Discuss the techniques to manage risks, Financial Management

Assignment Help:

Q. Discuss the techniques to manage risks?

Once risks have been identified and assessed, all techniques to manage the risk fall into one or more of the four major categories like avoidance, reduction, sharing and retention. Ideal use of these strategies may not be possible. Some of them may involve trade- offs that are not acceptable to the organization or person making the risk management decisions.

2. Risk avoidance - This includes not performing an activity that could carry a risk. Avoidance may seem the answer to all risks, but avoiding the risk also means losing out on the potential gain that accepting the risk may have allowed.

3. Risk reduction - Risk reduction or ‘Optimization" involves reducing the severity of the loss or the likelihood of the loss from occurring.

4. Risk sharing - Briefly defined as "sharing with another party the burden of loss or the benefit of gain, from a risk, and the measures to reduce risk.

5. Risk retention - Involving the accepting the losss, or benefit of gain, from a risk when it occurs. Risk retention is viable strategy for small risks where the cost of insuring against the risk would be greater over time than the total losses sustained.


Related Discussions:- Discuss the techniques to manage risks

Portfolio classification of mutual funds, Portfolio Classification of Mutua...

Portfolio Classification of Mutual Funds Mutual Funds differ with reference to the type of instruments in which the money has been invested as per the requirements of the inves

Globalization of the financial markets, Globalization of the Financial Mark...

Globalization of the Financial Markets There are many economies in the world that have opened their gates for foreign participants and companies. Trading takes place not only i

What is performance appraisal - cost of capital, What is Performance apprai...

What is Performance appraisal - cost of capital Performance appraisal further, cost of capital framework can be used to evaluate financial performance of top management. I

What are the main criticisms of the payback method, How do we calculate the...

How do we calculate the payback period for a proposed capital budgeting project?  What are the main criticisms of the payback method? We calculate the reimbursement period for

Dividend yield method, Dividend yield method As per this method, the co...

Dividend yield method As per this method, the cost of Equity capital is the discount rate that equates the present value of expected future dividends per share with the net pro

Macro-economic analysis, Macro-Economic Analysis Measuring the Level o...

Macro-Economic Analysis Measuring the Level of Economic Activity Gross National Product (GNP) and the Gross Domestic Product (GDP) are the two most widely used aggregates

What are the drawbacks of the payback, The drawbacks of the payback approac...

The drawbacks of the payback approach are as follows - Payback ignores the overall profitability of a project by ignoring post payback cash flows. In the illustration above the

Interference of central bank in markets, Interference of Central bank in Ma...

Interference of Central bank in Markets: Some dilemmas exist in the issue of central bank intervention in the market to correct the volatilities in the prices. In some countrie

Graduated-payment mortgages (gpms), The payments on GPMs unlike the p...

The payments on GPMs unlike the payments on traditional mortgages are not equal. The payments under GPMs start at a relatively low level and rise for a specified

Premium, The amount by which the market price exceeds the conversion ...

The amount by which the market price exceeds the conversion value or the investment value called the premium. When expressed as a percentage, it is given by,

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd