Financial Risk Analysis Assignment Help




Risk Analysis:-->

Introduction to Risk Analysis Questions:

Almost every we do in today's business world involves a risk of some kind:customer habits change,new compitetors appear,factors outside our control could delay our project.But formal risk analysis and risk management can help you to assess these risks and decide what actions to take to minimize disruptions to our plans.They will also help you to decide whether the strategies you could use to control risk and cost-effective.

When we use the word "RISK" we mean either an event which leads to a variation from the most likely outcome in either direction or the probability of occurrence of such an event.

In order to deal with the risk inherent in a given activity ,we first need to identify them, by estimating the frequency of occurrence and the consequences if they occur.

The analysis of risks aims to ascertain the frequency of occurrence and the consequences if the risk event occurs.

In order to judge the financial consequences of each risk ,the expected net present value for each risk can be calculated.

How to use the tool:

Risk is defined as the perceived extent of possible loss.Different people willhave different views of the impact of particular risk-what may be a  small risk for one person may destroy the livelihood od someone else.

                                                               risk=probability of event x cost of event

To Carry the Risk Analysis Follow the Steps:

1.Identify Threats:

The first stage of a risk analysis is to identify threats facing you. Threats may be:

  • Human - from individuals or organizations, illness, death, etc.
  • Operational - from disruption to supplies and operations, loss of access to essential assets, failures in distribution, etc.
  • Reputational - from loss of business partner or employee confidence, or damage to reputation in the market.
  • Procedural - from failures of accountability, internal systems and controls, organization, fraud, etc.
  • Project - risks of cost over-runs, jobs taking too long, of insufficient product or service quality, etc.
  • Financial - from business failure, stock market, interest rates, unemployment, etc.
  • Technical - from advances in technology, technical failure, etc.
  • Natural - threats from weather, natural disaster, accident, disease, etc.
  • Political - from changes in tax regimes, public opinion, government policy, foreign influence, etc.

2.Estimate Risk

Once you have identified the threats you face, the next step is to work out the likelihood of the threat being realized and to assess its impact.

One approach to this is to make your best estimate of the probability of the event occurring, and to multiply this by the amount it will cost you to set things right if it happens. This gives you a value for the risk probability.

3.Managing Risk

Risk may be managed in a number of ways:

1.By using existing assests:

  • Here existing resources can be used to counter risk. This may involve improvements to existing methods and systems, changes in responsibilities, improvements to accountability and internal controls, etc.

 

2.By contingency planning

  • You may decide to accept a risk, but choose to develop a plan to minimize its effects if it happens. A good contingency plan will allow you to take action immediately, with the minimum of project control if you find yourself in a crisis management situation. Contingency plans also form a key part of Business Continuity Planning (BCP) or Business Continuity management (BCM).

 

3.By investing in another resources

  • Your risk analysis should give you the basis for deciding whether to bring in additional resources to counter the risk. This can also include insuring the risk: Here you pay someone else to carry part of the risk - this is particularly important where the risk is so great as to threaten your or your organization's solvency.

Risk Analysis Questions:

RISK ANALYSIS

Q1: What are the main steps that must be taken in order to deal with the risks inherent in a given activity.

Sol :  Identify the risk

  • Analyse the risks - by estimating the frequency of occurrence and the financial impact should a particular risk occur.
  • Mitigate the risks - in order to reduce the frequency of occurrence and the financial impact should a risk occur.

Q 2:  What sub - categories might be included under political risks.

Sol :  Government

  • Public opinion
  • Environment Objections
  • Wars,crimes etc
  • Public relations

Q 3:   Consider a capital project involving the expansion overseas of a financial consultancy business.Give examples of the risk this project may face.

Sol :  Possible examples include

  • Political risk arising from the lack of co-operation from the overseas government and financial regulators.
  • Business risk arising from the lack of experience of the way business is conducted in the overseas country.
  • Economic risk arising from a slowdown in economic activity in the overseas country.

 Q 4:  Describe the steps necessary to achieve an effective identification of risks.

Sol :  The necessary steps are-

  • HIGH LEVEL PRELIMINARY RISK ANALSIS to confirm that the project does not obviously have a such a high risk profile that it is not worth analysing further.
  • BRAINSTROMING SESSION of the project experts example accountants, management,consultants,oil experts etc
  • DESKTOP ANALYSIS to supplement the above by identifying further risks,researching similar projects, and consultation with experts.

Q 5:  Describe the major risks that a project might face.

Sol:

  • Political risks
  • Natural risks
  • Project risks
  • Financial risks
  • Economic risks

Q 6: Describe how the risks could be analysed.

Sol :  The frequency of occurrence or the risk level , IE the perceived likelihood that the particular risk Will occur.

  • The financial impact, IE the effect on cash flows.
  • The degree of dependence - on other separately identifies risks.
  • Controllability, IE the extent to which the impact of the risk can be managed.

Data Analysis and Interpretation:-->

Introduction to data analysis and interpretation:

For any research or for any project, after the required data are collected, the data are analyzed and interpreted.There several process while data are collected and analyzed and interpreted.this article is about data analysis and interpretation.

There are three objectives of the data analysis:

  1. Getting a feel of the data,
  2. validity and reliability and
  3. Testing the hypothesis of the investigation

Data Analysis and Interpretation-1: Feel of the Data

All the data are listed and summarized.We use statistics to reduce the large data into meaning data showing central tendencies. There are three measures of central tendency – the mode, the medium and the mean. These three measures are designed to result a typical score.depending on the variety of distribution(normal and skewed) and level of measurements of varible,the mode of measurement is chosen.

For example,the per capita income of of Brunei is US$ 53,1000,It seems that everybody in Brunei is rich,but in reality it is not the case.there are poor people.using dispersion,deviation we can get to know how wealth are distributed.Using standard deviation we can figure out the rich and the poor percentages.

Data Analysis and Interpretation-2: Reliability & Validity

When performing data analysis and interpretation it is very important to make sure that the data collected are reliable and valid.Reliable data are trustworthy and can be dependable,while valid data are more genuine,appropriate and authenticated.So,while collecting data,reliability and validity should be given the ultimate priority,otherwise wrong data analysis will be performed.

Data Analysis and Interpretation.3.:hypotheses Testing

After being sure of reliability and validity of data,the researchers ove to the  next stage-Hypothesis Testing.hypothesis testing is the process where researchers develop the thesis and test the measures using some standard formula.for example standar formula of standar deviation,sample mean etc.It determines whether the data analysis meets its requirement by using the gathered data and the measures.

NULL HYPOTHESIS: When hypothesis test does not meets its requirement it is called Null hypothesis.

Sampling Plan:-->

Introduction for Sampling Plans:

          Sampling plan in expressions of the number of samples taken from a group and the collection of individual samples to be observed. Sampling plan is a declaration of criterion of acceptance functional to a group based on suitable examinations of an essential number of sample units by particular methods:

  •           Number of elements
  •           Sampling method
  •           Decision criterion (Microbiological criteria)
  •           Two or three class plan
  •           At what time samples to be taken?

Causes of Using Different Sampling Plans:

Simple random sampling (SRS) Make sure that all samples of size n are uniformly likely to be selected – units are selected separately – can use typical statistics.

Stratified random sampling Make sure that each of the strata is standard in the sample and we know how to construct the sample to whichever minimize variability of the estimator or to minimize price.

Composite sampling can keep costs making sampling more capable but we lose information about the personal sampling units.

Systematic sampling is a suitable sampling method for items coming off a line – make sure that item from the starting, middle and last part of production are sampled.

Using the Sampling Plan Tool:

To look at the impact of a sampling plan the following inputs should be specified:

  • Standard deviation of the log focus  among lots (in log CFU/gram).
  • Standard deviation of log focus inside a lot (in log CFU/gram).
  • The amount of samples to be tested from a particular batch.
  • Collection of each sample to be tested (in grams)

 Preparation and Handling Scenarios:
          The model is designed to allow the exploration of particular preparation and handling scenarios. Every scenario is distinct in terms of four processes:

  • Creation of the formula with re hydration of the powder.
  • Storage or holding of the product subsequent preparation.
  • Re-warming previous to feeding if needed.
  • Providing the formula for preparation.

       For every of these processes time (in hours), the ambient temperature (in °C) and the holding conditions are essential.  In addition, the temperature or collection of temperatures to be exploring for the re hydrating liquid is also mentioned (in °C).

Example for Sampling Plan:

            The following is an example of a sampling plan which is part of a project to analysis men about their clothing favorites.  The analysis will be completed in a shopping mall. 

1. Illustrate the population to be surveyed.

            The populations to be surveyed consist of men between the ages of twenty (20) and forty nine (49) in the New Mexico, metropolitan area who have individually shopped for clothing for their personal use within the past three months.  


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