JIT Task 1 Risk Management
Risk Management

From the last decade risk management is the most researched and exciting area in the financial industry as it elaborates how to minimize and avert the hazard of risk from the portfolios of different assets and from the operations of financial institutions. Regulators and depositors mainly emphasize the risk management and according to them risk management is an essential ingredient to enhance the value of shareholders and increase their level of confidence. Risk management is the assessment of risks to mitigate, monitor and control the probability or impact on uncertain events. Risk management methods vary from industry to industry for instance it cannot be same for project management, industrial process and financial portfolios. As a management view point risk management is an important tool which is the used in decision making because it is systematic and well structured. For better utilization of risk management in management‟s decisions, risk analyst‟s reports must be based on the latest and best available information. The cause behind the mentioning of the Chinese proverb above is that risk management is the only tool which differentiates good management with bad. From a bank‟s standpoint, the term is usually used synonymously with specific uncertainty because the usage of statistics allows us to quantify the uncertainty which is called the measure of dispersion. My objective is to define what risk is all about and then see why firms need risk management and its main objectives and from the viewpoint of directors of the company and the auditors of the company. I will provide a list of recommendations to overhaul on the problems. I have included one old and one new example of the default of the industries, one is of Merrill Lynch and my second example is Royal Bank of Scotland. Veiling Some Concepts regarding Risk