StudentShare solutions
Triangle menu

Use of Derivatives in Risk Management - Research Paper Example

Nobody downloaded yet

Extract of sample
Use of Derivatives in Risk Management

The global economic environment and the financial market have evolved drastically over the past decade. With the advent of information technology at a rapid pace, the financial markets of the world are now closely integrated. Due to this phenomenon of the world being a global village, a turbulence originated in a far distant financial market can have eventual consequences all across the globe. With the revolution in the communication technology, the access to information is instantaneous and thus the subsequent market reactions.
It is of prime importance to understand the concept that how does financial risk arises in order to safeguard’s one asset from deteriorating while being exposed to such risks. For any organization or a company, the financial risk arises by entering into a financial transaction such as sales, purchase, investing into securities and bonds, sanctioning of loan and advances, mergers and acquisition transactions, debt financing etc. Financial risk is directly co-related to the prevailing financial prices in the markets, as the fluctuation in these prices causes an increase in the cost to the companies, reduction in the revenues and thus adverse impact on the profitability of the company. These underlying financial prices can be anything ranging from the market interest rates, exchange rates and commodity prices. Other aspects which yield financial risk in the transactions are dealing in derivatives and internal failures of the process and people of any organization. The financial risk management process mainly copes with the uncertainties resulting from the financial market. The first and foremost step in this process is to identify the current exposure of the company and devise strategies accordingly keeping into consideration the priorities of the company. It depends upon the proactive decision making and the decisiveness of the company on how to cope with the current exposure of the company. In general, companies do realize that avoiding all risk is not possible in order to operate and thus they end up accepting a considerable amount of risk. Risk management is considered to be an ongoing process as the strategies needs to be updated and refined keeping into consideration the market norms and requirements. These changes are primarily brought about by the changes in the expectation about the market rates, business norms and practices and the international financial scenario. The most common strategy practiced by the companies all across the global financial market is to curtail their exposure to risk through the use of derivatives. Risk Management Process Risk management process is a continuous and iterative process which requires analysis of both internal and external risk factors. The ...Show more


For any corporation risk management is of prime importance. In today’s dynamic global economy every company is looking for and devising ways through which it can curtail the element of risk in its operations and function smoothly without any hindrance…
Author : hthiel
Use of Derivatives in Risk Management essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the research paper on your topic
"Use of Derivatives in Risk Management"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Risk Management
The manner in which an organization responds to possible risks could determine whether a business succeeds or fails. Risk management is, therefore, a very important undertaking for any business that seeks to grow and avoid major crises in the future. Essentially, this paper aims to discuss various types of risks, identify the goals of risk management, analyze the risk identification process and finally, discuss the various strategies for managing risk.
7 pages (1750 words) Research Paper
Credit Risk
The concept of credit risk can be simply described as an investor’s risk of loss due to a borrower’s failure to make payments as promised. Such an event of loss is termed as default. According to the Basle Committee, the international banking supervisory body, inadequate credit risk management continues to be the most threatening issue in the modern banking industry.
4 pages (1000 words) Research Paper
Risk Management
The current data based on losses caused by employee theft amount to 75 percent of any of the above businesses in their annual earnings (Ramsey and Ramsey 44). Cash drawers are risky ways of storing a business’ finances especially in places where the allocated place for drawer is accessible by multiple workers.
4 pages (1000 words) Research Paper
Risk Management
This paper aptly discusses and describes the risk management issue at a large teaching hospital, identifies the steps taken to address the issue, discusses how the organization is determined to solve the problem. Furthermore, this article identifies other facilities that have are adopted three sources in addressing the same problem and describes the comparison of the research and the process being developed at the organization.
6 pages (1500 words) Research Paper
Identifying and Managing Risk
Research Problem The problem of the research is, “Compare and evaluate risk management techniques from experts in the field?” Literature: Financial risk management techniques The risk management techniques in the field of finance include identification of the areas of financial risk and measuring it and then applying the use of financial derivatives and other instruments in order to mitigate the actual risk level to the desired level of risk exposure.
3 pages (750 words) Research Paper
Risk management
Nowadays, most of the companies are engaged in efforts to integrate CSR into all their areas of business. Upsurge in the number of analysts, shareholders, regulators, labor unions, activities, community organizations, news media, and employees are probing companies to be accountable for CSR issues.
8 pages (2000 words) Research Paper
Risk Management / Organisational Risk
7-Eleven is headquartered in Dallas, Texas and it has various subsidiaries in different locations which are operated by in excess of 45,000 of its employees. The organisation is further recognised as one of the
13 pages (3250 words) Research Paper
Risk Management Program
The various stages of risk management together with the factors influencing the company’s practices, including environmental, financial and
8 pages (2000 words) Research Paper
Risk management
Nonetheless, the happening of a crisis is not limited to just one industry, as multiple industries bear the risk of encountering several types of crisis. Corporate crises for
14 pages (3500 words) Research Paper
Risk Management
Financial risk management comes within various financial functions of an organization and is an indication of changing nature of this
10 pages (2500 words) Research Paper
Hire a pro to write
a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
Comments (0)
Click to create a comment
Let us find you another Research Paper on topic Use of Derivatives in Risk Management for FREE!
Contact us:
Contact Us Now
  • About StudentShare

  • Testimonials

  • FAQ

  • Blog

  • Free Essays
  • New Essays
  • Essays

  • The Newest Essay Topics
Join us:
Contact Us