How much diversification can help

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Question: Only those who will risk going too far can possibly find out how far one can go. T. S. Eliot

"Risk comes from not knowing what you''re doing." Warren Buffett

Risk Managers (RM) can add tremendous value to a company''s profile. Consider the many types of risk such as Market, Interest Rate, Inflation, Credit, and Liquidity Risk. The RM can identify and plan toward a balanced future.

How much diversification can help? The best performing assets should offset the worst performing ones. Is this true in most businesses? Consider investment portfolios, hardware store inventory, restaurant menu items, and even political platforms.

Can the risk of an unpopular position, precarious investment, or unsupported decision be worth the return?

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If an organization takes decisions without analyzing the risk factors involved the purpose & the existence will be defeated while defining the firm's goals or objectives. It will lose direction & uncertainty will prevail while taking a crucial course of action. During the modern times, risk management has been added as a crucial function in the functioning of the organization. All the decisions affecting are taken & analyzed by the risk department in order to safeguard against the risks defined & strategically implement the decisions to execute them.. If the organization is big, it will experience more risks & risk department is determined in assessing & combating those risks.

Reference no: EM131486265

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