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2. IDENTIFY RISK
APPARENT RISK EXPOSURES
The best exposures that may result from particular activities or circumstances to do this weend
to look:
SOURCE
Examples; borrowings and investment
Resulting for an exposures transactions in a foreign currency that resulting exposure for
volatility in foreign exchange form
TIMING
This is by looking in a cash inflows and out flows the same with the liquidity risk exposure.
OFFSETS
Example; if we have variable borrowings ($100,000) and $75000 of investments offset of risky
exposure we only need to consider the next interest right risk exposure from 25000$ also of
borrowings
3. ANALYZE RISK
By understanding the:
Nature of the risk
Actual exposure
Contractual adjustments, inflation adjustment
4. EVALUATE RISK
To prioritize the risk require in the immediate action to reduce the exposure on going close
monitoring review or regular highly.
5. TREAT RISK
RISK (REDUCE,TRANSFERS, ACCEPT, and AVOID)
It will depend time of risk and severity of the consequences, some risk maybe to be transfer with
third party such as contractual arrangements other risk exposures maybe medicated removing the
source of the risk or by taking action to reduce the likelihood or consequences.
- To keeping mind that the framework is not one of step by step process by actually more of a
secret process