Risk Management Techniques [3]
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论文字数:2470论文编号:org201406021052544654语种:英语 English地区:中国价格:免费论文
关键词:Risk Management Techniques风险管理技术金融风险Risk ManagerBank management
摘要:Each bank must apply a consistent evaluation and rating scheme to all its investment opportunities in order for credit decisions to be made in a consistent manner and for the resultant aggregate reporting of credit risk exposure to be meaningful.
erational risk is associated with the problems of accurately processing, settling, and taking or making delivery on trades in exchange for cash. Fund managers should not be allowed to expose their funds to unnecessary risk by investing in assets outside the remit of the fund specification. There should be a well developed and efficient Controls & Compliance function which promotes transparency in investments. Their independent monitoring provides comfort to investors that fund specifications will be appropriately controlled.
Market & stock specific risks are those associated with individual investment markets and shares which all investment managers aim to control through effective asset allocation and stock selection. To reduce the potential risk associated with specific companies, there should be a dedicated comprehensive research team to minimize the potential risk associated with investing in certain companies.
Credit riskarises from non-performance by a borrower. It may arise from either an inability or an unwillingness to perform in the pre-committed contracted manner. This can affect the lender holding the loan contract, as well as other lenders to the creditor. Therefore, the financial condition of the borrower as well as the current value of any underlying collateral is of considerable interest to its bank.
Counterparty risk comes from non-performance of a trading partner. The non-performance may arise from counterparty’s refusal to perform due to an adverse price movement caused by systematic factors, or from some other political or legal constraint that was not anticipated by the principals. Diversification is the major tool for controlling nonsystematic counterparty risk.
Counterparty risk is like credit risk, but it is generally viewed as a more transient financial risk associated with trading than standard creditor default risk.
Liquidity risk can best be described as the risk of a funding crisis. While some would include the need to plan for growth and unexpected expansion of credit, the risk here is seen more correctly as the potential for a funding crisis. Such a situation would inevitably be associated with an unexpected event, such as a large charge off, loss of confidence, or a crisis of national proportion such as a currency crisis.
Legal risks are caused by new statutes, tax legislation etc which can upset previous established transactions into contention even when all parties have previously performed adequately and are fully able to perform in the future.
Cases
Some examples would be: The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. A situation where sellers have information that buyers don't (or vice versa) about some aspect of product quality. In order to fight adverse selection, insurance companies try to reduce exposure to large claims by limiting coverage or raising premiums.
A risk manager may have an
assignment for an organization to arrange a prospectus liability policy to protect the exposures arising from their proposed flotation on the London Stock Exchange.
The flotation which may be of a large capital would need the risk manager to insure the IPO in appropriate limits to protect the company, the directors and the selling shareholders (C
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