Topic
Financial risk
About: Financial risk is a research topic. Over the lifetime, 11899 publications have been published within this topic receiving 231404 citations. The topic is also known as: economic risk.
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TL;DR: In this paper, the authors explore the importance of knowledge management in risk management and demonstrate the need for a more structured approach to transfer knowledge to decision makers before it is needed, enabling the access of information as it was needed, and generating and testing new knowledge about the firm's changing risk management requirements.
Abstract: Three recent failures of risk management—at Barings Bank, Kidder Peabody, and Metallgesellschaft—appear to be due to three underlying causes: dysfunctional culture, unmanaged organizational knowledge, and ineffective controls. The first and the last of these have been extensively discussed in the media. This article explores the importance of the second: knowledge management. It demonstrates the need for a more structured approach to transferring knowledge to decision makers before it is needed, enabling the access of information as it is needed, and finally generating and testing new knowledge about the firm's changing risk management requirements.
186 citations
TL;DR: In this paper, the authors explore the entrepreneurial risk construct, focusing on how the decision to launch a new venture may entail risks different from what is found in established firms, and suggest alternative measures that better capture these concerns, including the dilution of control when issuing equity, cash burn rates, etc.
185 citations
TL;DR: In this article, the impact of various components of not only political risk but also financial risk on inward FDI, from both long-run and short-run perspectives, is examined.
Abstract: In this paper, we aim to identify the political and financial risk components that matter most for the activities of multinational corporations. Our paper is the first paper to comprehensively examine the impact of various components of not only political risk but also financial risk on inward FDI, from both long-run and short-run perspectives. Using a sample of 93 countries (including 60 developing countries) for the period 1985-2007, we find that among the political risk components, government stability, socioeconomic conditions, investment profile, internal conflict, external conflict, corruption, religious tensions, democratic accountability, and ethnic tensions have a close association with FDI flows. In particular, socioeconomic conditions, investment profile, and external conflict appear to be the most influential components of political risk in attracting foreign investment. Among the financial risk components, only exchange rate stability yields statistically significant positive coefficients when estimated only for developing countries. In contrast, current account as a percentage of exports of goods and services, foreign debt as a percentage of GDP, net international liquidity as the number of months of import cover, and current account as a percentage of GDP yield negative coefficients in some specifications. Thus, multinationals do not seem to consider seriously the financial risk of the host country.
185 citations
TL;DR: In this article, a Monte Carlo Simulation (MCS) approach to risk analysis based on an entire life-cycle representation of RET-investment projects is presented. And the presented financial analysis combined with MCS aids in optimizing the conceptual design of an investment project with respect to capital returns and risk.
184 citations
01 Mar 2000
TL;DR: In this paper, the authors focus on clients from selected micro-finance institutions (MFIs) in Bangladesh, Bolivia, the Philippines and Uganda, and focus on the role of financial, physical, human, and social assets in reducing vulnerability.
Abstract: The study presented in this report addresses the question of whether microfinance can reduce poverty. It seeks to improve understanding of the impact of microfinance services on selected non-income dimensions of poverty and emphasizes the role of assets in reducing vulnerability. The study focuses on clients from selected microfinance institutions (MFIs) in Bangladesh, Bolivia, the Philippines and Uganda. The purpose of the study is to improve understanding of the impact of microfinance services on selected non-income dimensions of poverty, specifically those related to risk, vulnerability, and assets. The study emphasizes the role of financial, physical, human, and social assets in reducing vulnerability by helping individuals and households protect against risks ahead of time and manage economic losses afterwards.
184 citations