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INFORME INGLES FINANZAS S11

This document discusses the importance of financial risk management in the current economic environment, highlighting various types of financial risks such as systematic and non-systematic risks. It emphasizes the need for organizations to understand and mitigate these risks to ensure stability and sustainable growth. The report provides insights into effective strategies for identifying, assessing, and managing financial risks to enhance decision-making and resilience.

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4 views6 pages

INFORME INGLES FINANZAS S11

This document discusses the importance of financial risk management in the current economic environment, highlighting various types of financial risks such as systematic and non-systematic risks. It emphasizes the need for organizations to understand and mitigate these risks to ensure stability and sustainable growth. The report provides insights into effective strategies for identifying, assessing, and managing financial risks to enhance decision-making and resilience.

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FACULTY OF BUSINESS

ACCOUNTING SCHOOL

FINANCIAL RISKS AND THEIR


ADMINISTRATION.

COURSE:

CORPORATE FINANCE

AUTHOR:

Portal Gilio, Jhonny Ego (0000-0001-7425-6525)

TEACHER:

Rodriguez castro, Angel Daniel

Chimbote - Perú

(2024)

1
INDEX

I. INTRODUCTION
II. DEVELOPMENT
III. CONCLUSION
BIBLIOGRAPHIC REFERENCES

2
INTRODUCTION

The current financial environment faces a series of challenges and opportunities,


where adequate risk management becomes a fundamental pillar for stability and
sustainable growth. This report examines the different types of financial risks that
affect organizations, their impact on the economy, and key strategies to mitigate
them. Understanding and managing these risks is essential to making informed
decisions that promote financial resilience.

In an increasingly complex and dynamic environment, economic agents


particularly in business face exposure to risks across various domains, which can
impact their operations and even lead to financial losses due to uncertainty about
the future. For instance, activities such as purchasing financial instruments like
bonds or stocks, holding assets in foreign currency in anticipation of exchange rate
fluctuations, or obtaining loans all involve inherent risks. Each of these situations
requires analyzing multiple variables, as businesses are influenced by numerous
external factors. Thus, understanding and identifying these risks is essential to
managing them effectively and safeguarding the stability and resilience of the
organization. (Bautista, D. 2015).

The main factor accelerating this situation has been the gradual narrowing of the
intermediation margin of credit institutions in the last decade, a consequence of
the profound changes in their activity, characterised by other factors, such as
increased competition, the price war in traditional asset and liability operations,
new customer demands, the diversity of the offer of new products and services,
the difficulty in differentiating themselves from competitors, and the sharp decline
in interest rates. (Cáceres, D. 2002).

By understanding these risks, companies not only protect their assets, but also
improve their ability to adapt to market changes and ensure sustained growth. This
report will discuss the most effective methods of identifying, assessing and
mitigating financial risks, providing guidance for managers and decision-makers in
taking appropriate measures to strengthen organizational stability in the face of
economic challenges.

3
DEVELOPMENT
In the field of finance, risk is the possibility of an unexpected event that causes a
loss of value, that is, events that are not foreseen and that lead to not meeting
objectives. An example that clarifies this concept is the following: Juan buys
shares of a company listed on the Stock Exchange at a low price, with the
expectation that in the next few days it will rise to make a profit. However, if prices
fall even further, this would be an event that he did not expect and if the sale of his
assets were to take place, he would incur a loss. (Bautista, D. 2015).

A closely associated concept is that of uncertainty, which is affected by different


factors, of which time is one of the most important. Thus, the forecasts that a
company makes in the long term are associated with greater uncertainty than
short-term decisions due to the effect of the passage of time. It should be noted
that these two terms are not synonymous. The difference is that uncertainty is not
measurable, so it cannot be fully assessed, while risk can be defined as options
and probabilities assigned to each of them, that is, it is measurable.
On the other hand, it is specified that the total risk assumed by an agent is made
up of two parts:

Systematic Risk: This risk is determined solely and exclusively by the market,
i.e., by macroeconomic factors such as exchange rates, asset prices, interest
rates, commodity prices, etc. This type of risk affects the entire market and cannot
be eliminated through diversification, as it is related to factors that impact all
companies globally. Some examples of systematic risk include:

 Changes in interest rates: These affect both companies and consumers,


altering the cost of money and profit expectations.
 Fluctuations in exchange rates: These impact companies with international
operations, affecting their profitability.
 Economic crises or recessions: These cause declines in asset prices and
affect many sectors.

4
 Global political events: Changes in policies, wars, or geopolitical decisions
that alter financial markets worldwide.

Non-Systematic Risk: Also known as specific or idiosyncratic risk, this refers to


the part of risk that depends solely on the specific characteristics of the company
and not on the market. This risk is related to factors specific to a company or
industry and has the characteristic of being diversifiable, unlike systematic risk.
Some examples of non-systematic risk include:

 Business risk: Internal factors such as company management, strategic


decisions, or leadership issues that affect the company's performance.
 Industry risk: Changes or problems that affect a specific sector, such as
regulations or labor issues.
 Operational risk: Production errors, technological failures, or disruptions in
the supply chain.
 Innovation or disruption risk: New technologies or competitors that alter
the way the company competes.

CONCLUSION

Financial risks are an inherent part of any economic activity, as there is always the
possibility that unforeseen events may negatively impact businesses or
individuals. These risks can stem from various sources, such as fluctuations in
financial markets, economic uncertainty, internal management of companies, or
even global factors like political and social changes. In the financial field, risk can
be classified in various ways, with the most common being systematic risk and
unsystematic risk, which, while related to the same fundamental concept, manifest
differently.

In conclusion, financial risks are inevitable, but they can be managed effectively
with the right approach. The key is to recognize that risk is part of the environment
in which we operate and to learn how to make informed decisions and apply
strategies that allow us to face it in a controlled manner. By doing so, both
businesses and individuals can maximize their opportunities for success and
minimize the negative impact of unexpected events that may arise

5
BIBLIOGRAPHIC REFERENCES

Bautista, D. A. C. (2015). Riesgos financieros. Actualidad Empresarial N. º 337-


Segunda Quincena de Octubre 2015. http://surl.li/gjkflp

Cáceres, D. G., & Zaballos, J. M. L. (2002). Riesgos financieros y operaciones


internacionales. ESIC Editorial. http://surl.li/oyunmm

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