FINANCIAL RISK

MANAGEMENT

Lecturer :
Name : Siti Nur Farahani binti Hashim
NPM : 1801103010123
 DEFINITION
Financial risk management is the practice of
economic value in a firm by using financial
instruments to manage exposure to risk such as
credit risk and market risk. Similar to general risk
management, financial risk management requires
identifying its sources, measuring it, and plans to
overcome them.
Financial risk management can be qualitative and quantitative.
Qualitative Risk Analysis :
-We identify (or mark) risks for further analysis.
-We identify actions for the rest of the risks based on the
combined effects of probability of occurrence and impact on
project objectives.

Quantitative Risk Analysis:

-This analysis is only performed on risks which are marked for
further analysis by Qualitative Risk Analysis process
-We identify “effect of identified risks on overall project
objectives.”
 T H E S I G N I F I C A N C E TO
KNOWING THE RISK

Easy to find way to cope the risk

Planning for success
Helps with preparation
Maximizes results
Helps evaluation
 TYPE OF THE RISK

Interest Rate Risk

Credit Risk
Cash Flow Risk
Market Risk
 S T R AT E G Y TO AV O I D / S O LV E
THE RISK

Diversify
A common diversification method is to split
money in a specific way, such as 25 percent in
low-risk money markets, 25 percent in
government bonds, 30 percent in domestic stocks
or derivatives and 20 percent in international
investment instruments
.
 Use Savings Account
Using a savings account ensures these individuals have cash
on hand for emergency purposes if necessary

 Invest Sooner than Later

Investing sooner rather than later allows businesses and
individuals to let their money work longer and potentially
earns higher returns

 Learn About Investment

Proper investment education can mean the difference between
highly successful returns and significant losses

 Be Savvy, Not Greedy

Significant reductions in investments can occur quickly and
erase all financial returns earned on investment instruments
 CONCLUSION

It is important to every company to make the preparation for any

risk that might occurs.
Analyze the risk

Financial risk management important to overcome the risk.

Objective of the company can be achieve.