risk deals with the liquidity risk, liquidity here means how easily can the company converts its assets into cash. Due to unburden downturn, the company may be in need of cash. Therefore this risk depends on how easily or effectively the company can handle its emergency situation at the time of need.
The fourth risk is operational risk. Operational risk refers to the risk which comes from the ordinary course of the business. When a company operates within a specific area it need to take certain risk and these risks are termed as operational risk which are the results of collapse in procedure, system or manpower within a company. Basically operational risk looks into the ways things are done in any organisation and not the output of an organisation. Here only an overview of few terms associated with financial risk is provided. But learning and completing homework on financial risk also requires student’s knowledge in formulas, calculation, deep research and complete information. So, any help in this sector can be obtained from online tutors.
Other risks that operate in the day to day business of the organisation are fraud risk, personal problem, lawsuits etc. An organisation needs to face different risks in the business to be the successor in the competitive market. It is inherent of the business to bear risk but there must be proper management of risk. This management of risk can be termed as risk management in a company. The different ways of risk management are diversify investment, using saving account, to invest sooner than to invest later, to study about investment and the last way can be to be savvy rather than to be greedy.
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