Question

As a Chief Financial Officer, how do you manage the risks the company is exposed to.

Answer 1

Risk as a condition in which there exists a quantifiable dispersion in the possible outcomes from an activity.

Risk can be mitigated or managed by following ways:

• Risk identification: involves identifying risk exposures of an organization, in terms of their impact on survival of the business.
• Risk Quantification: In terms of probability of loss and quantum of loss are to be identified and specific strategies are to be initiated to manage the risk.
• Risk treatment: its a stand about how one try to mitigate the risk through proper methodologies.
• Risk Monitoring: After all the necessary actions taken, follow up hast to be made regarding the risk mitigation level achieved.

Risk one should analyse are the:

• Operational risk
• market risk
• Foreign investment risk
• Credit risk
• Liquidity risk
• Asset backed risk.....etc

All the above risk can be assessed through financial statements and proper actions can be initiated to mitigate the risk.