Financial risk management

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Finance theory also shows that firm managers cannot create value for shareholders. by taking on projects that shareholders could do for themselves at the same cost. This notion was captured by the hedging irrelevance proposition: In a perfect market.e. the Basel Accords are generally adopted by internationally active banks for tracking. This suggests that firm managers likely have many opportunities to create value for shareholders using financial risk management. also called its investors. particularly credit risk and market risk. Volatility. the firm cannot create value by hedging a risk when the price of bearing that risk within the firm is the same as the price of bearing it outside of the firm.Finance series Financial market Financial market participants Corporate finance Personal finance Public finance Banks and Banking Financial regulation This box: view talk edit Financial risk management is the practice of creating economic value in a firm by using financial instruments to manage exposure to risk. When applied to financial risk management. is that market risks that result in unique risks for the firm are the best candidates for financial risk management. Financial risk management can be qualitative and quantitative. Liquidity. financial markets are not likely to be perfect markets. etc. As a specialization of risk management. In practice. In the banking sector worldwide. Other types include Foreign exchange. and plans to address them. Sector. credit and market risks. A general rule of thumb. financial economics) prescribes that a firm should take on a project when it increases shareholder value. When to use financial risk management Finance theory (i. The concepts of financial risk management change dramatically in the international realm. reporting and exposing operational. this implies that firm managers should not hedge risks that investors can hedge for themselves at the same cost. The trick is to determine which risks are cheaper for the firm to manage than the shareholders. Inflation risks. financial risk management focuses on when and how to hedge using financial instruments to manage costly exposures to risk. financial risk management requires identifying its sources. Multinational Corporations are faced with many different obstacles in overcoming these . measuring it. Shape.. however. Similar to general risk management.

With government funding decreasing.[3] Megaprojects (sometimes also called "major programs") have been shown to be particularly risky in terms of finance. Research has specifically identified three kinds of foreign exchange exposure for various future time will give a museum a stable source of inco me that is . The following list offers some ideas and suggestions for increasing earned revenues: Instituting or raising an admission fee is a realistic option for increasing earned revenue. Research by many. increasing earned revenues should be a fundamental part of the budget planning process .[4] [5] Human resource management E-book http://books. If a product or service has enough interest to visitors. it is key that market research takes place to set a price point fee structure. a fee should be seen as µmoney well spent. Ideally. including Raj Aggarwal has started to disclose much of the decisions and impacts firms must make when operating in many countries. generating increased earned revenue will likely be the tactic chosen by event management co.. having an admission fee should not deter customers. Financial risk management is therefore particularly pertinent for megaprojects and special methods have been developed for such risk management.¶ Offering memberships or increasing memberships can provide a regular source of revenue. transactions exposure[1] an+resource+management+in+a+event+man&source=bl&ots=egKevCIRBt&sig=9IH FT6qaZvhDHHyqXG85jNlfpI&hl=en&ei=iOIWTd34K4rkrAfWqMXhCw&sa=X&oi=book_result&ct=resul t&resnum=1&sqi=2&ved=0CBoQ6AEwAA#v=onepage&q&f=false GENERATING REVENUES: In order for an event to remain financially viable. Prior to any implementation of an admission fee. Offering memberships for patrons. accounting exposure[2]. and economic

promotions and pricing to appeal to the target market. There are numerous associations throughout world that provide grants to eligible event. Offer an altered admission plan for a scheduled duration. The first major example of this was the TV show "He-man and the Masters of the . FOOD AND BEVERAGE SALES: Providing a source for visitors to obtain food or beverages while visiting the event may also contribute to revenue. usually those in current release and with television shows oriented towards children. increasing awareness about the museum s membership benefits may bolster membership. One definition of Merchandising is a marketing practice in which the brand or image from one product or service is used to sell another. sometimes it can be the other way around. which includes product packaging. often consists of toys made in the likeness of the show's characters or items which they use.collected on an annual basis. logos. This is called merchandising. If a membership program exists. Another option is to use vending machines for snack foods and drinks. 'sellable' way. The effect is intended to be an increas e in attendance and a resulting increase in revenue. Grants are financial contributions that are made to associations by private or public institutions. especially in connection with child-oriented films and TV shows. It is most prominently seen in connection with films. with the show written to include the toys. and providing this service through a concessionaire may be advisable. The intent here is to create awareness and interest by generating a sense of value and to develop new audiences. Caution is advised. companies go to great lengths to make sure that their products are visible in stores and are presented in an appealing. as running a restaurant is a difficult t ask. as advertising for the merchandise. Merchandising: To ensure sales. or character images are licensed to manufacturers of products such as toys or clothing. advertise that admission will be by donation only for a specified time period. if an event currently charges a fee for admission. However. For instance. Merchandising. either by a onetime financial contribution or ongoing funding. hoping they'll sell better than the same item with no such image. who then make items in or emblazoned with the image of the license. Once awarded. Trademarked brand names. placement. grants provide event with a source of income.

McFarlane Toys) Occasionally shows which were intended more for children find a following among adults. physical presentation of products and displays. In other cases. or organization financially or through the provision of products or services as part of brand identification and marketing." in the early 1980s. promotional opportunities before and after the event. activity. (Gundam model kits) The most common adult-oriented merchandising. A particular form of specialized brand sponsorship where a brand sponsors an unusual event or pastime that then becomes synonymous with that brand (to the point where future brands may be excluded from participation) is known as 'aboutsponsorship'. arts. and the decisions about which products should be presented to which customers at what time. even lasting decades after the show has largely disappeared from popularity (Hello Kitty). Sometimes merchandising from a television show can grow far beyond the original show. is that related to professional sports teams (and their players). but this practice has been common in children's broadcasting ever since. similar to a benefactor. Other benefits of sponsorship can include access to on-site hospitality tents or skyboxes. Sponsorship: To sponsor something is to support an event. as by coordinating production and marketing and developing advertising.) Merchandising. (An example would be Harley-Davidson branded clothing. the . display. and you can see a bit of a crossover. For example. person.Universe. however. This provides a strong walled-garden sponsorship relationship between particular events and the brand. entertainment or causes) in return for access to the exploitable commercial potential associated with that property. Other reasons for sponsorship include signage at sporting events. (Examples: Star Trek. huge amounts of merchandise can be generated from a pitifully small amount of source material (Mashimaro). Sponsorship [1] is a cash and/or in-kind fee paid to a property (typically in sports. Sometimes a brand of non-media products can achieve enough recognition and respect that simply putting its name or images on a completely unrelated item can sell that item. with products from that show oriented towards both adults and children. and sales strategies to increase retail sales. as commonly used in Marketing also means the promotion of merchandise sales. and the opportunity to entertain clients and prospective customers by inviting them as VIPs to sponsored events. This includes disciplines in pricing and discounting. The sponsor earns popularity this way while the sponsored can earn a lot of money. This is common especially with the science fiction and horror genres. local or national media coverage. A sponsor is the individual or group that provides the support. A smaller niche in merchandising is the marketing of more adult-oriented products in connection with similarly adult-oriented films and TV shows. a corporate entity may provide equipment for a famous athlete or sports team in exchange for brand recognition.

For example college bowl games now contain the name of their sponsor.A. sellers. Other types of sponsorships revolve around companies paying for parts of television broadcasts and sporting events which bear their name. Visa. among others. Eventually. Coca-cola Enterprises. activators and other interested parties. Ping. The mission of the ISC is to promote sponsor value and protect their collective interests. Panasonic. Many companies want their logo on sponsored equipment in return. FirstRand Group (South Africa). Unlike philanthropy. Honda Motor Co. Many radio stations were established by radio equipment manufacturers and retailers and programming was provided to sell radio transmitters and receivers. This led to a system where radio and television programs were financed by selling sponsorship rights to businesses. like this Annual Students Rowing Contest ('Roeivierkamp') on the Amstel river in Amsterdam. newsletters and job board. Members include some of the world's leading sponsors including Anheuser-Busch InBev. Porsche Cars N. They have over 5. The Coca-Cola Company. not a donation. Formula One teams for many years relied heavily on the income from tobacco advertising. Whe eve s are name after the r s ns r.agencies. When commercial radio stations began broadcasting in the early 1920s. MasterCard. ¥ ¥¤ £ ¢ ¡    .000 professionals interacting via online discussion groups. The community best represents the entire sponsorship community. Sponsorship Insights Group (SIG) [4] formed the largest online network for sponsorship professionals. and possi l even t e opport nit for sponsors and t eir VIP guests to parti ipate in a pro-am t pe event Anot er benefit is t e abilit to reach a specific demographic or target market Cause-related marketing[2] generall includes an offer by the sponsor to make a donation to the cause with purchase of its product or service. AT&T. and is expected to show a return on investment.. Sponsorship is also becoming increasingly important in education. reflected in the sponsorship liveries of the teams. properties.opport it to meet at letes or teams i person. Bridgestone Firestone. the programs were aired without advertising. money spent on cause marketing is a business expense. buyers. brands. the broadcasters began selling smaller blocks of advertising time to several businesses. the sponsor is a Title Sponsor.. The International Sponsor Council (ISC [3] was formed as the world's first trade organi ation representing corporate sponsors.

Many times a company's motives for sponsorship are altruistic in order to create goodwill in the community which increases their good reputation. Sponsorship in the traditional sense became less common is US television over the years² individual advertisements in many different programs being the norm for commercial television these days. People may sponsor an individual or group of people to undertake a fundraising task. of each program. With respect to neuroscience conferences.[5] invitations to lobbyists/politicians and taxation of benefits such as free admission tickets and hospitality. because of their high commissions (10-25%). An ongoing issue is the payment to intermediating sponsorship agents and sports managers which are employed by many sportspersons and teams to find sponsorship. but who are often reluctantly paid. getting buy-in from multiple constituencies and finally negotiating benefits/price. [edit] Selling sponsorship The sales cycle for selling sponsors is often a lengthy process that consists of researching prospects. finding the right contacts at a company. In Japan. usually with a subdued announcement at the end. as evidenced by each Japanese television series (after its opening sequence. sponsorship is prevalent in television. usually for a charity or other cause requiring funding. and optionally the beginning. sponsorship is more commonly used to derive benefit from the associations created for a company's brand(s) or image as a result of the sponsorship. the term sponsor designates the person financially supporting the research presented at the conference. This is often referred to as 'underwriting'. [edit] Sponsorship controversies Recently. Sponsorship belongs to the promotional tool of Marketing.[8] [edit] Activation . creating tailored proposals based on a company's business objectives.[6] The German initiative S20[7] has been established in 2007 in order to define a stable framework for the sponsorship industry in Germany. where sponsorship of an entire series is still commonplace. the sponsorship industry has been under scrutiny for compliance issues. However. with product placement becoming more popular²with the exception of Public Television. Some sales can take up to a year and sellers report spending anywhere between 1±5 hours researching each company that is viewed as a potential prospect for sponsorship. its ending and subsequent episode preview). among others the alleged channeling of funds ("kickbacks").

[9] .The term used by many sponsorship professionals referring to how a sponsor uses the benefits they are allocated under the terms of a sponsorship agreement. Also known as leverage. Money spent on activation is over and above the rights fee paid to the sponsored property. Activation is defined by IEG as the marketing activities a company conducts to promote its sponsorship.

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