Systematic and Unsystematic Risks

College
Essay
Miscellaneous
Pages 5 (1255 words)
Download 0
In this short essay, the author presents the brief on identification, measurement and investments in mitigation of systematic & unsystematic risks. The author has presented this subject in the context of Deloitte. In the end, the author has presented some discussion points.

Introduction

This makes multi-national corporations safer compared to their domestic counterparts. Normally, systematic risk assessment are important for listed companies to effectively price the equities, determining the cost of capital and effective evaluation of projects. However, internationalization also poses some distinct systematic risks to multi-national corporations. Some of these distinct risks are - exposure to currency fluctuations in multiple countries, exposure to political risks pertaining to multiple governments, exposure to reduction in ability of monitoring managers in multiple countries, increased chances of asymmetric & inaccurate localized information thus resulting in wrong investment decisions, etc. Internationalizing investment portfolios also increases the exposure to unsystematic risks - like competitor activity in a foreign country, manager's foul play in another country where the company's monitoring system is weak, etc. Hence, it is important for the organization to have sound global knowledge base & threat database for risk management.
Organization structures with distributed power often increases the exposure to both systematic and non-systematic risks. This is the reason that Chatterjee and Lubatkin et al (1992. ...
Download paper
Not exactly what you need?

Related papers

Corporate Finance Problems
Information about those 3 factors is presented in the following chart. Suppose this is the only information you have concerning these factors.…
Systematic Security Management
information should retain its integrity both with time as well as user at that particular instance of time.…
Extreme Risks
Rees notes that some experiments, say launching of single nuclear weapon, are known to render threat to life on Earth. However, the magnitude of the impact of such experiments may not be amply intense to destroy the whole world. On the contrary, the author asserts that there are some physics experiments performed mainly for the purpose of pure scientific inquiry that could possibly pose global or…
Corporate Finance System of Vodafone
The first chapter deals with the background information about the company whereby their corporate objectives, details about finance division, sources of finance, shareholder analysis, and corporate governance have been presented in brief.…
Beta
Company's (like Wal-Mart, Kmart, etc.,) security returns will also be affected. If oil price are increased in the market there will be considerable impact on other goods. Indirectly the price of other goods will rise. There is an overall risk of raising capital for firms. Whenever any entrepreneur wants to run a company/firm with low budget and high profit, entrepreneur would consider different…
Efficient Market Hypothesis
In fact investors can predict the future stock prices, based on the past stock prices and even by analyzing financial information such as company earnings and asset values. This paper would examine the relationship between EMH and the future predictions of stock prices based on technical and fundamental analysis.…
Systematic and Unsystematic Risks
This makes multi-national corporations safer compared to their domestic counterparts. Normally, systematic risk assessment are important for listed companies to effectively price the equities, determining the cost of capital and effective evaluation of projects. However, internationalization also poses some distinct systematic risks to multi-national corporations. Some of these distinct risks are…