Discuss the types of instruments that a finance manager can use to address manage risk. Explain when each instrument should be used.
Discuss the types of instruments that a finance manager can use to address/manage risk. Explain when each instrument should be used.
Risk is a probability of loss. An organization faces numerous types of risk. Some of them are:
? Political risk
? Legal risk
? Business risk
? Foreign exchange risk
? Other risks
As per Accenture.com, "Enterprise risk management is essential to optimizing shareholder return and increasing the value of an organization. A chief financial officer has a vital role to play within the overall risk management agenda in protecting business assets by anticipating and mitigating financial risks"
Hence Finance manager plays a vital role in managing risk. Some of the instruments which can be used are:
1) A futures contract is a type of derivative instrument, or financial contract, in which two parties agree to transact a set of ...
Response discusses the types of instruments used by financial managers to manage risk