Reflective report on Financial Risk Management

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Introduction
As a result of their financial engagement in the financial sector during the last several years,
large securities companies, money Centre banks, and other commercial and savings banks
throughout the country have suffered huge losses and unanticipated write-offs. So, top
management at these companies are seeking for new techniques to detect, analyze, and forecast
changes in financial risks to lessen the possibility of a repeat. These huge losses and unexpected
write-offs need the use of financial risk management. Risk management cannot be reduced to a
simple checklist or a mechanical procedure). If you have the capacity to question and imagine
other scenarios, you'll have an edge in risk management.
Chapter One: Personal Finance Basics and the Time Value of Money
Personal finance
Personal finance is a broad word that encompasses a wide range of topics, including budgeting,
saving, and investing. Money management includes everything from spending to saving to
investing to investing to insurance to mortgages to banking to taxes.
The word "personal finance" encompasses a wide range of financial objectives, from the short-
term (such as going on a trip or purchasing a vehicle) to the long-term (such as investing for your
child's college education and retirement). The word "personal finance" refers to the practice of
budgeting, saving, and making long-term financial decisions. In addition, financial management
include all of the following: banking, budgeting, real estate, investments, insurance, and tax
planning. The word "personal finance" refers to the practice of budgeting, saving, and making
long-term financial decisions. Banking, budgeting, mortgages, investments, insurance, retirement
planning, and tax preparation are all included in financial planning
Personal Finance important
To maximize your income and savings, you must become financially savvy. Financial literacy
enables you to discern between good and poor financial advice and make wise financial choices.
It is crucial to study the fundamentals of money management via free internet materials, courses,
blogs, podcasts, or at the library since few colleges provide courses in this area. The value of
money over time
As a rule of thumb, a given amount of money is worth more now than it will be in the future
because of its earning potential while it is still available. Core financial theory states that this is
the best way to make money.
Importance of Time Value
For a given dollar amount, the present-day value exceeds the future value by a certain amount
of time. Money can only increase via investing, which is why it's important to do so. An
opportunity is wasted if an investment is postponed. Money's future worth, the amount it may
earn, and its time period are all taken into account when calculating the time value of money.
How can this chapter help me in my professional life?
A good return on an investment is the only way money can expand over time. Over time, money
that is not invested loses its value. No matter how firmly one expects to be paid a quantity of
money, it worth decreases while it is being held in reserve. With its help, you can take control of

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your financial situation. Your financial decisions are more informed when you know how much
money is coming in and going out.
In what ways has this chapter influenced my outlook on life?
A Few Financial Basics
Create a Financial Calendar
Setting up appointment reminders for crucial money tasks, like a doctor's visit or automobile
tune-up, might help you avoid forgetting to pay your quarterly taxes or get a credit report. Do
you know where to begin? The financial calendar of our dreams.
Check Your Interest Rate
Which debt should you pay off first? An easy answer is the most expensive. Is there a specific
savings account that you'd recommend? One that has the best interest rate is a’s the problem with
credit card debt? A: The compound interest rate is to blame. Here's the bottom line: Keeping tabs
on the current rate of interest might assist you in determining the most important financial
obligations to priorities.
Track Your Net Worth
How much money do you have in the bank? The gap between your assets and your debt is the
most important financial metric you can use to assess your current financial situation.
Maintaining an eye on your progress toward your financial objectives will keep you informed of
your progress or alert you if you're going backwards.
Consider an All-Cash Diet
This will help you get out of the habit of overpaying. What if we're wrong? In these three
individuals' cases, the cash diet was a life-altering experience. And one lady discovered that
becoming cash-only wasn't as frightening as she had anticipated.
Take a Daily Money Minute
Alexa von Tobel, the founder, and CEO of Learn Vest, is a firm believer in spending only one
minute a day checking her finances. This 60-second schlep helps spot difficulties right away,
keep track of goal progress, and set the tone for the rest of the day!
Budget About 30% of Your Income for Lifestyle Spending
How to Get Money Motivated
Draft a Financial Vision Board
A vision board may serve as a constant reminder to keep on track with your financial objectives
and provide you with the inspiration you need to begin developing healthier money habits.
Set Specific Financial Goals
When describing your financial goals, don't simply use words; include figures and dates as well.
You must decide how much and when you want to get out of debt. How much money do you
want to put away, and when?
Spend your money in a way that is consistent with the words you've chosen. Ask yourself, "Is
this [fill in purchase here] better than Bali next year?" in order to be charged, an item must be
worth at least $30."
Top 10 Basics of Personal Finance
Budgeting Is You Friend
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Making a budget and understanding how to keep your bank account in the black is essential if
you want to avoid having your monthly outgoings surpass your monthly inflows. The result of
hoping and winging it may lead to bank fees and credit card debt, which prevents you from
saving the money you need.
Building an Emergency Fund
Your automobile may break down at any time, and you may need to see the dentist in an
emergency. A lack of savings might put you at danger of high-interest credit card debt or
bankruptcy if you don't plan for the unexpected.
Starting an emergency fund is a good idea so that you don't end yourself in this situation.
Avoiding a Credit Card Balance
The temptation to charge more than you can afford is strong when you have a credit card at hand.
But if you carry a debt from month to month, those purchases end up costing more than they
originally did.
Paying Your Bills on Time
Late payment penalties may be imposed by your creditors if you fail to pay your bills on time.
The longer you postpone paying, the more likely it is that your account will be sent to
collections.
Whether you miss a payment, your credit score, which lenders check to determine if you are
eligible for loans and credit, might suffer.
Starting Early to Save for Retirement
Retirement might seem like a long time away when you're young. But if you start saving early,
you'll be able to stretch your savings out over a longer period of time, rather than trying to catch
up at the last minute.
Compound interest is the most important incentive to start early, though.
Investing
It's possible that your retirement savings may fall short of what you'll need to maintain a
comfortable standard of living when you stop working. As a bonus, there may be luxuries you'd
want to enjoy later in life but before you're old enough for retirement.
Getting Insured
Sometimes, it's better to be prepared for the worse when it comes to insurance. This implies that
you must have health and automobile insurance (which is required by law). Renter's or
homeowner's insurance may help you safeguard your residence and its contents.
Taking Advantage of Credit Card Rewards
For those who have a solid credit score, you may want to consider applying for a reward-based
credit card. Consider a versatile travel rewards credit card that can be used on a variety of
airlines and hotels if you want to maximize your benefits.
Checking Your Credit Reports Regularly
The three major credit reporting companies, Equifax, Experian, and Trans Union, all provide free
copies of your credit history upon request. Due to the COVID-19 epidemic, the three credit
reporting agencies are now providing free weekly credit report checks. Previously, this could
only be done once a year.
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Ordering a copy of your report and scanning it for flaws or symptoms of fraud may be a smart
idea on a regular basis.
Choosing Your Bank Wisely
Since there are several financial institutions to choose from, it's a good idea to compare your
options to ensure you're working with the best possible one. Potential options include the
following:
 A traditional Bank. 
 Credit Union. 
 Online Bank

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Chapter Two: Financial Aspects of Career Planning
Financial planning sometimes overlooks the importance of a person's job and profession. The
amount of money you have available for spending, saving, and investing will be influenced by
the kind of job you have. There are many other factors outside one's job that go into determining
one's financial future, including one's personal beliefs, hobbies, and lifestyle. Career planning,
job hunting, and landing your first job are all covered in this section. There's advice on where to
go for job information, how to put together a resume and cover letter, and how to conduct an
interview.
According to Gardner, the most successful financial and career strategies are those that are
grounded. Maximize your plans by assessing your strengths." According to the author, "For
example, you'll want your budget to be flexible enough to enable you to make unforeseen
expenses without going over your budget." Emergency medical, stock trading, outside sales, and
entrepreneurship are just a few examples of fields where these abilities are highly prized. There
are two options: "go with the flow" or "start making changes," as she puts it. Whether you keep a
monthly tab on your spending, you'll be able to see if your goals are on track. In terms of your
career, reviews and feedback from your company are both useful tools. Your revenue statement
and balance sheet will keep you grounded in reality if you operate your own firm. It is your
financial strategy that decides how much money you will need to reach your objectives, and the
income you earn from your profession will confine this plan. Budgets, expenditures, investments,
and credit are just a few of the aspects that go into financial planning.
You'll never lose touch with reality if you're in charge of your own company's financial
statements. It is your financial strategy that decides how much money you will need to reach
your objectives, and the income you earn from your profession will confine this plan.
What you know and can do is just as essential, if not more so, than what you know.
A person's abilities and knowledge may be learned. This means that you may learn how to
program a computer, weld a pipe, or make a consumer feel at ease when they buy something
from you. To have knowledge, you need to have both formal and informal training, as well as a
working knowledge of the many situations in which your abilities could be put to use.
Learning new skills and information may be achieved via education. During secondary school,
vocational training teaches students how to work in a certain field, such as baking, accounting,
automobile repair, or construction crafts. Developing general education abilities including
reading, writing, research, and mathematical thinking are the primary goals of a university
preparation curriculum. In order to maintain a certain standard of living, you will need to make a
certain amount of money and spend that money in order to do so. As a result, your career path
and employment options are profoundly influenced by your way of life.
Life becomes more enjoyable when you take the time to arrange your finances. Planning for your
financial future is important. People may better manage their finances with the aid of financial
planning.

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As a financial planner, finding customers and establishing a customer base is essential to success.
A bachelor's degree is required to become a financial planner, along with coursework in
investing, taxes, estate planning, and risk management.
For those who like sales, are good with people, have strong analytical and communication
abilities, and can operate on their own, financial planning may be a good fit.
A financial adviser and a financial planner are generally two distinct professions. There is a
difference between financial planners and financial advisers when it comes to long-term
objectives and short-term needs.
It's a good idea to capitalize on your own instances of enthusiasm.
Being aware of one's emotions is the first step in accomplishing one's objectives. Think about
what you do, when your life will be perfect, and how you can keep it that way. In writing your
to-do list, there is no one-size-fits-all method. In order to make things clearer, the examination is
being conducted. It's crucial to know what each item on your list means before writing it down.
Chapter Three: Money Management Strategy: Financial Statements and
Budgeting
Money management
When it comes to managing your financial resources (sometimes referred to as investment
management), it's all about monitoring your spending, investing, budgeting, and banking. Money
management is a deliberate approach to maximizing the value of any money invested in order to
maximize the return on investment.
To satisfy one's desires, one must always spend money, no matter how justified the expenditure
is. People, businesses, and organizations have turned to money management approaches to help
them save money on non-essential purchases that don't have a big impact on their long-term
financial security or ability to live comfortably.
Financial Statements
Assets, liabilities, equity, income and costs, shareholder contribution, cash flow and other
associated information are detailed in financial statements.
These statements are generally audited annually by independent auditors and included in the
annual report.
They are offered in two comparative periods to help users understand how the company performs
financially.
Types of Financial Statements
Income Statement
The income statement is one of the company's financial statements, and it contains three key
pieces of information about the company's finances for a certain time period. Revenues, costs
and profit or loss for the time period were included.
Financial performance may be assessed and measured by comparing the financial performance of
an entity to comparable or competing entities, as well as the financial performance of an entity
itself.
Revenues

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In the context of an accounting period, revenue is defined as the amount received from the sale
of products or services.
The income statements include both cash and credit sales revenues in their revenues. You can
find out how much the company made in net sales throughout the course of the reporting period
in the revenues section. In the income statement, revenues are often reported as a "summary." If
you're looking for specifics, you may wish to review the financial report's reported revenues.
Expenses
The term "expenses" refers to the expenditures incurred by an organization within a certain
accounting period. From operations expenditures such as salaries, utility costs and transportation
costs, through tax and interest charges. Expensive items like commodities sold or services
rendered might also be included in this category.
On contrast to this, they usually disclose in a separate line between the cost of items sold and
general and administrative costs.
To portray costs in the revenue statement, either their nature or their function might be used.

Profit or Loss
Income after all costs are subtracted from sales is what is referred to as a company's "profit" or
"loss". Profit occurs when revenues exceed costs over a certain time period. However, if costs
exceed sales, the company will suffer a loss.
Balance Sheet:
Also known as the "statement of financial position," a balance sheet summarizes a company's
assets, liabilities, and net worth. Assets, liabilities, and equity are all shown in this table at the
conclusion of the period
Assets
Resources that a company legally and economically owns are referred to as "assets." Assets
include, but are not limited to, buildings, property, vehicles, and cash. Current Assets and
Noncurrent Assets are the two basic asset classes.
Liabilities
For example, credit purchases, bank loans, interest payments, tax payable, and an overdraft are
all examples of liabilities.
Equity
The difference between assets and liabilities is known as equity. Assets such as stockholders'
equity and retained earnings are included in equity, as are ordinary stock and preferred stock.
Statement of Change in Equity
A proclamation of a new direction Shareholder contributions and equity movement are shown in
inequity, a financial statement on the balance sheet. At the conclusion of the accounting period,
there should be a positive equity balance.
Statement of Cash Flow
As one of the most important financial statements, a cash flow statement demonstrates how the
company's funds have changed over time. This statement clarifies the company's cash flow to
customers.
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Budgeting
Not all of budgeting is about saving money, though. It's all about taking charge of your finances
and understanding precisely where your money is going. About 60% of American homes don't
have a budget, according to research, and 11 million Americans don't track their spending and
don't know how much they spend on food, housing and leisure. Moreover 77% of the population
rated their personal financial expertise as C, D, or F. There's never been a better time to join on
the budget bandwagon.
When a person's income and all of his or her costs are compared, a budget is created to help the
individual better understand his or her spending and achieve personal objectives. Creating a
budget based on your monthly income is a good idea since most individuals pay their bills
regularly. It's OK if you'd rather construct an annual budget instead.
Types
 You can't have one since it's just in your thoughts.
 Use envelopes to keep track of your monthly spending, such as food and rent.
 Budget in writing: a meticulous breakdown of expenditures in the form of a spreadsheet
or notebook.
 Use Excel or Quicken for your computerized budgeting needs.
 To create an online budget, go to the website of your bank or financial institution's
Consistent 
Consistency is key if you want to put your money management abilities to good use.
As life events like wage rises and job changes occur, people who have excellent savings habits
adhere to their objectives and only adjust them when necessary.
When it comes to financial planning, the key to success is being consistent, according to CPA
Stacey Hyde of Envision Financial Planning. 
Increasing Income
It is possible to alleviate financial difficulties by increasing income, but this is dependent on a
variety of circumstances, including economic conditions, employment skills and family
situations. Increasing one's income is possibly within the reach of a surprising number of
individuals.
Workers may be able to seek overtime or volunteer for additional duties at certain firms.
Consider working another job — this may be tough for families with children to manage, but
there are always alternatives. To make ends meet, several individuals take on part-time work at
department shops that provide employees with discounts on apparel and other goods.
Getting rid of a boat that you no longer need might free up some cash and allow you to better
manage your finances. A craft fair or rummage sale could be a good place to sell the products
you make as a hobby if you think people would be willing to pay for them. Clean out your home
and have a yard sale to raise money for your trip.
Think beyond the box — it's a good idea. One family was able to supplement their income by
offering dog-sitting services for vacationing pet owners. Another group decided to start a paper
delivery service in order to increase their weekly purchasing power.

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Ways to Help your Budget
In many cases, modest lifestyle modifications may save you a large amount of money in a
number of crucial areas:
Food
Rather of going out to dine on a regular basis, create your own meals and save money.
Using a shopping list can help you avoid impulse buys at the supermarket.
Clip coupons
As a member of grocery shop loyalty programs, you will get automatic savings.
Rather of dining out every day, bring your own lunch to work. You may save up to one-fourth of
your entire price by forgoing the soda and opting for a complimentary glass of water instead.
Transportation
To save money on petrol, carpool with your family or coworkers.
When you have errands to do, combine your excursions.
If you live in an area where public transit is accessible, take use of it.
Maintaining your vehicle on a regular basis can help you save money in the long run.
When the weather permits, ride your bike.
Utilities
Analyze the offerings of telecommunications providers such as cable, internet, and wireless.
Your money may be going toward unnecessary services.
Bundles that include various services from one provider might save you a lot of money in the
long run.
When shopping for appliances or light bulbs, look for the "Energy Star" mark to save money on
your energy bill and qualify for rebates from various power suppliers. Everything from the air
conditioner to the overhead lights should be turned off if not in use.
When feasible, use full loads in the washing machine and dishwasher.
As soon as you leave the house or go to bed, your thermostat will automatically lower the
temperature. Try turning the thermostat down a few degrees while the furnace is on and up a few
degrees when the air conditioner is operating.
Entertainment
Borrow books, CDs, and DVDs from your local library instead of purchasing them outright.
Rummage sales are great places to discover cheap books, movies, and other leisure products,
such as baseball gloves and knitting needles.
Subscriptions to periodicals and newspapers may be cancelled at the library. Another way to
save money is to have coworkers or family members share books, magazines, and newspapers.
Your internet, phone, cable or satellite bill should be reduced or cancelled.
Instead of going out to eat or shopping, meet pals for weekly walks or low-cost craft sessions.

Miscellaneous
Save money on postage by paying your bills online. Free online bill payment is available from
several credit unions.

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Chapter Five: Financial Services: Savings Plans and Payment Accounts
Financial Services
Credit unions, banks, credit card companies, insurance companies, accountancy companies,
consumer-finance companies and stock brokerages are all examples of financial services
provided by the finance industry. Individual managers, investment funds and some government-
sponsored enterprises also provide financial services.
Importance of Financial Services
One of the most significant and powerful areas of the economy is financial services.
Banking, investment, and insurance are just a few examples of financial services.
Financial products, on the other hand, are the real items, accounts, or investments that financial
services organizations and their specialists provide.
For a country's economy to grow, it must rely heavily on its financial services industry. It
facilitates the free movement of money and other forms of liquidity in the market. Companies in
this area are better equipped to handle risk when the sector is robust.
Savings Plans
People may receive guaranteed returns on investments via life insurance products known as
savings plans. They're designed to get you started saving so that you may leave a legacy to your
loved ones and provide for their financial well-being when you're gone. You have the option of
receiving either a one-time payment or a regular monthly income.
A savings plan is a vital part of many people's financial plans, since it helps them achieve a
variety of life objectives. You may develop wealth and financial security for yourself and your
loved ones by saving regularly for a certain period of time.
Importance of saving plan
Regardless of income, expenditure, or stage of life, everyone should have emergency fund. It's
time to start saving for the future.
It provides a sense of security: When you know that you have a certain amount saved up for
emergencies, it provides you a sense of security. If anything, unexpected happens, you may live
a stress-free life knowing that you will not have to fight.
As a result, you will have a brighter future. Your money may help you achieve a wide range of
objectives. It is possible to buy a home, save for retirement, or buy a new car. It is possible to
protect your future, enjoy the best that life has to offer, and lead a rich and rewarding life if you
work hard enough.
It takes care of your kids' education: The top schools and universities in the world may be paid
for by saving a significant sum of money.
Your short-term objectives may be planned as follows: It's important to remember that savings
aren't merely for the future. Short-term savings are also an option. Many individuals put save
money for a few months before embarking on a trip.
Payment accounts

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Payment accounts are bank accounts that enable you to conduct everyday transactions.
Depositing money, withdrawing cash, and using a credit or debit card are all examples of these
transactions. Non-payment accounts don't enable you to conduct these kinds of transactions.
Many people might not realize the importance of accounting in their everyday lives, yet it is a
profession that is sometimes underappreciated. Despite the fact that accounting is often seen as a
corporate need, you're probably doing some accounting in the "real world."
Planning for the Future
In times of economic uncertainty, it is typical for individuals to speculate about what could
happen next. Having enough money to quit working, pay for your child's college tuition, and
save for a trip, house, or automobile is the goal. Having a secure financial future is at the top of
your financial priority list.
In addition, accountants are always striving to maintain and grow the financial health of firms.
Like you, they use a variety of approaches. Financial planning includes a wide range of ideas,
including investments, savings objectives, debt management, and profitability.
Getting Better Grades
Many students apply their accounting abilities in the classroom. Your self-assessment begins as
soon as your grades are released. Instead of dwelling on your present rankings, consider what
grades the remainder of the quarter or semester will need in order to get the final grade you want.
You're aware of the impact your grades will have on your future, so you may decide to do
something about it. Accountants do the same thing, looking for methods to enhance the figures
and analyzing any areas of weakness.
Individuals and companies are included in financial inclusion if they have access to effective and
cheap financial goods and services that fulfil their needs transactions and payments, savings and
credit, and insurance delivered in an ethical and responsible manner. There are several benefits to
having access to a transaction account, including the ability to keep money and make or receive
payments. As a portal to various financial services, a transaction account is essential.

Chapter Six: Introduction to Consumer Credit

Consumer Credit
In a consumer credit system, customers can borrow money or incur debt and delay the repayment
of that money over time. – When a customer has a credit card, he or she does not have to pay for
the products or assets at the time of purchase. Being financially responsible implies that you've
always paid back your bills in whole and on schedule. In the future, a person with excellent
credit will be able to borrow money more readily and at lower interest rates. One of the most
common reasons why people have a low credit rating is because they have had problems paying
back the money they owe or making timely payments in the past. Bad credit makes it more
difficult to get a loan, which makes it more difficult to purchase a vehicle, a home, or get a credit
card. Credit is a precious asset that should be safeguarded and managed carefully.
Consumer credit is a kind of personal debt that is used to buy goods and services. A credit card is
a kind of consumer credit that may be used to make purchases.

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Consumer credit might refer to any sort of personal loan, although the phrase is most often used
to indicate unsecured debt incurred to purchase ordinary goods and services. The term
"consumer debt" may also encompass collateralized consumer loans such as mortgages and
vehicle loans.
Consumer debt is another term for consumer credit.
Understanding Consumer Credit
To allow customers to buy things right now and pay for them over time with interest, financial
institutions, merchants, and others provide consumer credit.
Non installment Credit
It is possible to get non-installment credit that is either secured or unsecured, depending on
which firm is providing the credit. Rather to paying a fixed monthly fee, this credit requires a
single payment of the whole debt.
Installment Closed-End Credit
It is possible for the customer to use instalment closed-end credit to buy one or a few items. A
automobile loan is an example of a closed-end instalment credit. The automaker provides
financing for the purchase of a vehicle to the customer. The credit may only be used towards
the purchase price of the vehicle and nothing more.
Revolving Open-End Credit
With a credit card, a customer is most likely to find revolving open-end credit. If the customer
maintains a certain balance, she is free to spend or save her money. At the conclusion of a
term, usually a month, the customer must repay a portion of the credit she has used. If the
credit provider does not cancel the account, the credit remains open.
Special Considerations
Spending on products and services that depreciate fast accounts for a large share of consumer
credit utilization. Everything from food to cosmetics to dry cleaning services is included in this
budget.
Economists keep a close eye on consumer credit utilization since it is seen as a sign of
economic expansion or recession. The economy receives a lift if customers are eager to borrow
and confident that they will be able to repay their obligations on time.
Advantages of Consumer Credit
The ability to borrow money to pay for goods and services is a key feature of consumer credit.
That may be a lifesaver in the event of an emergency, such as a vehicle breakdown. It's getting
more and more common to use credit cards instead of cash in the United States because of the
relative safety of credit cards.
Disadvantages of Consumer Credit
It is a major drawback of utilizing revolving consumer credit because it costs customers who
fail to pay off their whole obligations each month and keep accruing interest charges. At the end
of 2021, the Federal Reserve estimated that the average annual percentage rate on all credit
cards had reached 14.75 percent. The interest rate on a credit card might rise even more if a
cardholder misses a single payment.

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Chapter Seven: Choosing a Source of Credit: The Costs of Credit Alternatives
Source of Credit
Financial Institutions
Dedicated credit firms, such as financial institutions, exist only for the purpose of disbursing
credit. Unlike traditional banks, they do not take deposits or provide safe deposit boxes. They
often lend for a period that is between a few months and a year. Financial institutions are critical
when major corporations need long-term financing for their capital expenditure or modernization
programs, which may last many years. In addition to lending money, these banks provide
financial and technical assistance and consulting services since they specialize in that area.
Credit from financial organizations may be a useful source of funding, particularly if the demand
is large and long-term. When it comes to getting a loan, they have strict guidelines. The money
involved is so large that they may be able to nominate their own candidates to the company's
Board of Directors. Consequently, this might limit the authority of the board of directors of the
company.
The Costs of Credit Alternatives
Investors can build better risk-adjusted portfolios to beat the market using alternative credit's
diversification.
Availability of lower cost credit
Credit unions
To put it another way: They're co-ops that are owned and operated by their members, who are
also their consumers! There are about 400 credit unions in the United Kingdom that accept
deposits from and lend to millions of members. It is estimated that credit unions lend their
members a total of roughly £1.5bn. Members of credit unions are mostly people who must
adhere to the credit union's common bond. The most prevalent ties in the United Kingdom are
based on location, work, or profession.
For credit unions to expand or provide new goods and services, we are clear that they must be
regulated appropriately.
501(c)(3) non-profit organizations CDFIs are non-profit lenders who lend money to people,
small companies, and social enterprises that are unable to get credit from traditional lenders.
Most of these organizations are based in the local area and provide a social function.
Credit and basic home products might be combined. Shoppers who can't afford the whole cost of
a significant home item may utilize retail financing to buy it. Consumers who have low incomes,
poor credit, and/or a thin file (in which there isn't enough information on a file to make a loan
decision) may not qualify for retail financing because of the conditions of the deal. Retail
financing solutions are now being offered to a larger spectrum of customers as an alternative to
high-cost credit by a few of companies in recent years. Consumers benefit from a cheaper cost of
loan, even while the creditor bears a larger risk, as represented in the higher interest rate. The
credit is offered for a specific reason, as is the case with conventional retail financing, namely to
fund the purchase of certain commodities.

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Information on low-cost credit choices may be found online. An important component of
offering alternatives to high-cost borrowing is raising customer awareness. There is a promise
that we will investigate if there is a need for greater online information about low-cost credit
choices. We've looked at more than 200 websites devoted to low-cost credit choices to see
whether there is enough information accessible to make an informed decision. We also took into
consideration the ease with which it might be accessed. Below are the results of our
investigation.
Credit choices with reduced interest rates might be better publicized. Pages that may be quickly
accessed from the homepage include those with menus or headers such as "Money guidance,"
"Help with your borrowing," or "Get the best loan offer," as well as those with subheadings.
Some users may benefit from websites that have features like text-to-speech software and user-
friendly navigation. Accessibility elements like keyboard navigation and assistive technology
navigation may be found on some of the websites we examined. It is possible to raise consumer
knowledge of low-cost borrowing choices by integrating graphic and interactive information in
the signage of useful information about the features of credit union and CDFI loans. Tenants may
be referred to their local credit union or CDFI by certain RSLs with credit broking rights. To find
a credit union, some lead customers to a credit union search engine. RSLs that do not provide
online information on low-cost credit solutions generally direct renters to their in-house money
management services.
Chapter Eight: Consumer Purchasing Strategies and Legal Protection
Consumer Purchasing Strategies
Before a consumer purchases your goods, they go through a procedure known as the customer
purchasing process (also known as a buying decision process). In addition to helping your
salespeople, understanding your customer's purchase process can allow you to better coordinate
your sales approach.
The five-step approach for assessing the customer's purchase process is still a useful tool.
Recognition of a problem or necessity
The customer's decision-making process frequently begins here, and this is generally seen as the
most critical phase. You can't buy anything until you know what you're looking for. An internal
or external stimulus (such hunger or thirst) may have caused the urge (such as advertising or
word of mouth).
Information search
To find out what they think is the greatest answer for a problem or need, a client may go through
the information-searching phase. To find and assess relevant information for a purchase, the
buyer does research both inside the company and outside of it. Print, visual, internet, or word-of-
mouth are all possible sources of information for your client.
Evaluation of alternatives
Customers, as you would assume, will compare various items and brands based on alternative
product features, such as their capacity to deliver on the advantages the client desires. The

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mindset of the consumer is a major impact at this stage. Another aspect that affects the appraisal
process is the level of involvement.
Purchase decision
It's at this point that the final decision is made to buy. Negative feedback from previous
customers and a lack of incentive to receive the input may both affect the final purchase
decision, according to Philip Kotler (2009). As an example, after completing the previous three
processes, a consumer decides to purchase a new telescope.
Post-purchase behavior
For the most part, buyers are happy or unsatisfied based on their prior expectations of the goods.
To retain clients, these steps are crucial. This may have a significant impact on future purchases
from the same firm, as well as the stages of information gathering and alternative assessment.
Because of this, the Information search and Evaluation of alternative steps may be shortened or
omitted completely if your consumer is pleased.
It is customary for consumers to provide their positive or negative comments about a product
based on their level of satisfaction or dissatisfaction. Word of mouth, via the internet or through
social media may all be used to spread the news about a product or service. In order to keep
consumers interested and the process as smooth as possible, businesses must take great effort to
establish effective means of connection with them after the sale.
Consumer Warranties and Service Contracts
When you purchase anything, you get a warranty.
Expressed and implied warranties are the two most common forms of warranties. A seller's
written, oral, or ad-expressed commitment that the product will fulfil its purpose for a certain
time is known as an "express warranty." An express warranty is a promise that the item bought
new or secondhand will operate. However, not all products are covered by a written guarantee.
Expressed and implied warranties are the two most common forms of warranties. Any written,
oral, or ad-expressed guarantee from the vendor ensures that the product will fulfil its purpose
for a certain time.
Dealing with Warranty Breach
Get the item replaced or repaired by the seller if a warranty is breached. If that doesn't work, a
mediator may be able to help you settle the conflict. As a last resort, you might file a lawsuit
against the product's maker or retailer.
Federal Securities Act
The Securities Act of 1933, implemented during the Great Depression, is one of the most
essential consumer safeguards in the financial industry. Investors are required to provide
information about their finance and business plans as part of the legislation, which imposes
severe restrictions on the issuance of investment contracts, or "securities."
Fair Credit Reporting Act
Credit information is often used to influence mortgage rates and other loan terms, which is why
the Fair Credit Reporting Act was enacted in 1970. In addition, lenders are prohibited from
supplying customers with outdated or misleading information about their credit histories under
the terms of the statute.
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Dodd-Frank Act
The Dodd-Frank Wall Street Reform Act
The Wall Street Reform and Consumer Protection Act, known as the "Dodd-Frank Act," was
enacted in the aftermath of the 2008 financial crisis to overhaul U.S. financial rules. As a result
of the law, banks and other financial institutions were subject to increased scrutiny, especially
those that were blamed for the Great Recession. As a result, the Financial Stability Oversight
Council was established, which has the authority to split up banks deemed "too large to fail" or
to tighten reserve requirements for existing financial institutions. Subprime mortgages and other
predatory lending practices are regulated by the Consumer Finance Protection Bureau.
Legislation aimed at safeguarding the public from potentially harmful or immoral corporate
activities, such as deceptive advertising or defective goods. The Federal Trade Commission
oversees warranties and service contracts for most consumer items. Predatory lending, housing
discrimination, securities fraud, privacy infringement and other unethical behaviors are
addressed by consumer protection legislation in the financial sector.
Chapter Twelve: Life Insurance
Insurers and policyholders enter a life insurance contract, which is legally binding. By
purchasing life insurance, policyholders are assured that the insurance company will pay a set
quantity of money to their designated beneficiaries upon their death.
Accurate disclosure of the insured's history and present health issues and high-risk behaviors is
required for the contract to be valid.
Contractual agreement that provides a death benefit when an insured dies is known as life
insurance. You may pay a single premium or frequent payments over time to keep your life
insurance policy active. It is the policy's designated beneficiaries who will get the policy's death
benefit when the insured passes away. Term life insurance plans expire after a certain period of
time. When the insured dies, quits paying payments, or surrenders his or her policy, the policy
remains in effect.
Types of Life Insurance
Term life insurance
Term life insurance is only valid for a certain period of time before it expires. When you buy the
insurance, you get to choose the term. Term lengths of ten, twenty, and thirty years are common.
Life insurance plans that are both affordable and financially secure are the ideal long-term
investments.
Decreasing Term 
Reducing-term life insurance is a kind of renewable term life insurance with coverage
decreasing during the policy's term at a fixed pace.
Convertible Term 
Term Life Insurance policyholders can convert a term policy to permanent insurance by using
convertible term life insurance.

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An annual renewable term life insurance policy gives a quotation for the year in which the
policy is acquired, which may be renewed. Term insurance premiums rise each year, although
they are generally the cheapest at the outset.
Life insurance policies that are guaranteed to last a lifetime
Unless the policyholder stops paying the premiums or surrenders the policy, permanent life
insurance remains in effect for the whole life of the insured. It's usually more costly than term
insurance.
All through the course of one's life
Whole life insurance is a sort of long-term life insurance that builds cash value over the course
of time. The cash value of a cash value life insurance policy may be used for a variety of
reasons, including borrowing money or paying policy premiums.
In order to ensure that everyone has the opportunity to live
Universal life insurance is a sort of long-term life insurance with a cash value component that
produces interest. Life insurance premiums may be changed over time and have a fixed death
benefit or a rising death benefit, unlike term and whole life insurance.
Universally Indexed
The cash value component of this kind of universal life insurance policy allows the policyholder
to receive a fixed or equity-indexed return.
Flexible and Adaptable
Policyholders with variable universal life insurance may use the policy's cash value to make
further investments. The premiums are likewise adjustable, and the death benefit may be set at a
fixed amount or increase over time.
Importance
Long-term financial objective
Life insurance plans may help you build a sizable long-term financial portfolio by allowing you
to save money while providing the protection of life insurance.
Ensure the long-term well-being of the youngster.
Everyone's goal as a parent is to provide their kid the greatest future imaginable. Even if you are
no longer around, your kid will have a bright future thanks to life insurance policies.
Liabilities and loans
A term plan is usually a good idea if you have taken out a loan. When you're gone, your family
isn't forced to bear the weight of your debts. When a policyholder's life is cut short, the family's
ability to keep their house and pay off their mortgage is jeopardized.
Planning for a child's education
You may save and develop a fund for your kid's future school expenditures using a child
education strategy. In the event of the policyholder's untimely mortality, the insured amount is
paid to the child under these plans' life insurance provisions.
A spouse who relies on you
If your spouse relies on your financial support, you must purchase life insurance.
You may be certain that your spouse will be financially secure in the event that you are no
longer around.
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Preparation for one's post-retire
Investments in life insurance may help you save for your post-retirement years so that you can
live comfortably.
In what ways may I use the information in this chapter to further my career?
In the case of the death of a spouse, children, or other members of one's family, life insurance is
a need. A life insurance policy's death benefit might be used to pay off a mortgage, cover
college tuition, or assist finance retirement. Personal and family medical history, as well as
beneficiary information, are often requested as part of a life insurance application. Medical
examination and disclosure of any prior ailments, history of driving offences or DUIs, as well as
risky hobbies like car racing or skydiving, are also likely to be required.
Your Social Security card, driver's license, and/or U.S. passport will also be required before a
policy may be established.
If you're looking for a life insurance policy, keep in mind the seven variables listed above and
select an insurer that is less likely to punish people in your situation.
Chapter Thirteen: Investing Fundamentals
Investing Fundamentals
Quite simply, you invest to create and preserve wealth.
Saving is the practice of setting money away in a place where it is reasonably secure and earns a
predictable, albeit modest, interest rate.
Although a savings plan may not provide long-term wealth increasing returns, the actual buying
power of your money is likely to decrease because of inflation.
When you invest, you're putting your money to work now so that you may reap the benefits of
your hard work in the future. It may assist you in both accumulating and safeguarding your
financial assets. You may be able to reap more long-term rewards if you take a reasonable
amount of risk. Investing is a risky endeavor; therefore, investors should keep in mind that the
value of their assets and the income they generate might fluctuate.
Investing for profit or a favorable return over a reasonable period is the primary goal of most
people. Understanding your short, medium, and long-term financial goals is essential to any
successful investing plan since the investment strategy you choose will be dependent on your
financial goals.
Making an investment may be done in a variety of ways. Investments in stocks, bonds, mutual
funds, gold, real estate, etc. are all examples of this. Even whether you choose to invest in a
stock, mutual fund, or other kind of investment vehicle, the aim is always to generate greater
profits for yourself. As basic as this notion is, it's the most critical one for you to grasp.
Discipline and planning are essential for a successful start in the stock market.
Investing is a long-term process that involves both strategy and discipline.
When you plan your investing strategy, you take the time to examine everything you'll need to
include, such as how long you want to invest and what your objectives are.
Knowing how to allocate your assets.
Taking care of your money throughout time.

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Discipline is the ability to maintain perspective in the face of market fluctuations, to recognize
the possible effect of risk, and to do regular portfolio rebalancing.
Living within one's means and setting aside a budget for investments are equally key
considerations when developing a financial plan.
Determine Your Objectives and Investment Timeline
When making investments, think about what you want to accomplish, and how long it will take
to get there.
You may use your investing time period as a guide to help you choose the right assets.
There are a variety of objectives that people pursue at various points in their life. For instance, if
you are retired, you may just wish to maximize your income. In contrast, your long-term goal
may be to secure your and your family's financial future.
Realistic expectations regarding your financial situation and how you may effectively manage
your assets are essential for each investor, regardless of their financial objectives or time period.
In the event that you aren't sure what kind of investments are right for you, consulting with a
professional investment adviser may be a good idea.
Temporary Aspirations
In order to achieve these objectives, you'll need simple access to money throughout the following
five years. Consider putting together a dream wedding, purchasing a new automobile, or doing
upgrades on your house.
Long-Term Objectives
Saving for your children's college tuition or putting money down for a down payment on a home
are two examples of goals you could have in mind over the next five to ten years.
Goals for the Long Term
If you're looking beyond the next ten years, set goals like paying off your mortgage or keeping
your current level of living in place in retirement.
Put Your Money into Long-Term Assets
When it comes to long-term investments, the proverb "time is money" sums it up well.
Your financial objectives may include starting a company, leaving a legacy for your children, or
donating to a favorite charity. Investing over a long period of time is one of the finest methods to
attain your goals, no matter what they may be.
Compounding your investment returns may have enormous long-term consequences because of
this.
Identify Your Income and Growth Requirements
Investments may be categorized as either revenue or growth producing. At this point in the
process, one of the most important choices you need to make is whether or not you want to
invest for income, growth, or both.
Assets that are increasing in Value
These investments are geared at long-term capital appreciation as the primary source of profit.
Equities and real estate investments, both in the UK and abroad, are examples of growth assets.
In the long run, these assets may serve as a hedge against rising prices.

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As a result, investors who have a longer time horizon for their investments are more likely to
place a larger emphasis on assets with potential for growth. Longer-term returns on growth assets
might be lower because of the increased volatility of short-term returns.
Intangible Assets
Cash, bonds, and certain stocks are all examples of income-producing assets. The returns on
income assets are smaller, but they are more reliable.
If your main goal is to generate a steady stream of income, you may choose to invest more in
income-producing assets.
Working with your financial advisor to design an investment strategy is the next step after
deciding whether you need more income or more growth from your assets.
Consider the Possible Consequences
When it comes to investing, there is always a degree of risk involved. Having a basic
understanding of investing risk and return will help us construct a portfolio that you are
comfortable with and that has the greatest chance of accomplishing your objectives. An
investment's actual return may vary from expectations, which is a risk factor.
Investments are vulnerable to a variety of dangers. If you're planning on making an investment,
you need to be aware of the hazards.
The Risks of the Country
Foreign currency risk is the danger that domestic events, such as political turmoil, financial
difficulties, or natural catastrophes, would damage a country's financial markets.
It is possible for an investment to lose value due to currency exchange rate fluctuations.
Risk of Inflation
Prices for products and services are rising at an increasing pace, and this is known as inflation.
Inflation presents a danger to your assets since it might diminish their value or buying power.
Risk of Liquidity
Due to the risk of a transaction becoming complicated, an investment
Risk in the Market
Risks are inherent in most asset types, but they may be mitigated. This is referred to as market
risk by experts. In investing, market risk refers to the possibility that your investment returns
may vary throughout the market.
Risk of a Rapid Declination
If your long-term financial objectives aren't met, there is a danger of a shortfall.
The Risk-Return Relationship
The larger the potential return, the greater the degree of risk that is required to get there.
Everyone wants to maximize return and reduce risk, but these investments don't exist, and it's
impossible to achieve them. There is a general rule of thumb that the larger the possible return is,
the more likely it is that the investor will take on more risk and put in more effort.
This will decide the spectrum of assets that you may invest in based on your tolerance for risk.
It's critical to know the level of risk connected with your assets. You should not invest if you are
not comfortable or comprehend the risk you are incurring.
Risk vs. reward trade-off.
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As a general rule, the relationship between risk and return is:
Investments in less volatile asset classes often have smaller returns, both positive and negative,
than investments in more volatile assets. Investors should expect lesser returns since the
investment is less volatile. Investors demand compensation in the form of bigger potential profits
since their return is more unpredictable.
Since time immemorial, the returns of various asset classes have generally tracked their relative
levels of risk. In times when investors' outlooks for a firm or market are increasing, the highest
risk asset classes tend to provide the largest returns. In a situation when growth prospects are
deteriorating, lower risk asset classes are expected to outperform higher risk asset classes.
The long-term performance of high-risk assets is expected to be better than that of lower-risk
assets notwithstanding occasional bumps on the road.
Reduce your exposure to risk by investing in a variety of different types of securities.
One of the greatest methods to limit risk and guard against abrupt drops in any market, industry,
or individual investment is to spread your money over a variety of assets.
Returns from better-performing assets may help offset losses from investments that
underperform when held in a diverse portfolio.
Investing in a diversified portfolio does not guarantee a profit or prevent you completely from
losses in a downturn in the market. As a consequence, it may lessen the chance that a single
investment will cause a significant loss of capital.
By working with a financial advisor, you can diversify your assets and lower your risk.
Recognize how to allocate your assets
A sound investment plan includes a well-balanced mix of several types of assets.
Working with your financial adviser, you may begin to develop an asset allocation for your
portfolio based on a knowledge of your investing objectives, timeframe, and risk. You might
think of asset allocation as determining how much of your money you want to invest in various
asset types, such as stocks, bonds, real estate, and cash. Your financial goals, time horizon, and
risk tolerance should all be taken into consideration when picking an asset mix.
The following is a breakdown of the many types of securities that make up an asset class:
 Equities
 Dependable flow of cash
 Cash \ Commodities
Investing in property
The amount of risk, as well as the possibility for generating returns and outperformance under
various market situations, varies for each asset type. The distinct features of each asset class are
used in a balanced portfolio to smooth out performance volatility and balance risk.

Equities
Equities are a company's shares of ownership. When you invest in equities, or shares/stocks, you
become a stakeholder in the company. As a long-term investment strategy, stocks have

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historically generated larger returns than other assets, such bonds. This may help you achieve
your long-term financial goals.
You may see an increase in your share price if the firm does well. If it doesn't perform well, that
price might go down. Investing in the right firm at the right moment is the essence of a
competent fund manager's job.
It is possible to gain a profit from shares in two ways:
It is regarded as a capital gain when you sell your shares at a greater price than you paid for
them.
Dividend Income, or dividends paid to shareholders of a firm whose stock you own,
Shareholder dividends are given to shareholders who own the shares directly, while mutual fund
dividends are paid to the fund that owns the stocks in question. The fund's management then
elect to distribute an annual dividend.
You can decide if you wish to invest in a mutual fund:
Assume that dividends will be paid out on a regular basis.
Have your dividends re-invested in the fund.
Inflation-Protected Assets
Bonds, TFCs, and other financial instruments often issued by corporations (T-Bills, PIBs, etc.)
typically pay a fixed/variable interest rate over a certain period of time or, at the time of
maturity, upon which the principle amount is also returned.
To put it another way, they might be an excellent way to diversify your investment portfolio by
providing a more stable source of income than shares. In general, investors believe that Fixed
Income Securities (FIS) provide steady returns and fewer risk than equities, but they also believe
that they produce lesser returns than stocks. The value of assets might change depending on the
current discount rate, which can affect the investment value.
Cash
Interest-bearing bank accounts are the most common place for cash to be kept. Cash funds, a
kind of financial product, leverage their market power to earn higher returns on deposits than you
would obtain in a conventional bank account. They often invest in ‘money market instruments,'
which are effectively bank loans to one another, which are also known as short-term bonds.
Commodities
Commodity exchange is one of the first types of commerce ever practiced by the human race.
For millennia, people have been able to buy and sell items. Investing in commodities futures
markets may now be done via a wide range of vehicles, including mutual funds, exchange-traded
funds, and notes, allowing investors to get exposure to a particular commodity, a sector, or a
broad spectrum of commodities.
Today's commodity markets may provide investors with some very appealing options.
Diversification, which is perhaps the most important advantage of wide exposure to
commodities, is shown by commodities' poor correlation with conventional assets. The total
volatility of a well-diversified portfolio is reduced since the various asset classes do not move in
lockstep. This decreased volatility decreases portfolio risk and should lead to better long-term
results. Diversification, on the other hand, is not a guarantee against loss.
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Importance
National economies and their currencies also have a set of fundamentals that are worth
analyzing, even though fundamentals are more often associated with specific firms or stocks. For
example, interest rates, GDP growth, trade balance surpluses and deficits, and inflation levels are
some of the basics of a nation's worth.
Investing in property
Investing in real estate may provide steady income, some protection against inflation, and
excellent diversification with other assets in a portfolio.
Adding uncorrelated assets to a portfolio is the most efficient approach, according to modern
portfolio theory, of increasing return while reducing risk. In multi-asset portfolios (stocks, bonds,
and other asset classes), real estate may give considerable advantages since correlations with
stocks and bonds throughout time have been low. Another advantage of investing in real estate is
the ability to protect one's wealth against rising prices. Your rental income and property's worth
might rise significantly when inflation rises. With the rising expense of life comes a rise in the
amount of money available.
Conclusion
The integrated framework or larger notion of corporate risk management for financial risk
management Banking Business Review reports that Northern Trust has created a daily integrated
risk reporting solution that consolidates predictive risk management, performance assessment,
and compliance analysis on the company's basic dashboard. Financial institutions such as
pension funds, insurance companies, foundations, endowments, and other ultra-wealthy
customers and fund managers throughout the world will appreciate the daily updates to the fully
integrated reporting dashboard. Customized solutions are embraced by clients since they are
more personalized to their specific demands. The necessity of an integrated financial risk
management may be shown in this example. Credit, market, and operational risks associated with
financial affairs are often handled through financial risk management, which is a broad term.
According to the financial lexicon, "financial risk" refers to the danger that a company may be
unable to satisfy its financial commitments. Due to the firm's debt-to-equity ratio, this risk is
essentially a function of the firm's ability to raise capital. A larger percentage of debt raises the
risk that the company may not be able to meet its interest and principal obligations at some time
in the future. Examples include the risk of a creditor defaulting on a loan, the risk of interest rate
changes, the risk of currency fluctuations, the risk of stock prices, and the risk of commodities
prices. Financial risk quantification methodologies should all come together in the future to make
this achievable.
It is hoped that corporate risk management systems would help institutions better control their
exposure to dangers. A company's total risk may be gained from the process itself, even in
circumstances when certain hazards cannot be quantified accurately. As a result, more money
will be allocated to productive uses. In addition to improved capital allocation, risk hedging
through derivatives is quite beneficial. The fact that certain risks balance each other has been
identified by a few financial firms. When it comes to saving money on insurance policies for the
whole company, risk management is a clear winner. Instead of purchasing separate insurance for
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each kind of risk, financial organizations may take advantage of the advantages of diversification
by considering their risks as part of a single portfolio. It is also possible to save money on
transactions by using corporate risk management.

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