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How to Manage the Risk of Investment in Textile Sector of Punjab

Introduction:
A common definition for investment risk is deviation from an expected outcome. That deviation can be positive or negative, and relates to the idea of "no pain, no gain" - to achieve higher returns in the long run you have to accept more short-term instability. Risk is barrier to success of every business. In other words It is the possibility of loss. In every industry if you want to achieve success you have to manage risk efficiently, because risk is a major problem when you going to invest your money in any business. First stage is to identify the risk management while the next step is to analyze and control the risk. If weidentify risk correctly then we can enable to mange it. The purpose of this research is to identify the risk of investment in Textile sector of Pakistan and then how to manage this risk. Today Risk management is a very crucial problem especially in Pakistan due to instability of politics and lack of infrastructure. Electric Power is almost at zero level due to which a person has to mentally prepare himself to manage the electricity problem and to take the risk of this additional cost.

The Research Question:


For this crucial problem we find the gap of research that is; How to manage the risks of investment in textile sector of Punjab Because Pakistan is a big source of cotton and Textile sector can add much more in GDP which is unfortunately at very low stage.

Justification:
Risk identification is the basic stage of risk management. Risk identification can be done through the investigation of all activities of all all managerial levels of an organization. The purpose of our research is to identify the factors which can change risk and the solutions to manage it. The size of the industry is very big and scattered in different cities of Pakistan. Among all of them Faisalabad has major share of textile industry. Faisalabad is considered as home of textile industry in Pakistan. There is not enough research available on todays investment risk problems and how manage to these problems efficiently on this industry. In this research our main focus will be on that; we try to identify major risk problems and there solutions for future investors in textile sector.

How to Manage the Risk of Investment in Textile Sector of Punjab

Literature review:
For the sake to cover this topic we read different articles and found some useful information which is stated below; According to Professor Caspar Rose Operational risk occur when internal processes and operating system fails. There are many types of operational risk like IT fails, fraud, internal or external theft etc. The operation risk can be minimized by three different ways one is The basic indicator approach second is The standard approach and third is Advance measurement approach (AMA).In the time of economic crises there may some high risks like trading, fraud, misspelling, wrong advice etc (Journal of IT and Investment Management, (April 2009). Shapiro and Titman (1998) said that a firms total risk consist of two type of risks one is market risk and second is specific risk. Market risk tell about how much your firms stock price risky to the market and specific risk tell stock price movements which are specific to the firm. Professor herve corvellec conduct a research and found some information in which he state that there are two claims of risk management first is Administration of risk management to be taken from management theories while second is Risk management practices do not need to be clear but can be fixed in the managerial plans, De certeau (1990). Many scholars give more attention to find the ways of how can any organizations minimize the risk. Business leaders also have to identify and understand the changing nature of risk in the world, Cleary and Malleret, (2008). For this purpose there are many managerial tools to avoid the risk. There are two tools used to manage risk one is use management theories second is management practice. Management theories are very important to manage the risk but without management practice it cannot fully avoid the risk. So, both of management tools are important and related with each other. (after lipsky (1980)). The majority of institutions have no intention of changing in future. The primary key to improve risk management functions is to increase the strategic influence of risk function. Most people believe that financial crises are increase due to increase in investment in staff and in competencies, Global Investment Management Risk Survey, (2009). If risk manager do not succeed to identify the risk correctly then the original risk will cause the loss, (Green and Trieschmann, 1984). If we miss any good possibility that we can seek is also big loss (Dickson an Hastings, 1989). If we identify the main problem at start then we can handle it efficiently and it cannot be barrier in future for our business success. It is possible to observe not only the internal but also external environment and check how your organization is effecting on environment as well as how environment is effecting to your organization. With

How to Manage the Risk of Investment in Textile Sector of Punjab

the help of this information a risk manager can see all major risk that are challenging the firm. Risk identification is process that determine the possible risks as well as conditions which causing this risk. By risk identification an organization is able to study the area of risk and which are the sources of risk (Williams et al, 1998). There are different sources of risk like physical, social and economic resources. The source of risk can be represented depending on the environment in which they are arising (Williams et al, 1998). There are many type of environmental factors; physical environment, social environment, political environment, operational environment, economic environment, legal environment and cognitive environment.

Theoretical framework:
In this research we have dependent variable Investment Risk and independent variables are economic conditions of country, Energy conditions, rules and regulations, political condition, return on investment, physical environment and political environment.

Methodology:
We will go to different textile factories of Fasialabad and Lahore. We will use questionnaire to gather data from their finance managers. Our main focus will be on investment techniques and questionnaire, interview and data base for gathering required information. After data collection we will use SPSS software to interpret it.

Contribution of the Research:


Our research will determine the major factors of investment risk in textile industry of Pakistan as well as determine how to manage and minimize theses risks while investing in this sector. After our research results one will able to indentify to manage risk and to invest in textile sector more efficiently.

Research Time table:


Chapter 1 2 3 4 5 TOTAL Topic Introduction Literature review Methodology Data analysis Conclusion and Implication Weeks 1 1 1 2 1 6

How to Manage the Risk of Investment in Textile Sector of Punjab

References:
Professor Caspar Rose, 2009, Journal of IT and Investment Management.