Eternity Law International — News — Financial risk management

Financial risk management

Published:
July 16, 2020

Any large enterprise will fail if it does not follow the principles of risk management, in other words, it ignores financial risk management.

In this publication we will try to reveal the most important aspects of this area of ​​activity.

Business is primarily a risk, so every entrepreneur tries to make every effort to keep his business out of the danger zone.

This is especially true for large enterprises, because the larger the enterprise, the higher the various risks, including financial ones.

The main goal of risk management is to reduce the likelihood of losing any part of cash resources. With proper financial risk management, any enterprise will be successful, including the shares and investments of large companies.

Activities based on speculative manipulation carry the greatest risk for the enterprise. The main interests are the level of profitability and loss from these operations.

TYPES OF FINANCIAL RISKS

The likelihood of bankruptcy is one of the financial risks that everyone knows about. There are also relationships between financial market participants – buyers and sellers, investors, creditors, etc.

Every year the financial risks became more and more, therefore a special classifier was created.

The object of the operation, the nature of the consequences, the time period, inflation, forecasting – all these are the main features according to which financial threats are divided into three groups.

The first group includes inflation, deflation, currency depreciation and reduced liquidity. They are all related to the purchasing power of money.

The second group relates to investments. It is a dangerous phenomenon that directly depends on investments in innovative products and other projects, as well as direct financial losses and capital reduction.

The third group contains threats to economic activity, that is, risks associated with the production and sale of goods and services.

All three groups have negative consequences, then let’s talk about risk assessment, what it is for and what methods are used.

FINANCIAL RISK ASSESSMENT METHODS

The most accurate assessment method is considered to be “economic-static”. Its foundation is statistics of an economic nature and all the information that is collected for private research.

Since official statistics do not always reflect reality, there is a need to use another method – calculation and analytical. It is not accurate, but it shows the statistical error.

The analog method is used when it is necessary to detect a possible threat to the market. It is based on an analysis of previous transactions that were carried out in a specific market.

The final risk assessment method is the expert one. There are cases when there is neither information nor data for the calculation and statistical method.

The information that was obtained as a result of interviews with experts in a particular field is subjected to analysis and mathematical processing.

FINANCIAL RISK MANAGEMENT PRINCIPLES

The main task of risk management is to find the right information and its correct interpretation. At its core, management includes techniques, methods and activities that make it possible to identify and predict threats to the enterprise.

An important task is not just to predict risks, but to prevent them. For this, the leadership chooses the direction of the strategy and the necessary tactics.

At the moment, the risk – managers are in demand in the labor market and every enterprise needs a professional in their field.

In order to become such a specialist, you can start by creating working tools – primarily a current account.

The accounting department of the company must compile quarterly, annual financial reports and provide declarations to the tax service. Contact us for more information.

You could be interested

Corporate tax in Romania

The state of Romania is a great country for entrepreneurship. Before launching the establishment every businessman has to be informed about all peculiarities of trade activity in the country. One of the most consequential topics is the taxation of companies. The corporation tax rate is 16% in Romania It is evaluated as the variance between...

Italy gambling license

A license is a document, the presence of which gives the right to conduct any activity: construction, accounting or gambling. Licensing of gambling in Italy is compulsory. Without the presence of such a document, the functioning of the business will be in question and may be criminally punishable. Issuance of permits for gambling business is...

Company registration in Croatia

Among all the Balkan states, Croatia has the highest level of development. In this country, all the appropriate conditions have been created in order to implement a profitable commercial project. But, you can start doing business in Croatia only after receiving official approval from the authorities. Since 2012, this jurisdiction has had rules governing the...

ICO - Game by the rules

In the first quarter of 2018, the most popular topic in the world of cryptocurrency was the regulation of ICO. This happened in Switzerland, where in February FINMA issued its ICO guidelines. This caused a huge resonance both within the country and in the wide association of blockades. Considering the fact that we are members...

Mobile bank security

Mobile banking applications are widely used everywhere, because they make it much easier for customers to work with banking services. Today we will talk about such an aspect as the security of a mobile bank. As a trend, the creators of online banking applications do not pay the required attention to this issue. Often, due...

Fintech company registration in Malta and Singapore

Registration of a fintech company in Malta and Singapore is quite a popular request in recent years. This article describes in detail the process of creating fintech companies in Malta and Singapore. Reasons why it is necessary to register a company in Malta In recent years, it has been Malta that has gained a reputation...

Discover our services

The international company Eternity Law International provides professional services in the field of international consulting, auditing services, legal and tax services.

Ready-made companies for sale

Companies with a bank account around the world

Banks for sale

Established Banks for sale

Ready-made licenses for sale

Forex, cryptocurrencies, gambling, EMI, PSP, SVF, MSO, DLT

Licensing

Forex licenses, cryptocurrencies, gambling, EMI, PSP, SVF, MSO, DLT

Offshore company registration

Expert advice on the acquisition of an offshore company

Open a bank account

Open bank accounts in more than 120 banks around the world
Fill the blank:

Zurich

Dreikonigstrasse, 31A, Stockerhof
+41 435 50 73 23

Kyiv

Baseina street, 7
+38 094 712 03 54

London

Grosvenor Gardens, 52
+44 203 868 34 37

Washington

1629 K St. Suite 300 N.W.
+1 (888) 647 05 40 Toll Free

Vilnius

Gediminas Avenue, 44A
+370 52 11 14 32

Tallinn

Kesklinna linnaosa, Tuukri 19
+372 880 41 85

Edinburgh

Lochrin Square, 1
+44 203 868 34 37

Nicosia

Jacovides Tower, 5 floor
+371 665 550 51

Riga

Esplanade, 7 floor
+371 665 550 51

Hong Kong

18 Harbour Road, 35/F, Central Plaza, Wanchai
800938622 Toll Free

Singapore

Level 42, Suntec Tower Three, 8 Temasek Boulevard
+6531594300

Sydney

20 Martin Place
+61 2 888 00 365

Porto

2609 Avenida da Boavista
+351 800 500 206 Toll Free

Tbilisi

Revaz Tabukashvili Str., N 45, area N 7
+995706070360