Risk Management

What is Risk Management

Risk Management in an organization is to identify, control, and minimize the financial impact of uncertain events. By reducing potential risk, companies can minimize potential loss in unforeseen circumstances.

How to reduce risk?

This risk can be said to occur through:
  • The volatility of a financial variable
  • The organizations exposure to this variable

  • The organization cannot control variability but can control exposure

    Risk Managment in Large corporations and Multinantionals

    Many large corporations invest and finance their operations through foreign currency exposure. However this can involve many volatile currency fluctuations which can have an effect on future cash flows of a corpoation.

    Ways to reduce this exposure could be through:
  • Long term forward contracts
  • Currency swaps
  • Cross Hedging
  • Currency diversification
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