英语论文网

ruments often led to greater involvement with the board. In order to maximize value, corporations must recognize the effect of their activities on customers, suppliers, and employees.
 
The importance of a Risk Manager within a corporation has become more than just successful interaction with the Insurance market. To be effective, risk managers need to communicate effectively with managers and others throughout the company in order to understand all of the risks faced by the company, design risk reduction programs, and implement insurance and non-insurance risk-financing techniques. Communication has become more important than ever before. While the systems and activities begun in the first generation continued, the risk manager’s job now requires a substantial commitment to managing risks that crop up from relationships with external stakeholders.
 
Reasons of Risk Management
 
Few of the major reasons of risk imbalance are Asymmetric information causing Adverse selection.
 
Asymmetric Information is a case where one party in a deal or a transaction has higher or superior information compared to the other party. It often happens in transactions where the seller knows more than the buyer about the transaction details, although the reverse can happen as well.
 
This could be a high risk situation because one party can take advantage of the other party’s lack of knowledge and information regarding the transaction. With globalization and increased advancements in technology, asymmetric information has been on the decline due to ease in access to all types of information. Asymmetric information refers to a case where the buyer and the seller have an imbalance in the information about each other and / or the transaction details.
 
Information Asymmetry can lead to two main problems:
 
1. Adverse selection- immoral behavior that takes advantage of asymmetric information before a transaction. For example, a person who is not be in optimal health may be more inclined to purchase life insurance than someone who feels fine.
 
2. Moral Hazard- immoral behavior that takes advantage of asymmetric information after a transaction. For example, if someone has fire insurance they may be more likely to commit arson to reap the benefits of the insurance. Moral hazard means that people with insurance may take greater risks than they would do without it because they know they are protected, so the insurer may get more claims than it bargained for
 
Types of Risks
 
Risks in a commercial bank would be encountered in many forms, from the risks associated with specific products of the bank to operational risks and risks associated with a given market or stock.
 
Product or fund risk is the risk associated with choosing a particular investment product or fund. It is of vital importance to know the funds specification setting out the parameters within which the portfolio manager can invest. An in house research team which specializes in studying the particular industry or company is very essential apart form third party analysts which would provide the investors with a clear view of the investment scenario.
 
Operational risks are associated with individual investment houses and their business processes. Op本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。