Investment Risk Management - Essay Example

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Investment Risk Management

Laura and Rubia (2012) says that in a practical setting, typical risks faced by financial institutions include defaults on loans provided by the firm, losses on investment securities and failure of business undertakings on a supplementary party owing certain obligations to the affected party. In this case, it is acknowledgeable that financial companies face numerous risks in operations. Therefore, risk management involves developing appropriate measures to curb and minimize effects of these typical circumstances. Laura and Rubia (2012) says that after developing appropriate measures, risk management moves into implementing and procedures meant to facilitate the realization of pre-determined risk management goals. In contemporary business environments, the financial industry faces substantial effects from volatility in micro-economic elements. This means that, economic trends play a significant role in either boosting or inflating portfolio, and investment securities held by a given company. This type of risk is largely inevitable, as micro-economic elements of a business environment depend on the specific region that a business organization operates. ...Show more

Summary

Running Head: INVESTMENT RISK MANAGEMENT Name: Tutor: Course: Date: From a theoretical perspective, risk management refers to the process of ascertaining the existence of financial risk and evaluating the risks in order to appraise their magnitude. Upon appraising the quantity of risks involved, risk management moves into supplementing measures meant to prevent impact of those risks in business operations…
Author : terry02
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