Purchase Solution

Corporate risk mitigation

Not what you're looking for?

Ask Custom Question

Need assistance with the following question.

Need an explanation of corporate risk mitigation techniques used in capital budgeting.

Thanks

Purchase this Solution

Solution Summary

Corporate risk mitigation is examined.

Solution Preview

Need assistance with the following question.

Need an explanation of corporate risk mitigation techniques used in capital budgeting.
Capital budgeting involves taking decisions about the long term assets mix of the organization. Capital budgeting decision is surrounded by risk factors. Risk in capital budgeting may be defined as the variation of actual cash flows from the expected cash flows. (Resources, 2010) The future is uncertain and full of risks. Longer the period of project, greater may be the risk and uncertainty. The financial forecasts may not come true. Hence different project having different risk levels should have different discount rate. This is because of difference in risk premium as discussed above. Following factors can cause risk for a project:
1) Market risk/Systematic risk
Systematic Risk means the risk inherent to the entire market or entire market segment. This is also known as "un-diversifiable risk" or "market risk." Hence systematic risk represents the uncertainty related to overall market. For example the world economy is affected now by recession and contraction in GDP.
2) Business risk and financial risk
As per Investopedia, "Business risk is the risk that a company will not have adequate cash flow to ...

Purchase this Solution


Free BrainMass Quizzes
Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.