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Financial Risk Management - Essay Example
Author : berniereldridge
Finance & Accounting
Pages 4 (1004 words)
FINANCIAL RISK MANAGEMENT Table of Contents Risk Management and Bear Stearns 3 Introduction 3 Risk Management: An Overview 3 Risk management policies followed by Bear Stearns 4 6 Risk Management and Bear Stearns Introduction The Bear Stearns Companies, LLC, founded in 1923, was a New York based company which was involved in investment banking, trading of securities and derivatives and brokerage activities globally all over the world…
This study involves a comprehensive study of the risk management policies followed by Bear Stearns and how it led to its demise. Risk Management: An Overview Risk is a term associated with any type of business entity. Without risk it would have been an easy task for managers of a company to allocate its resources in the most effective way. And with the world experiencing the global financial crisis in the year 2008, effective and efficient risk management is the key to success for any financial enterprise. The idea of risk management may differ from person to person. In case of regulators risk management is a means of control, for traders it is a means of hedging their risks and for risk managers it is a means of obtaining the highest return possible by allocating capital in the best possible way. Risk management takes into consideration the magnitude as well as the nature of risks involved. It is all about optimizing the risk-return profile of a company. Sources of risk are many and it is due to the uncertainties of future events. In today’s world banks are engaged in wide range of activities like trading of derivatives to its customers which results in exposure, finally leading to risks. ...