what is the advantages and disadvantages of business risk management

It seems that there is never a time in the world where we can be assured that prosperity for a large percentage of the population is a safe bet for the foreseeable future. There always seems to be another financial crisis lurking around the corner, even when things seem the most settled. That reality can be a scary one for people to confront, since they have their own financial stakes to consider. If you are the head of a household or a family, this prospect can be even more daunting, since you also have to worry about the fortunes of those who count on you as well as your own. The stress from wondering what’s coming next from the economy at large can be unbearable at times.

At the end all the risk are finance related, because the liability’s cost money and this will have an effect in the company’s earnings, so what is important is not only to try to avoid such events but also to be prepare in case they happen and have a plan, is like the saying “Hope for the best but be prepare for the worst”.

In 2008, an enormous global financial crash had occurred impacting millions of people around the world. It was, according to many people, the worst financial crash after the Great Depression in 1930. One of the main causes of both depressions was people’s lack of knowledge and understanding of finance. Becoming financially literate can allow people to be more prosperous in the future by saving more money and help reduce the chances of falling into a downward spiral financially.

There are some policy recommendations based the findings of this essay. It is a positive thing that enlarges the coverage of financial services, increasing the opportunities of access in financial services and activities. It will benefit for decrease the level of inequality. It claims that by allowing the poor an opportunity to get access into the financial

n 2008, the financial crisis affected the companies, the families and the people. This is how I find myself driven towards the financial area. I saw many companies closed and people lose their jobs and families face huge challenge. Therefore, I realized how the financial market changes people’s life and I want to avoid these happening on myself. I pursued a bachelor degree in Business Administration, specifically in finance major. As my knowledge of that field grew, so did my curiosity about the effects of finance, but also in terms of how we can transfer the risk and cut losses.

In the late 1990’s, there was a boom and bust on information technology stocks. Because of that, a mild recession happened in 2001. The mild recession made people have over confidence to the stability of financial system and the whole economy. Therefore, the authorities started to ignore the work of keeping financial stability.

Business risk refers to the chance a business's cash flows are not enough to cover its operating expenses like cost of goods sold, rent and wages. Unlike financial risk, business risk is independent of the amount of debt a business owes (Guzman & Media, 2015). Financial risk refers to the chance a business's cash flows are not enough to pay creditors and fulfill other financial responsibilities (Guzman & Media, 2015). Financial risk is the additional business risk concentrated on common stockholders when financial leverage is used and depends on the amount of debt and preferred stock financing (Brigham & Ehrhardt, 2014).

A financial crisis involves the value of financial institutions or assets dropping rapidly. It is often associated with a panic on the banks causing investors to sell off assets or withdraw money from savings accounts. This is the result of concern that the value of those assets will drop if left at the financial institution. As the crisis intensifies there is a significant change in the amount of risk that world financial markets are willing and able to accept. This results in easy credit conditions becoming a situation of tight credit and is accompanied by reduced consumer and business confidence. According to experts, credit is the most vital piece to a successful economy. Consumers and businesses rely on credit to make large purchases. In recent years, the American economy has experienced the most severe global financial crisis since the Great Depression of the 1930’s. Unemployment rates rose, and stock and housing markets tumbled. These combined had dramatic effects on American households.

Finance is the study of applying specific value to things we own, services we use and decisions we make. Financial management is the process for and the analysis of making financial decisions in the business context. The major subareas of finance are investments, financial management, financial institutions, market, and international finance. Risk is a potential future negative impact to value and or cash flow. It is often discussed in terms of probability of loss and the expected magnitude of the loss.

Just after ten years of Asian financial crisis, another major financial crisis now concern for all developed and some developing countries is “Global Financial Crisis 2008.” It is beginning with the bankruptcy of Lehman Brothers on Sunday, September 14, 2008 and spread like a flood. At first U.S banking sector fall in a great liquidity crisis and simultaneously around the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiest nations have had to come up with rescue packages to bail out their financial systems. (Global issue)

As a government, it requires its ability and being able to express the reality completely for all people. They should release the power from the previous level supervising authority and verify the lawful financial information. Ideally, this suggestion can avoid the financial crisis based on the failure of credit department. From research and development investors’ point of view, even though the U.S. fiscal deficits year after year, but research funding has continued to increase (28). Nowadays, the financial crisis has got more severed. Thinking of the investment banks have performed the significantly technical positions in the financial history. Banks help raising money for the new company, and the product that they buy is raising comprehension of investors' interest in technology companies. Despite of the global financial depression, high-tech industries’ profits are still rising.

In this essay, we are trying to look at the factors responsible for the global financial crisis in 2008-09 which started in US and later spread across the world. By now, a lot of studies have been done on the global financial crisis of 2008. We explain briefly the role of the financial engineering which leads to combination of various financial securities, the actual risk of which is not clearly assessed and hence leading to the financial crisis. There were also some serious lapses in regulation and failure of the rating agencies in assessing the risks assumed by the financial products which accentuated the crisis.

Risk management is an activity which integrates recognition of risk, risk assessment, developing strategies to manage it, and mitigation of risk using managerial resources. Some traditional risk managements are focused on risks stemming from physical or legal causes (e.g. natural disasters or fires, accidents, death). Financial risk management, on the other hand, focuses on risks that can be managed using traded financial instruments. Objective of risk management is

Risk related to events even before the War on Terror began, the Sept. 11, attacks dealt a harsh blow to America financial standing (DePietro, 2017).sintressing the future role in which finance leadership is evolving. Equally alarming this crisis that influences an organization's decision-making, based on significant external and uncontrollable factors. Some of these aspects that remained obtainable in this discussed involve the economic factors, legal, political, and social conditions technological changes. The change of Interest rates in

According to the work examined in this study the global recession that occurred in 2008 and 2009 was partially a result of the financial industry's failure to be responsible for the decision it made in using financial instruments that were risk and very complex in nature. The culture of corporations were constructed on risk-based rewards instead of rewards that resulted in value for stakeholders. The financial risks that banks took on were not well comprehended by the public or regulators and the mass media also failed to understand the risks that the banks had entered into with certain financial agreements.