All of the statements below represent exposures to financial risks
All of the statements below represent exposures to financial risks, except: I. Hurricane damaged the oil drilling platform in the Gulf of Mexico that resulted in oil spill; II. Loss of data records from CRM system because of hackers attack; III. Government officials announce the threat of the overheating of economy and push the central bank to raise interest rates; IV. The bankruptcy of astatic/image/hrline/4.gif
THE CORRECT ANSWER IS A. ONLY III AND V. In a situation where the government is able to predict an overheating economy, then it does not represent a financial risk since the central bank will be pushed to raise the interest rates. Hence overcoming the financial risk. A financial risk is defined as the situation in which an organization may loose their finances due to some factors from the market. Increase in interest rates by the central bank will promote more money getting back into the economy rather than loosing the money. Hence building the economy.
Financial analysts play a big role in assisting companies to avoid involving in financial risks. Financial analyst who practice money laundering are able to identify the money received through illegal ways into the company. Hence predict How to deal with money to avoid financial risks in the long run. Suppose the factors that would lead to financial risk are monitored and controlled early enough then the probability of a company incurring such risk is very low. Financial analysts are responsible for that.
Step-by-step explanationREFERENCEGrippa, P., Schmittmann, J., & Suntheim, F. (2019). FINANCIAL RISK. Finance & Development.
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