...risks and how they can be managed and understand approaches to crisis management and business continuity planning. The aim of this assignment is to raise business risk awareness and develop skills to assess, monitor and control business risks and to develop an appreciation of the implications of business risks I certify that the work submitted for this assignment is my own and research sources are fully acknowledged. Name: Date: Table of content Content | Page | Declaration | 1 | LO1: Understand the risk management function in business | 3 | P1.1 Examine the role of the risk management function in business | 3 | P1.2 Assess the role of business function sin the management of risk | 4 | LO2: Understand how business risk is assessed and managed | 5 | P2.1: Analyse the risk assessment process | 5 | P2.2 Evaluate approaches to managing risk | 7 | P2.3 Examine the risk management process | 8 | LO3: Understand the effects of business risks and how they can be managed | 9 | P3.1 Analyse the main drivers of business risk | 9 | P3.2 Appraise the impact of different types of risk for a business organisation | 10 | P3.3 Assess which business areas are high risk | 11 | P3.4 Analyse risk management strategies | 12 | LO4: Understand approaches to crisis management and business continuity planning | 13 | P4.1 Analyse the vulnerability of businesses to breaks in continuity | 13 | P4.2 Critically evaluate approaches to crisis management and...
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...Financial Crisis Introduction In recent decades, financial crises have stopped the momentum of economic development of many countries around the world. In some cases, they have destroyed almost completely different financial systems. The term financial crisis is applied broadly to a variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these panics. Other situations that are often called financial crises include stock market crashes and the bursting of other financial bubbles, currency crises, and sovereign defaults. Financial crises directly result in a loss of paper wealth but do not necessarily result in changes in the real economy. Many economists have offered theories about how financial crises develop and how they could be prevented. There is no consensus, however, and financial crises continue to occur from time to time. The purpose of this study is to analyze the causes of financial crisis, the types of financial crisis and the impact caused in the countries that have experienced them. Explanation of financial crisis Financial crises have come in many forms although they have many common elements. A financial crisis is often associated with one or more of the following phenomena: substantial changes in credit volume and asset prices, severe disruptions in financial intermediation and...
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...supply chain Introduction Global supply chains and transport networks create the core of the global economy, fuelling trade, growth and consumption. Due to the never-ending push of management boards to improve efficiency and increase profit, supply chains are becoming more and more complex. Getting leaner, just-in-time inventory, outsourcing and other trends have introduced many business benefits, however we must not forget about the other side of the problem; new kinds of supply chain risk. Except from the internal company’s trends, other macro factors are influencing the complexity of a supply chain. Forces such as globalization, e/m-commerce and global connectivity are fostering the process of higher complexity within the chains and are amplifying the impact of problems & risks, which may arise. The trends and are not only influencing the company side though. Customer expectations and PLCs continue to develop and change in reference to external factors. A constant stream of products (high quality, low cost and environmentally friendly) is expected by the modern times buyers. The internet, social media platforms and the „shrinkage of the distances“ between people, lets the public quickly learn about any weak spots of company; sometimes even before the information reaches the employers. Not only internal trends have contributed to the fragility of the supply chains. External challenges during the last decade such as the fuel crisis, mouth disease, SARS and natural...
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...India too has been impacted by the crisis – and by much more than it was suspected earlier. The four major questions that have been raised are: * Why has India been hit by the crisis? * How has India been hit by the crisis? * How have we responded to the challenge? * What is the outlook for India? Why Has India Been Hit By the Crisis? There is, at least in some quarters, dismay that India has been hit by the crisis. This dismay stems from two arguments. The first argument goes as follows. The Indian banking system has had no direct exposure to the sub-prime mortgage assets or to the failed institutions. It has very limited off-balance sheet activities or securitized assets. In fact, our banks continue to remain safe and healthy. So, the enigma is how can India be caught up in a crisis when it has nothing much to do with any of the maladies that are at the core of the crisis. The second reason for dismay is that India's recent growth has been driven predominantly by domestic consumption and domestic investment. External demand, as measured by merchandize exports, accounts for less than 15 per cent of our GDP. The question then is, even if there is a global downturn, why should India be affected when its dependence on external demand is so limited? The answer to both the above frequently-asked questions lies in globalization. First, India's integration into the world economy over the last decade has been remarkably rapid. Integration into the world implies...
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...A period of economic difficulty that consumers and markets are experiencing world-widely is known as global financial crisis (BusinessDictionary, 2015). It occurs when there is an increase in asymmetric information coming from disruptions in financial system that is interrupting the funds from channelling efficiently between savers and households as well as preventing firms from having productive investment opportunities (Mishkin and Eakins, 2012, pp. 204). The recent global financial crisis began in the year of 2007 and the intensity increased in the subsequent year. Global financial crisis in 2007 happened as result of a number of factors such as government mandated subprime lending, imprudent mortgage lending, housing bubble, securitization and a few other more factors, which will be discussed. Causes The government mandated subprime lending has contributed to the financial crisis by promoting affordable housing under Community Reinvestment Act (CRA) as well as Fannie Mae and Freddie Mac. Through affordable housing, banks were encouraged to participate in imprudent mortgage lending as mandated by the federal in order to help low-income borrowers, which imprudent mortgage lending is another cause that contributed to the global financial crisis (Jickling, 2009). As a result of mortgage lending, low-income families are able to purchase houses that they are not be able to afford to purchase without the policy. The loans require low or no down payments and limited documentation...
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...| Asian Crisis of 1997 | | | Prepared by:Azra Becirovic and Sanela Bilalic | | April 21, 2012 | Long before Asian financial crisis has started, South Korea, Thailand, Indonesia, and Malaysia had an increasing economic performance; economy was fast growing, saving rates were high, and inflation low. Turning point in Asian economy was 2 July 1997, the day when Thai Baht fell around 20 % against the $US. “It all began in Thailand’ summarizes the conventional explanation of the early stages of the crisis.” (Hill, p.3) How it all began, what factors caused the crisis, what segments were affected the most, what was the backup plan, and what policies should have been taken to prevent the crisis are the points that this paper will cover. First and Second-Generation Models According to 1996 annual report of Bank for International Settlements (BIS), pre-crisis fundamentals exhibit economic performance of Asian countries. They’ve experienced moderate inflation rates of about 6%, high savings rate of 32%, and trade openness indicators of 39%. Table 1: East Asian Economic Conditions Before Crisis Although accounting and macroeconomic analytics have failed to foreseen the currency crisis, which is inevitable, first and second-generation models explain us was it due to weakening macroeconomic fundamentals or financial contagion. In accordance to first-generation model developed by Krugman 1979, market-speculative movements, in response to policies, are incompatible...
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...this regard, the better the utilization of assets, the higher the profitability of a firm will be. Managing assets are assessed periodically as the basis of information. Each period is to be compared to determine whether companies have to alter their management, concerning asset management during times of crisis. Companies now days have to find another ay to gain assets because without financial resources, companies cannot survive in these turbulent times or even in normal circumstances. This study will provide a quick view of how manufacturing companies in the Philippines manage their assets during crises and non-crises period. Researchers have studied utilization of financial resources in different ways. Some authors have studied the impact of asset utilization during non-crises period only. Here, the study focus not only in non-crises period but also during crises period because there are no studies done about the relationship between utilization of financial resources and firm’s profitability during crises periods within the Philippines and also it allows a comparison between those periods which could indicate whether manufacturing companies in the Philippines have to alter their asset utilization when the economy is close to a recession. Background of the Study The Philippine Economy is faced with several factors which could hold back the rate of having a huge return on the financial...
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...risks arising from their loan books. This discussion includes a brief assessment of issue of credit rationing which is an issue of both microeconomic and macroeconomic significance. Bank risks – an overview What is risk? – danger that a certain unpredictable contingency can occur, which generates randomness in cashflow Risk and uncertainty – risks may be described using probability analysis (business cycle, company failures), while events subject to uncertainty cannot (financial crises, wars etc.) Risk and variability – variability alone may not entail risk as long as known for sure ex ante The nature of qualitative asset transformation- gives rise to risks because of mismatched balance sheet. Main forms of risk Credit risk – risk that party to contract fails to fully discharge terms of contract Interest rate risk – risk deriving from variation of market prices owing to interest rate change Market risk – more general term for risk of market price shifts Liquidity risk – risk asset owner unable to recover full value of asset when sold (or for borrower, credit not rolled over) Market liquidity risk – risk that a traded asset market may vary in liquidity of the claims traded Other risks o operational risk o risk of fraud o reputation risk Systemic risk – that the financial system may undergo contagious failure following other forms of shock/risk Introducing credit risk and the debt...
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...The concept of Fair Value Fair value is defined as “the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction”. Prior to the introduction of Fair Value Accounting (FVA), accounting was carried out on a historical cost basis. However there were many limitations of Historical Cost accounting (HCA). HCA assumes money holds a constant purchasing power. It ignores specific price-level change, general price-level change and fluctuations in exchange rates. During inflationary periods, HCA can become irrelevant and can lead to an erosion of operating capacity. IASB framework states “the objective of financial statements is to provide information about the financial position, performance and changes in financial position of an entity that is useful to a wide range of users in making economic decisions. It also states “financial statements also show the results of stewardship of management, or accountability of management for the resources entrusted to it”. FVA is superior to historical cost accounting for these purposes. FVA is dominant in numerous IFRS’s and IAS’s. The IASB have yet to finalise an IFRS on fair value measurement, but it is expected it will have been completed by early 2011. Furthermore, the IASB is developing extra educational material to accompany the publication of the IFRS on fair value measurement. This material will give a description on the thought process for the measurement of assets, liabilities...
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...Abstract Failing to communicate and collaborate in crisis or emergency situation will undoubtedly increase the vulnerability of an organization toward potential crisis. This paper highlights the significance of effective communication and collaboration at different levels in the event of or during a crisis. This is a case of a cyberattack against Sony Pictures Entertainment once on December 3, 2014 and another attach on December 8, 2014 was considered for the purpose of this research. These cyberattack shows how techniques are not just a strategic weapon to bring down societies or to terrorize societies. But it shows that attackers are getting increasingly comfortable with using cyberattacks and can quite easily gain access to consumer personal information, business information, and employee information and can bring a company to its knees. The recent attacks not only on Sony but also Home Depot, Target and others are raising concerns. What needs to be done? The attacks are becoming more frequent, more invasive and the attackers are being bold. Should there be collaboration between businesses to combat the rising issues? Will this change the way that others businesses work together? What role does the government have in protecting citizens and their right to privacy especially from foreign attackers? These issues are significant as they underline the element of crisis communication and collaboration. Introduction In the face of increasing business demands for...
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...ABSTRACT Almost everyone was affected by the 2007-2010 global financial crisis in one way or another. While there have been numerous studies that have explored the causes behind such global financial crisis, this subject proves to be a rather significant matter as it is still an ongoing crisis that had hit the Western countries directly causing massive layoffs. Indeed, many people have predicted such crisis would require a substantial amount of time for it to subdue. However, we do not know just how bad the current credit crisis will get. Therefore, this study attempts to rectify the whole scenario in the literature. This research aims to analyze the causes, implications and impact of this global financial crisis towards the world economy and through this information, we should be able to clear any doubts and discontent one has on this matter. TABLE OF CONTENTS ABSTRACT ………………………………………………………..………..…………………...ii ACKNOWLEDGEMENT……………………………………………….……………….………iii TABLE OF CONTENTS ………………………………………………………………………..iv CHAPTER 1: INTRODUCTION………………………………………………………………1 CHAPTER 2: RESEARCH ANALYSIS………………………………………………………2 2.1 THE GLOBAL FINANCIAL CRISIS OF 2007-2010……………………………………….2 2.2 CAUSES……………………………………………………………………………………....3 2.2.1 US HOUSING BUBBLE AND FORECLOSURES………………………………. 3 2.2.2 SUBPRIME LENDING……………………………………………………………..4 2.2.3 INACCURATE CREDIT RATINGS……………………………………………….5 2.2.4 MORTGAGE UNDERWRITING…………………………………………………..6 2.2...
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... BDFM 7053 GLOBAL ECONOMIC THEORY AND ISSUES UUM-Rezzen KL Third Semester May Session 2013/2014 Prof Dr. K. Kuperan Viswanathan SHORT PAPER #1 INTERDEPENDENCE OF WORLD FINANCIAL MARKETS AND FOREIGN EXCHANGE FLUCTUATIONS Submitted by: ZAHARIN BIN ALI MATRIC No. 95906 June 14, 2014 Short Paper #1 Page |2 1. INTRODUCTION With the increase in advancements in transportation and communications made possible by technology, the world has seen exponential growths in economic ties among all nations. In the last few decades, globalization has resulted in a rapid surge in the interchanging of goods and services reaching across further and faster beyond national borders, whilst increasing the interconnectedness of different markets and cultures. These economic ties come in the forms of international trade, foreign direct investment and monetary integration, made possible with the complementary increase in the interdependence of international financial markets. With further liberalization and deregulation, financial market interdependence grew in momentum alongside the worldwide capital mobilization. This growing interconnectedness of all the world financial markets and the degree of their interdependence have themselves created a subject of substantial interest among economists. The recent global financial crisis has only elevated this interest further, as the impact of U.S. subprime crises on the world economies have provided evidence of global financial markets interdependence...
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...Global economic slowdown and its impact on the financial services industry in India April 2009 The global slowdown was an outcome of two events - absence of a sound regulatory framework & mismatch between financial innovation and the ability of the regulators to monitor them immediate aim should be to fix the financial system and to maintain the aggregate demand at a high enough level to stimulate the real sector 2 Contents Executive summary 1. Global financial markets: A perspective 2. Indian financial services industry 3. Impact of the recession on the financial sector of the Indian economy 4. Future outlook 5. Conclusion Contacts 4 6 9 14 18 20 23 3 Executive summary The global economy is reeling with the impact of the ongoing recession which started with the sub-prime crisis in the United States and found its way to other developed and emerging economies of the world. This recession has its roots in the initial collapse of the financial sector. However, in a world that is more integrated within each country as well as across nations, the events in the financial sector have eventually trickled down to the real sector of the economies as well. Finance and financial markets play a dominant role in growth and development of modern economies – hence, any recovery from the current recession must be couched in an overall recovery of the health and performance of the financial sector. In the absence of mature financial markets in their own economies,...
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...Global economic slowdown and its impact on the financial services industry in India April 2009 The global slowdown was an outcome of two events - absence of a sound regulatory framework & mismatch between financial innovation and the ability of the regulators to monitor them immediate aim should be to fix the financial system and to maintain the aggregate demand at a high enough level to stimulate the real sector 2 Contents Executive summary 1. Global financial markets: A perspective 2. Indian financial services industry 3. Impact of the recession on the financial sector of the Indian economy 4. Future outlook 5. Conclusion Contacts 4 6 9 14 18 20 23 3 Executive summary The global economy is reeling with the impact of the ongoing recession which started with the sub-prime crisis in the United States and found its way to other developed and emerging economies of the world. This recession has its roots in the initial collapse of the financial sector. However, in a world that is more integrated within each country as well as across nations, the events in the financial sector have eventually trickled down to the real sector of the economies as well. Finance and financial markets play a dominant role in growth and development of modern economies – hence, any recovery from the current recession must be couched in an overall recovery of the health and performance of the financial sector. In the absence of mature financial markets in their own economies,...
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...FINANIAL CRISIS 2008 AND CORPORATE GOVERNANCE The business world is questioning whether Corporate Governance has become a mere catchphrase, divorced from the contentious problems it is supposed to solve… MEMBERS: AYUSH KUMAR-030 NIPEKSH I MAHAJAN-082 PRABHAV MISHRA-0 PRATEEK KUMAR-096 VAIBHAV JAIN-164 “Why should a financial engineer be paid four, four times... to a hundred times more than the real engineer? A real engineer build bridges, a financial engineer build, build dreams. And when those dream turn out to be nightmares, other people pay for it.” - Andrew Sheng “Contrary to the vulgar belief that men are motivated primarily by materialistic considerations, we now see the capitalist system being discredited and destroyed all over the world, even though the system has given men the greatest material comforts” - Ayn Rand “In fact, there is ultimately a limit to how much regulation can do. In the final analysis, you could write all the rules you want, but there has to be a philosophy of ethical behaviour that comes from human beings operating in a professional way” – William H. Donaldson, CFA “The global crisis was caused by “the over-50s not knowing what the under-30’s were doing” – Johann Rupert, Remgro Chairman “The first casualty of a downturn is truth” - Financial Times Columnist 30 Sept 2008 Introduction- The banking crisis was triggered by largely unregulated trading of complex financial instruments, including mortgaged-backed...
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