The Importance Of Risk Management For Companies
May 19, 2010
The main objective of the company’s owners when run their business in general is to increase their corporate value and maximize prosperity of the company owners or shareholders (shareholder’s wealth).
To achieve this, the company’s owners is obliged to apply risk management in their business.
All levels management in the company must implement risk management. In fact, the shareholders should not only eager to get dividends, but they must apply risk management and care of the risks that may arise in their business.
Risk always comes up and the effect it could have unpredictable, if we never know the pattern. Therefore, businesses should take note and study the emergence of risks, including the frequency and activity, in order to know the pattern of risk for the business. Read more
Diversification As a form of Risk Management
March 16, 2010
Every investor should know what is called diversification. Diversification is one method of risk management in investing. Why do investors need to diversify? Then how to do diversify? Consider the following answer in writing.
Risk Return Trade-off
In investing, investors must expect the return. However, in investment you are faced with the fact, that is a risk-return trade off. If you want get high returns, of course the risk is also high. Similarly, if you want a safe investment and low risk, then the return is small.
In every investment, it must contain the risk. Whether you invest it in stocks, bonds, even though safe as bank deposits. Therefore, you certainly can not avoid the risk of investing. However, you can still try to manage and minimize risks, one of way is diversification. Read more
Run Effectively Of Risk Management
March 6, 2010
Current financial crisis largely caused by a poorly functioning of risk management. Risk management function should in fact less than perfect in implementation. Therefore, risk management must be improved continuously in order to run more effectively.
Various events in the world has an important contribution to the evolution of risk management, ranging from World War I and II, Great Depression, terrorist attacks, the Asian crisis, Enron and WorldCom scandals, Madoff scandals, until the latest of the global economic crisis that resulted in the fall Lehman Brothers.
People have always tried to learn from experience. The experience provides a valuable lesson so that we do not fall on the same mistake again. Likewise happened to risk management. We tried to minimize the risk with manage it. If it still leaks, then the risk management system repair, and so on. Read more
Know About Quantitative Model in Measuring Risk
February 26, 2010
Measurement of risk is one crucial step that must be done in risk management. Measurement of risk is generally carried out qualitative and quantitative. Although sometimes there is only a qualitative measurement include only, but for more complete information, of course, also required a quantitative risk measurement.
Now, a method for quantitatively measuring these risks also vary, including major and commonly used are as follows.
Simple Method
This method is a quantitative method of the simplest. Thus, this method of measuring risk based on knowledge of the risks that have occurred historically in the various elements of the project. The higher of the risk factor cause the higher the cost estimates contingency. Read more