by International Monetary Fund

It comes as no surprise that many people do not have an idea of what the role of a finance manager is. Their main responsibility is to provide financial support and advice to clients with the aim of guiding them in making informed choices. They can work in both the private and public sectors. This could be financial institutions, multinationals, charities, trusts etc. Usually, major business decisions heavily depend on the financial assessments and considerations. The manager helps shed light on the financial implications before any business can be conducted.

They will give advice and ensure that the proper rules and procedures are followed. The roles can change depending on the organization that they are working for. When they are working for a large organization, they are more inclined to deal with strategic analysis while those working in smaller companies may only have to deal with preparation and collection of accounts.

Other duties of a financial manager include analyzing financial data and making suggestions. They also have to create long term business strategies and find new ways to reduce costs. In addition, they should look for opportunities where the business can earn additional income and also manage the company’s debt.

To be a successful finance manager, it is essential that you are involved actively in your company’s budget process. Learn to work hand in hand with the accountants since you need all the help you can get especially when faced by financial difficulties. Keep them up-to-date with any financial changes or progress. Ensure that you have hands on approach when it comes to your company’s budget. Keep track of your performance against the planned one, and if one is not planned, then make it your business at the earliest opportunity. This way, you will be able to manage your challenges when they are still small.

by saschapohflepp

Risk Management:

Risk management is a discipline for dealing with the possibility that some future event will cause harm. It provides strategies, techniques, and an approach to recognizing and confronting any threat faced by an organization in fulfilling its Projects mission. Risk management may be as uncomplicated as asking and answering three basic questions:

What can go wrong?

What will we do (both to prevent the harm from occurring and in the aftermath of  an “incident”)?

Every project involves some degree of risk (“nothing ventured, nothing gained….”),  but that risk can be controlled with a bit of careful analysis, planning and communication.  As a project manager (or a manager dealing with projects), it is your job to anticipate project risks, and then to devise the means for controlling those risks before they  can get out of hand.  This is where the risk management process comes in…..

RISK MANAGEMENT DEFINED

Risk is all about the three questions:  1) What can happen?  2) What could result?  3) What can be done? Risk management is based on the need to anticipate and manage the elements of risk. If realized, risks can threaten the success of a project, both in terms of process and outcome. To effectively manage risk, threatening events and consequences should be probabilities, not merely possibilities.

Without a crystal ball, risk management can be a challenging process. But instead of just trying to see into the future, we can manage risk by looking at the past. By examining prior project, experiences you can get a better handle on risk probabilities. And if you can anticipate an event, you should be able to weigh the consequences, and control the outcome.

A Practical Process:

Although specifics may vary based on the nature and complexity of a project,  an effective risk management process will have three key components:

Risk Identification
Risk Analysis and Assessment
Risk Response and Control

You will note the repeated use of the word realistic.  This is to emphasize an important aspect of the risk analysis process… time spent analyzing risks that are possible, but improbable, will usually be an ineffective use of time and resources.  While it is possible that a meteor will strike the earth in the midst of any given project, it is not probable, and certainly not something that can be realistically anticipated.  This extreme example aside, it still can be said that to achieve the most effective analysis possible, it is best to keep identified risks realistic and probable.  Overall, the goal is to develop a list of probable risks, and thus lay the foundation for the assessment and ultimate response to those risks, whether you choose avoidance, mitigation or acceptance.

The starting point in the risk analysis process is to consider the nature and complexity of the project at hand.  Risk analysis will take time, and any steps taken to avoid or mitigate risk may negatively impact project schedules and budgets.  Therefore, you want to carefully consider the effort to be put into risk management.  A short term, non-production project, such as an internal review of purchasing procedures, would warrant limited risk analysis.  However, the physical deployment of new purchasing systems, with the potential for operational disruption, could call for further risk consideration.  In view of the operational impact, most technology projects deserve some degree of risk management.

Once you know that risk management is warranted, begin by identifying the types of probable risks. Depending upon the nature, complexity and duration of your project, you may encounter different types of risks.  To facilitate identification and assessment, and to pave the way for clarity in thought and communication,  group potential risks into categories.  This will allow you to view risks according to type, source and underlying cause…..

The end result of this risk identification process should be a listing of likely project risks, organized by appropriate category.  This list is your roadmap to the next step…..analyzing and assessing the impact of these risks, and then ultimately to forming an effective plan for response and control.

Controlling Project Risks

The risk management process begins with identification … to assess a project for potential risks that could threaten the project process itself, or the outcome. But identification is only the beginning.

Once probable risks are identified, they must then be assessed to determine the level of impact … will there be a negative impact, and how serious will it be? If the impact is serious, that raises another question …. is the negative impact so serious as to warrant further action?

This is a critical juncture in the risk management process. Every effort to control and mitigate risk has a price – in terms of time, money or resources. Before any action is taken to accept, avoid, or mitigate risk, these costs must be carefully considered.

Once you have identified and categorized probable risks to your project, you can turn to the assessment phase of the risk management process.

The goal of the risk assessment phase is twofold:

To determine the likely impact of probable risk.
To evaluate that impact in order to determine the need for further action.

5

Determine the Impact:

Identifying Project Risks

Now is the time to take out that crystal ball. In order to properly manage any threats to project success, you must first anticipate and predict the likely impact of probable risk. There is no magic formula for this prediction, just knowledge, common sense and experience.

The starting point for this type of risk assessment is predicated upon the existence and quality of project scope and goals. If you have clearly identified your project goals and priorities, then you will be able to use that knowledge to assess the impact and consequences of any probable project risks. For example, if you view probable risk and likely impact in context of overall project priorities, you will be in a better position to evaluate the need for targeted action.

To that end, with your identified risks in hand, you will now need to consider the following types of questions…..

Can this risk affect the quality of my product or project end-result?
Can this risk affect project budgets and costs?
Can this risk affect the project schedule?
Can this risk affect the project planning and management process?
Can this risk affect the stability of project work environment?

For each “yes”, you can then proceed to the next series of questions ….

Does this risk pose a sufficient threat to my project so that further action is warranted?

THE ANSWER = NO

If the answer is “no”, then the results of that analysis should be properly documented, thus declaring that no further action is warranted. Remember that the goal of risk management is not just to avoid risk, but to also apply logic and reality to any decisions and strategies for dealing with risk. If, at this point, you can acknowledge risks, and logically decide to take no further action, your goals in risk management will be realized.

THE ANSWER = YES

However, if the answer is once again “yes”, thus acknowledging the need for further action, then continued assessment should proceed.

Once you acknowledge the possibility of impact, and the need for further action, you will then need to look at the issue of consequences. For example, you may know that a delay in network card delivery could impact a desktop installation project, but how will that delay affect the overall project …. will that one delay affect the entire schedule, or can other parallel activities help to make up for that lost time? The answers to these types of questions will help you to pinpoint the likely consequences of a given risk.

TAKE ACTION …

With this information in hand, you can then evaluate the need for mitigation and control.

If something happens, how will we pay for it? Simply speaking, a risk is any uncertainty about a future event that threatens your organization’s ability to accomplish its mission. Although your “fund balance” may be small, and equipment may be second generation, your nonprofit has vital assets at risk. Nonprofit assets fall into the following categories.

People — board members, volunteers, employees, clients, donors, and the public. Property — buildings, facilities, equipment, materials, copyrights, and trademarks. Income — sales, grants, and contributions.

Goodwill — reputation, stature in the community, and the ability to raise funds and appeal to prospective volunteers.

Consistent risk management is one of the keys to the success of a project and must always be applied at the right time in the course of all project phases, from the tendering right through to project conclusion. The Risk Management process defined sample formats as per the write up enclosed below and normally organizations needs to be adhered strictly to their risk mitigation processes, base upon their policies.

Organization Risk Process Sample Format:

Risk Management Process in GAUTAM KOPPALA ORG India

The Risk Management process has been introduced in GAUTAM KOPPALA ORG since December 2000.

GAUTAM KOPPALA ORG became a full fledged business group within GG Inc. effective 23.02.2004 and has since then imbibed this philosophy gradually.

Today’s business environment is subjected to stiff competition, globalization of markets,  complex technologies, projects having a faster cycle time coupled with tricky contractual conditions. As an outcome of these factors there is an exposure to a large number of risks that arise in the ordinary course of business.

The current profile of GAUTAM KOPPALA ORG business is approx 75% solution business and the balance being the product business. The solution business typically revolves around supply of a spectrum of standard products from the various GG Inc.  factories, and customizing  / integrating the standard software around the hardware supplied so as to offer a complete solution to the customer.

The business is heavily dependent on imports from GG Inc., with absence of local manufacturing, local value addition is in the form of panels, cables, conduits and installation services and project management. There are no “tailor made” goods or made to order products, therefore the risk profile of the business to that extent is lower.

With this background, the risk management process within GAUTAM KOPPALA ORG has been structured accordingly to review and manage:

Technical Risks

Commercial/Contractual risks

Operational risks like currency fluctuation, liquidated damages etc

Risk Management process in GAUTAM KOPPALA ORG does not aim at removing all risks in totality but is an enabler towards risk identification and managing of these risks in an efficient manner. On the other hand it also allows us to focus on the opportunities available and there by ensuring financial compliance and minimising risk impact on the Business group operations.

The Risk Management Process within GAUTAM KOPPALA ORG is followed in the manner mentioned below :

The activity is centrally controlled from Head office through the Organisational Risk Management divisional co-ordinator.
The Strategic Risks / Financial risks are centrally identified and controlled at the Divisional Management level
The Risk identification of operational risks is done through the bi-monthly regional reviews and analysis of the Projects on POC basis and other regional financial statements.
The Complete risks at the Divisional level are compiled and circulated to the regions for conformance and completeness
Based on this report the Top 5 risks are reviewed and reported in the quarter ending process to GG Inc. Management

Managing Director                                                   Risk Controller

Ideal risk management:

A prioritization process is followed whereby the risks with the greatest loss and the greatest of occurring are handled first, and risks with lower probability of occurrence and lower loss are handled in descending order. In practice the process can be very difficult, and balancing between risks with a high probability of occurrence but lower loss versus a risk with high loss but lower probability of occurrence can often be mishandled.

Types of Risks:

Intangible risk management identifies a new type of  risk - a risk that has a 100% probability of occurring but is ignored by the organization due to a lack of identification ability. For example, when deficient knowledge is applied to a situation, a knowledge risk materializes. Intangible risk management allows risk management to create immediate value from the identification and reduction of risks that reduce productivity.

Relationship risk appears when ineffective collaboration occurs.

Process-engagement risk may be an issue when ineffective operational procedures are applied. These risks directly reduce the productivity of knowledge workers, decrease cost effectiveness, profitability, service, quality, reputation, brand value, and earnings quality.

Financial risk management is the practice of creating economic value in a firm particularly credit and market risk

Management Risks: Risks that relate to the scope, structure and strategy of a given project.

Some examples……

The scope and complexity of the project is too large…i.e. are you biting off more than can be chewed?
Project requirements and outcomes are poorly defined.
The project does not have effective sponsorship or management support.

Technology Risks: Specific technical risks including design omissions, version conflicts, operational failures, incompatibilities or bugs.

Some examples……

Potential incompatibilities exist within current desktop platforms or internally customized applications.
Outdated or insufficient hardware exists for running new software products.
Early adopter’s risk – early adoption of new technology will limit the ability to benefit from the experiences of others.

Resource Risks: Human resource risks can involve staff changes, a lack of skilled resources,  staff non-performance,  or the reliability and availability of external service providers.

Some examples…..

Continual resource availability may be compromised during lengthy projects.
The loss of key staff  to competitors or vendors may occur once they are trained in new products or technologies.

Timing Risks: Timing and scheduling risks can include product delivery delays, or missed deadlines along the critical path.

Some examples……

Annual budgets will lapse if product delivery is delayed.
An overly aggressive project schedule may limit the execution of thorough test plans.

Political Risks: Internal sensitivities relating to project support, sponsorship, internal cooperation and communications.

Some examples……

Is the project dependent upon one individual for visibility and support – and what would happen if that person leaves the company?
Are project deliverables in alignment with stated company priorities?
Are there any political issues that could negatively impact resource availability and cooperation?
Are there other competing projects within the company?
Could pending organizational changes impact the project?

External Risks: Risks beyond the direct control of the project team, caused by external environmental or industry factors.

Some examples……

Potential regulatory changes
Potential economic changes
Potential company mergers
Seasonal issues, including conflicts with holidays or weather related issues

Risk management is a structured approach to managing uncertainty through, risk assessment developing  strategies to manage it, and mitigation of risk using managerial resources.

The strategies include transferring the risk to another party, avoiding the risk, reducing the negative effect of the risk, and accepting some or all of the consequences of a particular risk.

Steps in the risk management process:

Establish the context

Establishing the context involves

Identification of risk in a selected domain of interest

Planning the remainder of the process.

Mapping out the following:

the social scope of risk management

the identity and objectives of stakeholders

the basis upon which risks will be evaluated, constraints.

Defining a framework for the activity and an agenda for identification.

Developing an analysis of risks involved in the process.

Mitigation of risks using available technological, human and organizational resources.

Identification

After establishing the context, the next step in the process of managing risk is to identify potential risks. Risks are about events that, when triggered, cause problems. Hence, risk identification can start with the source of problems, or with the problem itself.

Source analysis Risk sources may be internal or external to the system that is the target of risk management. Examples of risk sources are: stakeholders of a project, employees of a company or the weather over an airport.

Problem analysis Risks are related to identified threats. For example: the threat of losing money, the threat of abuse of privacy information or the threat of accidents and casualties. The threats may exist with various entities, most important with shareholders, customers and legislative bodies such as the government.

When either source or problem is known, the events that a source may trigger or the events that can lead to a problem can be investigated. For example: stakeholders withdrawing during a project may endanger funding of the project; privacy information may be stolen by employees even within a closed network; lightning striking a Boeing 747 during takeoff may make all people onboard immediate casualties.

The chosen method of identifying risks may depend on culture, industry practice and compliance. The identification methods are formed by templates or the development of templates for identifying source, problem or event. Common risk identification methods are:

Taxonomy-based risk identification The taxonomy in taxonomy-based risk identification is a breakdown of possible risk sources. Based on the taxonomy and knowledge of best practices, a questionnaire is compiled.

Common-risk Checking In several industries lists with known risks are available. Each risk in the list can be checked for application to a particular situation. An example of known risks in the software industry is the Common Vulnerability and Exposures list found at

Risk Charting This method combines the above approaches by listing Resources at risk, Threats to those resources Modifying Factors which may increase or reduce the risk and Consequences it is wished to avoid. Creating  under these headings enables a variety of approaches. One can begin with resources and consider the threats they are exposed to and the consequences of each. Alternatively one can start with the threats and examine which resources they would affect, or one can begin with the consequences and determine which combination of threats and resources would be involved to bring them about.

Assessment

Once risks have been identified, they must then be assessed as to their potential severity of loss and to the probability of occurrence. These quantities can be either simple to measure, in the case of the value of a lost building, or impossible to know for sure in the case of the probability of an unlikely event occurring. Therefore, in the assessment process it is critical to make the best educated guesses possible in order to properly prioritize the implementation.

Furthermore, evaluating the severity of the consequences (impact) is often quite difficult for immaterial assets. Asset valuation is another question that needs to be addressed. Thus, best educated opinions and available statistics are the primary sources of information. Nevertheless, risk assessment should produce such information for the management of the organization that the primary risks are easy to understand and that the risk management decisions may be prioritized. Thus, there have been several theories and attempts to quantify risks. Numerous different risk formulae exist, but perhaps the most widely accepted formula :

Rate of occurrence multiplied by the impact of the event equals risk

Later research has shown that the financial benefits of risk management are less dependent on the formula used but are more dependent on the frequency

In Project it is imperative to be able to present the findings of risk assessments in financial terms. Robert Courtney Jr. (IBM, 1970) proposed a formula for presenting risks in financial terms.

Potential risk treatments:

Once risks have been identified and assessed, all techniques to manage the risk fall into one or more of these four major categories: (Dorfman, 1997)

Avoidance (aka elimination)

Reduction (aka mitigation)

Retention

Transfer (aka buying insurance)

Ideal use of these strategies may not be possible. Some of them may involve trade-offs that are not acceptable to the organization or person making the risk management decisions.

POME Prescribe:

About Work / Life Balance:

Naps, Breaks and Vacations: The rejuvenation trio

ü  Take a break: When you feel overwhelmed, take a break; get your mind off work for some time. Chances are, you will be able to handle the situation better after a break.

ü   Get enough sleep: There is no substitute for sleep. All else being equal, a well-rested person is better equipped to meet the challenges that the day presents, as compared to a person who has not had enough rest.

ü  When you plan a vacation and want to really enjoy it, ensure that all the work-oriented nitty gritty is taken care of, and out of the way.

ü  Manage your vacation as a project (a lot of planning) if you enjoy doing a lot of things rather than just lying around idly all day (which is also an excellent way to recharge your batteries, by the way).

Gautam Koppala,

POME Author

by azizuan

Real estate investment is perhaps the most important yet risky venture. The initial investment that is made to purchase a house is something that many people cannot even afford in lifetime. Only the people with healthy financial record and a good credit score can take a chance to invest in the real estate. Therefore, it is necessary to follow correct strategies to ensure that the venture is in the right path. However, here is some real estate investing tips that will lead to a successful investing. 

#1Real estate investing tip

To invest in real estate you need to take help of experts and financial institutions for knowledge and wealth. The proper guidance is the first step towards sound investing. Therefore, the first tip is to build up a powerful team, members who can lend their good credit rating, money, expertise and professionalism.

#2 Real estate investing tip

Real estate investing tip is incomplete without proper planning. Before investing a large amount, there should be meticulous and detailed planning as how to set up the venture or choose the property, developing it, and which is the perfect area of real estate that can prove to be profitable.

#3 Real estate investing tip

While buying the house, it will be wise to go for a fixer-upper. This will basically increase the resale value of the house. Therefore, buying properties that need repairing for resale is a great way to add wealth. The only fact is that it requires significant amount of investment and time initially.

#4 Real estate investing tip

A great way to be successful in real estate investment is to rent out the property that is bought. This is a good method to make a steady income. But in this case there should be a legal agreement that no damage should be done to the property by the tenants. However, in case of any kind of repairs, the landlord should do it.

#5 Real estate investing tip

The fifth real estate investing tip focuses on the elements of running the business. The real estate investing entrepreneurs should take care of the factors like taxation, accounting, marketing, etc. These infact are the parts that have direct impact on the business. 

by ocean.flynn

Risk management is the analysis of risk coupled with the implementation of quality risk controls. Risk management is needed for banks and financial institutions, mainly because it insures a margin of safety that guarantees a levered financial firm’s solvency.

The unpredictability and inherent risks associated with the financial markets makes it vital for financial institutions and banks to implement risk management controls. The level of quality risk management policy and controls can make or break (literally) banks or financial institutions.

The term “risk management” has evolved over the past twenty years from the term “insurance management”. This evolved term covers a wider variety of responsibilities than insurance management ever did.

Financial risk management products, derivatives and other such contracts that help hedge and protect the downside, include interest rate swaps, foreign exchange swaps and contracts, as well as a plethora of derivative securities. There are dozens of types of risk management related derivative products, the most popular of them Credit Default Swaps.

The most important part of risk management is the transferring of risk. A bank or a financial institution can protect itself from the potential risks and pitfalls of its asset portfolio by purchasing some Credit Default Swaps.

Credit Default Swaps, the most popular kind of derivative, are derivative swaps that transfer exposure to fixed income assets (bonds, mortgages, loans) from the purchaser to the seller of said derivative.

Credit Default Swaps are more or less an insurance policy taken out by a creditor that pays out if the borrower defaults. The underwriter of the swap, in return for agreeing to assume the risk of the underlying asset, receives a stream of premium payments (premiums like the ones received by insurance companies).

Credit Default Swaps are the most popular form of Credit Derivative, derivative products that protect creditors against systemic risks in both the market and in the borrower.

Risk management related credit derivative products such as Credit Default Swaps, albeit good hedges for risk, are truly double edged swords, if coupled with wanton speculation and overleveraging.

In recent years risk management products such as credit derivatives have evolved into vehicles of speculation, instruments used by financial firms and institutions to make speculative and sometimes irresponsible bets on market movements.

Lack of regulation, coupled with poor understanding of complex and Byzantine instruments, led to the credit derivative market degenerate into, to put it bluntly, a Wall Street casino.

The downturn in the housing markets has led this derivative house of cards (no pun intended) to collapse upon itself, leading to insolvency and systemic failure. Credit default swaps, however are a zero sum game. Some financial institutions have profited from correct bearish housing market bets.

If risk management products were used responsibly by banks and financial institutions, instead of used to make levered bets, the whole financial calamity could have been minimized. It is quite ironic that systems put into place to reduce risks ending up being the root of exacerbated risk.

Once the damages of the financial crash are cleaned up and settled, proper risk management can again be put into place. The need for regulation, however, is an issue up for debate.

There are too many arguments for and against regulation of credit derivative markets for there to be a concrete solution to the credit derivative problem.

There is simply too much nuance in the moral, social and financial ramifications of credit derivative rules, regulation and policy; in no way is the credit default swap debate a black or white issue.

As long as banks and financial institutions use credit derivative products such as credit default swaps for hedging purposes only, the integrity of the risk management instruments will stay in place.

The whole concept of risk management for banks and financial institutions is nullified by improper and risky speculative activities. Risk management, if done in a proper and responsible way, can effectively mitigate systemic and market risks, risks that are both inherent in today’s global financial marketplace.

For risk management to truly be risk management there should be zero tolerance for rampant, irresponsible speculation. The last thing a bank or a financial institution needs to do is exacerbate its risks by mixing gambling (speculation) with risk management.

RISK MANAGEMENT IN BANKING COMPANIES

Risk Management in bank operations includes risk identification, measurement and assessment, and its objective is to minimise negative effects risks can have on the financial result and capital of the bank. Banks are required to form a special organisational unit for the purpose of risk management. The risk to which the bank is particularly exposed in its operations are market risk(interest rate risk, foreign exchange risk, risk from change in market price of securities, financial derivatives and commodities), credit risk, liquidity risk, exposure risk, investment risk, operational risk, legal risk, strategic risk. These risks are highly inter-independent. Events that affect one area of risk can have ramifications for a range of other risk categories.

CREDIT RISK MANAGEMENT

Credit risk is defined as the potential that a bank borrower or counter party will fail to meet its obligations in accordance with agreed terms. The goal of credit risk management is to maximise the bank’s risk-adjusted rate of return by maintaining credit risk exposure within acceptable parameters. Banks need to manage the credit risk inherit in the entire portfolio as well as the risk in individual or credits or transactions.

For most banks, loans are the largest and most obvious source of credit risk; however, other sources of credit risk exist throughout the activities of the bank, including in the banking book and the trading book and both on and off the balance sheet. Banks are increasingly facing credit risk (or counter party risk) in various financial instruments other than loans including acceptances, inter bank transactions, trade financing, foreign exchange transactions, financial future, swaps, bonds, equities, options and in the extension of commitments and guarantees, the settlement of transactions.

BASAL II ON CREDIT RISK

The basal community on banking supervisionrelease a consultative document on New Capital Adequacy Framework with the view to replacing 1988 Accord. The document proposes three pillars for the new accord-

1. Minimum Capital Requirements, 2.Supervisory review 3.Market discipline

A new accord continues with the minimum capital adequacy ratio of 8% of risk waited assets. Arrange of options to estimate capital as proposed in the document include a standardised approach. Under this approach, preferential risk weights in the range of 0%, 20%, 50%, 100%, and 150% are envisaged to be assigned on the basis of external credit assessments. Under foundation Internal Rating Based (IRB), community proposes certain minimum compliance.wiz.a comprehensive credit rating system with capability to quantify Probability of Default (PD) while assigning preferential risk weights, with the information supplied by national supervisor on loss given default (LGD) an exposure at default. Adoption a New Capital Accord by banks in the proposed state requires complete change in the existing risk management systems.

MARKET RISK MANAGEMENT

Banks are exposed to market risk via their trading activities and their balance sheets. Two types of risks are considered the market risks for the bank such as interest rate risk and foreign exchange risk. Banks face the foreign exchange risk due to exchange rate fluctuations and interest rate is the most common risk all the banks manage because all the financial products issued by bank are interest rate sensitive.

1. INTEREST RATE RISK

Interest Rate Risk is a risk of negative effects on the financial result and capital of the bank caused by changes in interest rate. The overarching objective of the interest rate risk management is to ensure a cash flow mechanism that is devoid of major mismatches in both assets and liability segments. As financial intermediaries, banks encounter interest rate risk in several ways such as-

Re-Pricing Risk: The primary form of interest rate risk rises from timing differences in the maturity(for fixed rate) and re-pricing(for floating rate) of assets, liabilities off-balance-sheet(OBS)positions. They can expose a banks “income and assets” underlying economic value of unanticipated fluctuations as interest rate tends to be too frequent and volatile.

Yield Curve Risk: Re-Pricing mismatches can also expose a bank to change in slope and shape of the yield curve. Yield curve risk arises when unanticipated shifts of the yield curve have adverse on bank’s income or economic value of their asset porfolio.

Basic Risk: The risk that the interest rate for different assets and liabilities may change in different magnitudes is called basic risk. Such risk arises due to imperfect correlation in the adjustment of the rates earned and paid on different instruments with other wise similar re-pricing characteristics.

Embedded option Risk: An option provides the holder the right (but not the obligation) to buy, sell or in some manner alter the cash flow of the instrument or financial contract. Options may be stand alone instruments such as exchange –trade options and over- the-counter (OTC) contracts, or they may be embedded within otherwise standard instruments. While banks use exchange-trade and OTC-options in both trading and non-trading accounts, instruments with embedded options are generally most important in non-trading activities.

Re-investment Risk: uncertainty about future interest rate gives rise to re-investment risk as future cash flow will be re-invested at a rate unknown at present. Ordinary yield curve, without bootstrapping, does not take into account the re-investment risk.

OPERATIONAL RISK

It isone of the new planks of the Basel-II capital accord. Operational risk is defined as ‘the risk of the loss resulting adequate or failed internal processes, people and system or from external events.’ This definition includes legal risk, but excludes strategic risk and reputational risk. On the other hand, the Reserve bank of India has defined operational risk, as ‘any risk, which is not categorised as market or credit risk, or the risk of loss arising from various type of human and technical errors’.

Sources of operational risk

(i)                 Wrong /delayed decision and lack of accountability, control and proper auditing ,

(ii)               Inadequate MIS ,

(iii)             Incompetency of staff and lack of proper training and job rotation,

(iv)             Lack of succession planning and development of second lines,

(v)               Lack of contingency planning,

(vi)             Non compliance with circulars, policies and regulatory requirement,

(vii)           Obsolete policies,

(viii)         Involvement of the staff in the fraud and forgeries,

(ix)              Failure of electronic instruments ,like computer systems, software and telecommunication equipment,

(x)                Legal flaws in execution of security documents for advances

(xi)              Deterioration of bank image due to poor services,  staff behaviour, frauds, high NPAs, etc

At present, banks account for their losses due to operational risk by debiting it to their P&L account without allocating any capital charge for it, unlike in case of credit and market risk. Under Basel-II, operational risk needs to be assessed separately from three approaches namely (1) Basic Indicator Approach, (2) Standar5dised Approach and (3) Internal Management Approach. Under Basel-II framework of operational risk management, banks are encouraged to move along the spectrum of available approaches as they develop more sophisticated operational risk management system and practices.

LIQUIDITY RISK MANAGEMENT

Liquidity risk is the potential inability to meet the banker’s liability as they become due. It arises when banks are unable to generate cash to meet fund withdrawal, commitment credit or increase in assets. It originates from the mismatches pattern of assets and liabilities. Measuring and managing liquidity needs are vital for effective operations of commercial banks the cause and effect of liquidity risk are primarily linked to the assets and liabilities of the bank. The bank should continuously monitor its liquidity position in a long run and also on a day- to day basis. There are two approaches that relates these two situational analysis such as (1) Fundamental Approach and(2) Technical Approach .

Fundamental Approach: This approach is used in the long run. In this approach the banks try to manage the liquidity risk by controlling its assets –liability positions. A prudent way to tackling this situation could be by adjusting the maturity of assets and liabilities or by diversifying and broadening the sources of the funds.

Technical Approach: This approach focuses on the liability position of the bank in the short run. Liquidity in the short run is primarily linked to the cash flow arising due to the operational transaction. The bank should know its cash requirements and the cash inflows and adjust these two to ensure safe level for its liquidity position.

The Risk Management scenario will strengthen owing to the liberalization, regulation and integration with global markets. Management of risks will be carried out proactively and quality of credit will improve, leading to a stronger financial sector. The future will see a structural change in the banking sector marked by consolidation and a shake-out within the sector. The smaller banks would not have sufficient resources to withstand the intense competition of the sector. Banks would evolve to be a complete and pure financial services provider, catering to all the financial needs of the economy. Flow of capital will increase and setting up of bases in foreign countries will become commonplace.

Related Bank Risk Management Articles

by Michael Ashley

By effectively managing the life cycle of an organization’s IT assets, the IT manager has significant influence to improve an organization’s overall performance, reduce costs, improve effectiveness, and improve and demonstrate the IT department’s ROI. Managing an Enterprise’s IT assets is essential for an organization’s competitiveness today. Deploying an IT Asset Management system will help avoid failures and quickly identify wasted IT resources and other inefficiencies.

Corporations, small business, government agencies or educational institutions, all require a comprehensive solution for managing computer and software assets, controlling expenses, and automating license compliance. Enterprises require an end-to-end solution that is capable of:

Taking IT Inventory, including computers, software, servers, laptops, and mobile devices that connect to your network. Get Instant IT visibility: Have an accurate Computer Inventory and easily view updated configuration and physical location of each computer, server or laptop. View over 200 different hardware properties and know which software titles are installed on each computer. Search every IT asset by CPU, by operating system, by vendor and many more. Then export the data to CSV, PDF or HTML files directly from each view, giving you an easy way to export your data from the service and create useful reports. The Compliance Manager ensures IT compliance by tracking computers and software that are installed on your network and matching your software inventory against your software licenses to determine compliance status.

Online IT management software such as SAManage allows you to make sure that your organization has the ability to manage their IT assets throughout their lifecycle, and helps you better manage your enterprise IT assets.

Asset Management align asset operational and it’s financial aspect to achieve optimum cost
Video Rating: 4 / 5

by World Bank Philippines

METAC

Image by International Monetary Fund
(L-R) International Monetary Fund (IMF) Senior Advisor MiddleEast and Central Asia Department Alfred Kammer, IMF Deputy Managing Director Murilo Portugal, and Minister of Finance of Lebanon and Chair of the Middle East Regional Technical Assistance Center (METAC) Steering Committee H.E. Raya Haffar pose for a photo after the IMF, Donor Partners and Recipient Countries Pledge Contributions of US.5 million to Support the METAC.
The International Monetary Fund (IMF), the European Commission, France, Kuwait, Oman, as well as the Middle East Regional Technical Assistance Center (METAC) beneficiary countries—Lebanon, Egypt, Jordan, Libya, Syria, Sudan, and Yemen—pledged to contribute US.5 million to METAC during a pledging session held in Washington DC today. The pledges received cover about two thirds of the center’s requirements for its third phase of operation, which runs from May 2010 to April 2015. Discussions are ongoing with a number of other donors who have also expressed interest in contributing to METAC.

The center, which is located in Beirut (Lebanon), provides technical assistance and training to Afghanistan, Egypt, Iraq, Jordan, Lebanon, Libya, Syria, Sudan, the West Bank and Gaza and Yemen, with a focus on banking supervision, public debt management, revenue administration, public financial management, and macroeconomic statistics.

After the conclusion of the pledging session, IMF Deputy Managing Director Murilo Portugal made the following statement:

“The IMF is pleased that our partners – both traditional donors and recipient countries alike have again pledged their support to METAC.”
October 10, 2010, IMF Headquarters in Washington, D.C.
IMF Staff Photo/Michael Spilotro

Are you dreaming to head a Finance Empire in future? A traditional master degree in finance may not be adequate to help you reach your goal. The reason behind is top positions in FINANCE is generally restricted to Professional Accountants. Even an MBA (Finance) from a top B school is, often, not considered as an optimum qualification for this purpose.

To be a Professional Accountant, you neither, always, have to be a Public Accountant (Auditor) by struggling for 5-8 years including your article ship period nor you need to get disappointed by repeated failures in  examinations and eventually turning nowhere with a demoralized, half-accountant status as it happens to majority of the aspirants.

A faster yet challenging CMA (Certified Management Accountant) route provides you faster earning opportunity. By the time your friends pass the auditing exam, you would earn Rs 20-25 lacks and occupy 1-2 level positions above them.

Management Accountants are also Professional Accountants and learn the same body of knowledge the Public Accountants learn. Although the CMA exam is held by IMA, US, a student can take the preparation and appear for an online exam from any part of the globe.

The best features of CMA are

It is a compact examination consisting of only 2 papers.
The syllabus is focused to the needs of the modern world of finance.
There is facility to appear for the exam online from any metro city.
CMA has international brand value.
It is officially equivalent to ICWA (India) if the student appears for CMA from a country outside India.
Job opportunity of a CMA is huge.
CMA is a quite affordable exam.
Classroom Coaching or coaching in distant mode is available. (www.ifcpld.com)

Even Harvard, IIM, XLRI graduates do this robust, convenient, industry-relevant CMA (US) to extend their career choice in finance functions.

Why CMA is only a 2 papers exam?

The world is moving in faster pace nowadays and most of the students neither have the patience nor the time to face many shorter exams over number of years. Hence, all American exams including CMA have evolved, in a scientific manner, as compact exams encompassing all subject areas within fewer papers. It requires hard work over a shorter period to pass the exam. CMA is an internationally portable qualification – a passport to work in all countries, including US.

CMA can be extremely beneficial for

Current MBA students / MBA aspirants – CMA will be synergic with MBA as it will help them do very well in Financial Management, Cost & Management Accounting, Corporate Finance, Security Analysis & Portfolio Management, Financial Institutes and Markets, International Finance & Derivatives and Management papers of the MBA examination. However, students doing CMAs will not need to do an MBA (Finance) as it automatically covers most areas of MBA (Finance).

B Com / M Com students – CMA will help you separate yourself from other lacks of MBAs. With a CMA, you can work in any area of Finance or Accounting in Managerial positions. CMAs drive performance in business – auditors just express opinions. Even an ordinary MBA (Fin), MFC, B Com, or M Com can have extraordinary career with the international CMA. CMA alone can get you all the material benefits life and job has to offer. The CMA option will save substantial money for the B Com/B Sc graduating students and they will start working early.

CA aspirants – Cost of doing a CA over an average 4.5 years period is Rs 23.54 lakhs including the opportunity cost of lost earning (as compared to a CMA) during CA studentship.

IT professionals – A good programmer with an additional CMA qualification will be a hot cake in the international job market. If you want, you may also move to the career line of a Finance Manager or MIS Manager where your IT background will be accepted as a plus.

Ambitious Science/Engineering graduates who have a knack in finance and dreaming to hold a prestigious position with a handsome salary as early as possible.

So, do not wait for your chance to come anymore. Go and grab your dream through the CMA way of success.

for more details go to www.ifcpltd.com

Bill Dorotinsky of the IMF presents research and analysis about trends in PFM at the June 2008 ICGFM DC Forum

More Public Finance Management Articles

by USDAgov

the last cult of England

Image by francistoms
Staff of Programmes Ltd, London, England. Dateline: mid-1980′s

Programmes Ltd. was the UK’s sales sensation of its time. These people could sell anyone practically anything, legal or not: they worked insanely hard and made their company the industry leader in about two years. No wonder they quickly won Britain’s top phone marketing award.

Never mind marketing – this is about a phenomenal group of people whose story has never been told. If a history of cults in modern Britain were to be written, these people would be in it. Fact: all or almost all the staff seen here are graduates of the controversial – some would say notorious – Exegesis Seminar. Without Exegesis, Programmes would never have existed. It was these men and women who launched Programmes in Bristol and later London. They quickly proceeded to redefine telephone marketing in the UK. The year was 1981.
.
Founded, inspired and controlled by the charismatic Robert Daubigny, a master trainer, Exegesis copied the style and content of Werner Erhard’s est training – and pushed further. Exegesis seminars were much smaller, more intense and confrontational than est trainings. Once the seminar commenced its four long days in a hotel room, you quickly realised the trainer was not like anyone you had ever met. He, or she, was ruthless. It was as if your game was up. You could not hide. Nothing had prepared me for it.

Was it disturbing? Absolutely. Was it abusive? It took risks to get you to risk. Did it go ‘too far’? I never witnessed that. The British media were extremely prejudiced about Exegesis and slammed it as a scam and worse, but I cheerfully disagree.

A man needs a little madness or else he never dares to cut the rope and be free.
—Nikos Kazantzakis

If anything, I thought Exegesis did not go far enough; still, of what use would the most brilliant training be if it bothered the authorities so much that they banned it?

Active in England and Wales from the late-70s to the mid-80s, with headquarters in Bristol and London, whoever was lucky or doomed enough to do the Exegesis Seminar, and had the nerve to endure it all either went through hell and came out transformed, as we used to say, or merely wasted time, money and the opportunity of a lifetime – and didn’t. By all normal standards it was a dangerous, foolish thing to do.

www.bbc.co.uk/bbcfour/documentaries/features/gurus.shtml

Given its damn-the-torpedoes brand of experiential education, toxic media reportage and notoriety were all but guaranteed. In fact, Exegesis got such bad press as to prompt hostile questions in the UK Parliament. Thus, from Hansard:
hansard.millbanksystems.com/commons/1984/may/14/mr-ashley…

Full disclosure: I never worked for Programmes. I took part actively in Exegesis. Did I like it? No. I loved it. I hated it. I was fascinated by it, and disgusted as well. I wanted to get out, I wanted to stay in. It was as if we were being cooked in a cauldron of ever increasing commitment to be fully here now. My time in Exegesis was priceless, unforgettable. It invited me to experience passion, excellence, total commitment, trauma, grace, and enlightenment. If you could stand it, Exegesis was the shock treatment of your life (that barf bag under every chair in the seminar? It wasn’t a prop). Every moment was wake-up time: take full responsibility – no excuses! now! now! now! Committed exegesis graduates were like warriors without a war – or rather the war Robert had us fighting was no less than the age-old spiritual war against our own copping out, against apathy, against the fear-driven betrayal of life, truth and of love.

Your greatest gift lies beyond the door named ‘fear.’
—Sufi aphorism

Well, that was what fired me up. Other graduates responded differently. For many, the power they discovered in the seminar was promptly deployed in business; in this, Exegesis’ series of communication, and other-themed, seminars were very successful. The applications for sales were obvious, and in Programmes they were put to full use.

Reality check: if exegesis sounds implausibly gruelling, idealistic and too good to be true, well, it was. Personal integrity was hammered into us at seminars; yet, outside, the Exegesis ethic was to go for results by whatever, uh, worked. Morality was irrelevant: ends justified the means. Even healthy and creative criticism was angrily rejected: unquestioning trust in Robert’s directives and appointees trumped all other considerations. Dysfunctionality shadowed enlightenment in a weird duet. Largely as a result, project after project was launched with high hopes only to go nowhere.

Away from the seminar (only, there was no ‘away’ from the seminar) there was no escape from the in-your-face demands by staff for more effort, more commitment and most of all, more registrations. We grunts, called gaspers (graduate assistance seminar programme: a committed corps of unpaid employees) were not allowed to forget that Job One was to get people, thousands, millions of people, the whole freaking world! to do the Exegesis Seminar.

"Hello, I want to offer you this unique opportunity to be humiliated, taken apart and turned inside-out in front of strangers. This is your once in a lifetime chance to totally transform your life and get enlightened."

I mean, come on. You had to be crazy, right? We were!

Yes, I took part in the drive, in 1981, to swing an election in a heavily Labour constituency of London to our very own candidate, a respectable lawyer. Unknown to the public, not to mention the dear old oblivious Liberal Party, she was in fact an exegesis staffmember taking orders from Robert. In the weeks before election day, busloads of well-dressed graduates from Bristol joined London graduates in canvassing the entire borough, door to door, clipboards in hand, spiels memorised, getting the answers we wanted.

Using my deafness as an excuse I had at first not wanted to do it, then changed my mind. It turned out beautifully, blowing away yet another old limiting belief: "I can’t do canvassing because I’m deaf". Going door to door meeting all kinds of people (years later I recall how kind they were to give me their time) and asking for their vote, and often getting it, was when I first truly realised my being deaf is, paradoxically, a gift, even an exquisite joke, opening me to total listening, without prejudice, a listening that transcends communication and opens to – whoa! – communion. Nothing else but total listening was – is – the answer to the koan of my deafness. How perfect it was. My world was rocked! Could I have learned this by following social norms and having a conventional education? Hardly.

“The deepest level of communication is not communication, but communion. It is wordless. It is beyond words, and it is beyond speech, and it is beyond concept.” —Thomas Merton

How grateful I am that Exegesis was almost nothing like Aum Shinrikyo, or Heaven’s Gate, or People’s Temple, of "drinking the Kool Aid" infamy.

Being unreasonable, risking yourself and doing the impossible was the Exegesis way. That was what I got from my encounter with Robert Daubigny and his students.

Incidentally, in that election the Liberal Party, the Labour Party and even MI5 never knew who we were until the votes were in and it was too late. Exegesis’ candidate came second, almost winning the seat against all the odds.

Ah, memories. Yes, I witnessed the rise and fall of Microlite Engineering Ltd. (made hang-glider-like planes from imported kits), an Exegesis front company in the heart of Bristol’s old industrial district. All the the employees were exegesis graduates, including – fatally – its management. Its too-trusting graduate founder was soon financially ruined… Yes, I was in at the beginning of the powerplays called the Bristol Project (aim: to recruit key people in the city, and grow Robert’s influence there) and the Glastonbury University project (aim: a university teaching enlightenment or whatever else Robert wanted)

Dodgiest of all (or perhaps not) was the ‘Money Seminar’ (Bristol, 1981) in which Robert raked in serious cash from us suckers running a one-game casino, week after week… until we wised up and clammed up. How it worked: every graduate in the room wrote down their high bid in secret and handed it in to a staffperson. The highest bidder won half the total pool. To this day I remember the awful look on the face of neophyte graduate D_ R_ as he learned that he had won that night’s bout with his huge wager – and that after the organisation had skimmed off its hefty cut he’d actually get back about half his stake. We all clapped enthusiastically for the winning loser.
While not as unfortunate as my hapless culltmate I too was taken for a tidy sum before catching on. Ouch!

The wackiest Exegesis project of them all? No contest: the Total Transformation of Society – yes, this includes you, dear reader – in 4 years. Or was it two? Launched at a much-heralded gathering of all exegesis graduates, led by Robert in a city-owned hall at the foot of Park Street, Bristol in 1981, it was to begin with us ‘transforming’ the city, and go viral from there. If I recall aright, Robert declared the project a success after two years.
Or was it one? Whatever.

Anyway, every Exegesis project more or less failed, with the glittering exception of Programmes. It made Robert Daubigny extremely wealthy.

In 1986 Exegesis ceased operations, having transformed itself into what soon became Britain’s the top telephone marketing firm: Programmes.

The people I trained with in Exegesis still have a place in my heart – you never forget your first time! I wanted more, and became something of a glutton for cults in the 1980s. Pursuing my passion for enlightenment, I went to a zen monastery in California, then on to Esalen Institute, and after took the est training and its various graduate seminars. At the last est training and the first Forum in San Francisco, I assisted Werner Erhard. Curious about Werner and est? See:
www.youtube.com/watch?v=mMeXmFVq6cY
and
www.erhardseminarstraining.com/

At the same time, I volunteered at The Breakthrough Foundation (basically an est offshoot, as also the Hunger Project, and the simply transcendent Holiday Project)… and as my decade of crunchy, culty goodness came to a close, Ron Kennedy’s ‘Man Woman Training’. The last of these I took, in Russia, afforded us western participants the eerie realisation that we were doing a seminar peppered with KGB agents (Moscow, then-USSR, 1989).

No, they did not exactly get into the groove.

Risk in the stock market is everywhere. Investing in the stock market is fraught with worry, for good reason. If you lose half of your investment, you must double your return to just breakeven. Warren Buffett, considered by many to be the world’s greatest investor, states his first rule of investing is “do not lose money.” Unfortunately, the risk in the stock market of losing your money is always a possibility. However, without taking some risk there is no reward. Therefore, successful investors employ stock market risk management strategies to minimize their losses. Managing risk in stock market starts with identifying the type of risk and taking action to mitigate the impact of the risk on your investment portfolio.

Risk in the stock market comes in many forms and each can lead to a loss. The most common is the overall trend of the market. Approximately 60 % of the move of an individual stock is attributed to the trend of the stock market. If the stock market is rising, it takes with it most of the other stocks, though not in equal amounts. When the stock market falls stocks sink with it.

Another big risk in stock market lies with owning an individual stock. While owning the stock of a company can offer greater rewards, it also entails the risk that something might go wrong that can cut the price of the company’s shares in half. It might be news that sales have suddenly fallen due to a new competitor, or a product liability issue has arisen. For whatever the reason, individual stocks are subject to risk associated to them alone.

While there are other risks in the stock market, these encompass the vast majority of the ones you will encounter. Fortunately, investors can employ several strategies as a part of their stock market risk management program.

First, they can invest with the trend of the market. Following the trend is a proven method, though it is not as easy as it sounds. Trend following tries to identify and then align with the underlying trend of the market. The assumption is the market will be in a trend that could last a day, a week, a month a year or multiple years. Generally, short-term trends cycle within longer term trends. Depending on your time frame, you can align your stock position with the trend once you have identified it. When you follow the trend, you are able to reduce the likelihood your stock will fall when the market trend is rising.

Another proven risk management strategy for owning stocks is to diversify your portfolio across several different companies, sectors, and asset classes. By owning several different stocks, you reduce the impact of a loss in any one company. Moreover, if the stocks you own are from several different industry sectors you mitigate the impact of any one sector have causing a loss. Exchange Traded Funds (ETFs) offer an excellent way to add diversity to your portfolio as they hold shares of companies based on an index. The index can be for the whole market, or any segment of the market. When using ETFs, be sure there is sufficient liquidity (plenty of shares trading) or you will create another unwanted risk.

Many investors size their stock position based on their tolerance for risk. Dr. Van K. Tharp performed an experiment on position sizing in his book Trade Your Way to Financial Freedom . As Dr, Tharp found adjusting the size of your stock position using percent risk or volatility greatly increases your returns. By adjusting the size of your position based on the risk you are willing to assume, you lower your potential of a loss and increase your probability of solid gains. Our article on Position Sizing provides further detail on this method to manage stock ownership risk.

Should the price of your stock turn down, wouldn’t it be nice if you could exit your position before the price fell further. Stop loss or trailing stops are tools used by many investors to close their position should the price fall by a specified amount. Most brokerage firms allow the use of stops using a set number of points below the price or a percent below the price. Trailing stops follow the price up by an amount you set and then hold that price level on any turn down. The idea of this stock market risk management technique is to leave enough room for the stock price to fluctuate within its up trend, but be ready to sell should it fall below a pre-determined level. Some investors use mental stops, which work well as long as they have the self-discipline to sell when their stop price is hit.

Many people believe equity options are risky investments. It is true that options can be risky as they increase your use of leverage. However, professional investors use certain options to reduce the risk of their portfolios. Covered call options are an excellent way to create some down side protection while increasing the potential return of your portfolio. Covered calls are suitable for IRA accounts, indicating that the authorities consider them a low risk investment strategy. Protective put options are another method to lower risk of a portfolio. Similar to insurance, protective puts provide security should your long positions suddenly fall in price. When that happens the put option guarantees you will receive the agreed upon price for your stock no matter how far it falls. You can learn more by reading articles on covered calls and protective puts that describe the features and benefits of these stock market risk management strategies.

Managing risk in stock market is a matter of doing all you can to avoid losing money. Fortunately, there are several strategies to help you to achieve this important goal. The most successful investors employ all of stock market risk management strategies that recognize how important it is to avoid making a mistake while investing in the stock market. Do your portfolio a favor and use the available stock market risk management techniques to your advantage.

www.guerillastocktrading.com This may just be the most important stock market tutorial video you will ever watch. Most stock traders focus on buying a stock, and how much money they will make on the upside if the stock goes up x%. In this video, Lance explains why this is the opposite approach you should be taking. Understanding the difference between the mindset of amateur stock traders and professional stock traders will give you an edge over the competition.

More Market Risk Management Articles

by Frederick Md Publicity

Advice To Nordic And European Startups by Jason Calacanis of This Week In Startups #TWiST

Image by paulamarttila
READ: paulamarttila.posterous.com/advice-to-nordic-and-european…

Original Flickr Photo CC: Zpeckler www.flickr.com/photos/zpeckler/2500484769/
Included in my Prezi presentation: Top Ten Advice To Make Your Startup Succeed
prezi.com/xwctx5bb3gz4/top-ten-advice-to-make-your-online…

Therefore here is an important piece of stock trading advice. Do not chase sudden move stocks. Vital rule to keep in mind. The idea is to buy stocks before movement. Stock prices go up because there are usually large amounts of people buying the stock. A slow, upward trending stock is different than a rapid uptick in cost. Rapid upticks have a tendency to proper very quickly. Or to plummet very fast. Always be suspect of rapid shifts in price.
I am sure your quest for stock market investing tips has come to an end as you read this article. Yes, gone are those days when we have to search endlessly for stock market investing tips information or other such information like daytrading, stock trade, Invest in Indian Stock Market or even penny stocks tips. Even without articles such as this, with the Internet all you have to do is log on and use any of the search engines to find the stock market investing tips information you need.
Investing is no longer only for the elite and powerful. Numerous people can invest into the stock market and you do not have to hold a degree in finance so as to perform this task. The reason people will continue to invest is due to numerous reasons. Some love the thrill of the investment; some have a dream of hitting the “big bucks” where some genuinely depend on the stock market for their earnings.
Watch Out!-Something to be careful of when investing on trends is major events. You want to ensure that the trend was not created based on large events. Because an example, a stock might jump up from time to time but I is really the result of a few enormous deals the corporate took part in. This is not a company you want to invest in. These events are purely chance and chance is not good to risk your cash on!
MEANWHILE — I hope you have been able to get a full grasp of the main points related to stock market investing tips or other related trading options, trade stock, all about indian stock market or sure shot stock tipsin the first half of this article. Whether you answer Yes or No, keep reading as there is a lot more to uncover in this article that will excite you.
The part of making a good investment is in finding the right price. You need to look at where the corporate is right now and where it is going. What price fits the stock? You don’t want to purchase an overpriced stock. There are many formulas which will assist you in determining recent and future value. You have to learn to use the formulas and combine them with a little common sense.
Study-Learning and studying the stock market mechanism, in place since 1600. Keep under consideration to activate the option “common sense” in your brain! Knowing the basics of reading a balance sheet is important, because well because knowing how to analyze and calculate certain ratios, sort the opinions of analysts, understand what a percentage correctly is and how it works, cash flow, dividends, increase capital, and understand how to buy, how to sell, knowing the expenses of routing orders… No matter how much you already know or think you understand, there’s always room for improvement!
A lot of well-meaning people searching for stock market investing tips also searched online for stocks investment tips, finance, publicly traded companies, and even indian stock market technical analysis software.
Those are my tips for the stock market. I truly do hope they have helped you because much as they have helped me! For more tips for the stock market.

Related Investment Tips Articles

by lsgcp

10di1371-77

Image by USDAgov
Agriculture Department Chief Financial Officers and Budget Directors make up an impromptu panel to answer audience questions. (L to R Marketing and Regulatory Programs Chief Financial Officer Laura MacKensie, Research, Education and Economics Chief Financial Officer Steve Helmrich, Risk Management Agency Chief Financial Officer Margo Erny, Office of Inspector General Chief Financial Officer Kathy Hammer, Rural Development Chief Financial Officer Van Jorstad, Food Nutrition Service Chief Financial Officer Steve Butler, Foreign Agricultural Service Budget Director Scott Redman, Natural Resource Conservation Service Chief Financial Officer Joseph Noselli, and Agriculture Acting Chief Financial Officer John Holladay). The event took place at the Financial Management Training Conference held in Washington, D. C., on May 26, 2010. USDA photo 10di1371-77.

With the economy performing the worst it has since the great depression, and the US Government having to spend trillions of tax payer dollars to bail out investment banks and insurance companies, it is clear that far more effective risk management practices must be put into place. It is absolutely sickening that hard working US taxes payers are stuck flipping the bill to save greedy investment banks and insurance companies that invested foolishly with money they were entrusted to protect.

Public companies must adhere to strict financial risk management practices so they are not allowed to make high risk investment decisions that can lead to huge losses. We cannot repeat the financial meltdown we are experiencing now in 2008, especially since it was caused by greed.

What is even more disappointing about the financial crisis we are in is it could have been avoided. There are many outstanding financial risk management software applications available that can protect against making bad investment decisions that can lead to great losses.

So, the question is, what is financial risk and how is it measured?

Financial risk is the probability that an investment’s actual return will be different than expected. This includes the possibility of losing some or all of the financial value of a particular investment.

Now here is where investing gets tricky. It is known that the more risk you take, the more potential there is for a large gain. However, the more risk you take, the more potential there is for a huge loss. This is where greed can become very dangerous. One of the main reasons we are experiencing the financial disaster we are in right now is from investment banks and insurance companies investing in high risk consumer mortgages. They took the risk that they would earn a large return from offering high interest mortgages to people with poor credit. They also took a huge risk by allowing consumers to take out zero money down mortgages and interest-only mortgages.

Where the problem occurred is that a greater than expected percentage of consumers who received these mortgages could not pay them. And if people are not paying their mortgages, the investment loses value and causes financial losses. With advanced risk management software, investors would have been alerted that the potential for loss with these high risk mortgages was great and that the investor should be very aware that making these investments could lead to a huge loss.

The purpose of financial risk management software is to protect against making bad investment decisions that may lead to a large financial loss. It does this by estimating the how much risk is being taken for a particular investment choice and how much money could be lost if the investment loses value.

Here are a few advanced methods financial risk management software uses to calculate risk:

1. Measure value at risk (VaR). VAR is a technique that uses the statistical analysis of historical market trends and volatilities to estimate the likelihood that a given portfolio’s losses will exceed a certain amount. It can be thought of as the worst loss that might be expected from holding a particular investment over a specific period of time.

2. Monte Carlo. This is a problem solving technique used to approximate the probability of certain outcomes by running multiple trial runs, called stimulations, by using random variables.

Dr. Suman Banerjee of Tulane University’s AB Freeman School of Business examines risk management and how it impacts corporate decisions in good times and in bad. What is financial risk management and how does it impact corporate value? Banerjee’s lecture explains the need for risk management and how it has arrived at the forefront of corporate management and investment strategy.
Video Rating: 3 / 5

by World Economic Forum

Risk Management

Image by Cold Cut
Done using the demotivator DIY tool. I should point out I work for a bank, in the risk management department (but we didn’t need a bailout). The orriginal images is here. It was used in a display for the heritage society at the Gladstone Hotel in Toronto.

The characteristics of present banking system is exposed to diverse market and non-market risks, which has put risk management in these sectors to a core functionary within the financial institutions. This has been essentially done to protect not only the interests of the stakeholders, but more obviously, in protection to the shareholders and creditors. The growing economy demands a safe and sound banking system, and as such, risk management has become a critical task for the banking sectors, bringing in stability in the financial markets. A good supervision of all the factors involved, would lead to identifying, assessing, and promoting a secured risk management system.

The banking sector is increasingly faced with tougher challenges in meeting various risk management requirements, and no matter how tough it is, the present day operations requires the risk managers to be vigilant, and unusually diligently perceptive towards the causes of protecting the interest of the people concerned. In the practical scenario, risk management is very much fragmented, spread across in pockets, resulting in inconsistency in reporting, inadequate measurements, and poor quality of management. Poor data availability is one of the major causes in inefficient risk management, making it difficult for the bank to manage and control in an institution-wide environment.

In order that a consolidated step could be taken towards a better risk management, there has been much interaction between the public and private sectors, with an attempt to evolve techniques, mostly pertinent to the banking sector, which represents the largest and most internationally active industry in the world. Through these deliberations, Basel Committee (BCBS) in Basel, Switzerland, in 1988, came out with Basel I framework proposal, which brought together closer ties between the banks’ capital holding, and the risks that are involved. This brought in higher capital level. The banking sector is growing rapidly, and with its large and complex operations, Basel I have become inadequate in continuing with the improvement of the advanced method of risk management that the banking sectors have today. A more comprehensive guideline was evolved in Basel II. This regulation envisaged that, the banking sector should ensure a proper handling of the capital, separate the operational risk from the credit risk while quantifying both, and distribute capital vis-à-vis the economic risk. We shall discus Basel I and Basel II in a little more detail in the articles to follow.

The basic concept of risk management involves making an assessment of the risk and then developing a strategy to manage that risk. Risks ensuing out of physical or legal causes, such as, natural disasters or fires, accidents, death, and lawsuits, are one of those which are traditionally focused. But, in banking sectors, the focus is mainly on risk factors involved with traded financial instruments. In an ideal situation, the risks concerned with substantial losses and the high probability of its occurrence, are handled first, and given the highest priority in risk management. The lesser probable ones comes next. In doing so, it is quite difficult to maintain the balance between the combination of different scenarios, viz., risks with a high probability of occurrence but lower loss vs. a risk with high loss but lower probability of occurrence.

In meeting the basic characteristics in banking sectors, there is a need to provide human and financial resources through-out the organisation, enough to meet the purpose of an effective compliance risk management system. In proving such resources, it is necessary to delegate proper authority and independence in the working method. There needs to be a sense of ‘ownership’ in the compliance function, in order that the organisation can keep itself focused on its compliance risk management responsibility. A comprehensive database should be in place, along with monitoring and measuring of the risks involved in any kind of circumstances, which, in combination, may provide meaningful reports based on the laws and regulations governing compliance risks, associated with existing or new products, and new business activities.

The banking sector need to understand operational risk exposure at the organisational level, where the concerned risk factors are consolidated into one, making it somewhat easier to have a verification of operational risk involved. We shall examine in the consequent articles the problems that banking sector finds most difficult to address, which are deficient in the current methodology used. There are gaps in analysis of risk elements in the current procedures adapted, in establishing risk management and risk control.

prabirsenuk@yahoo.co.uk

by Cian Ginty

Keynote Bob Long, Conversus Asset Management

Image by djevents
Bob Long, President & CEO, Conversus Asset Management (right) is interviewed by Jennifer Rossa, managing editor, Dow Jones Private Equity Analyst.

Proper management of your IT assets can help you save money and reduce your overall IT costs. According to IAITAM, proactive IT asset management can reduce your IT costs by up to 25%. By knowing which computers and software are used across your company, and matching the inventory information against your financial and contractual records you can make better IT decisions and get more out of your IT budget. IT Asset Management provides the following benefits:

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