Topic 11EWRM Flashcards
What is EWRM ? And what are the key risks dealt with ?
• Company-wide risk management’ “holistic risk management”
• Reflect a comprehensive approach
• Be consistent across an organisation
Promote the integration of RM skills and commercial activities Be co-ordinated through a centralized management role
• Enjoy strong and continuing board and senior management support
• Risks should be dealt with in a systematic, consistent way: integrated, multi-disciplinary and continuous process
• The organisation should focus on an organization’s net exposures to risk through pooling of risks and offsetting risks/ensuring diversification across an organization There should be no internal barriers in RM: people ‘talk the same language’ and share information within the organization and with outside stakeholders
What should they do in Ewrm ?
And what risks does it cover ?
Company should net exposure (decrease) through posting oF risk (der insurance) offsetting risks, ensuring divisification (in (uding different things)
(vang diger ines commicking and sharing information within
- Changes in stage can be due to changes in risk propire.
Unat does Ewem coner EVERYThing e g fiancial visks, exchange rates capit affect
- intrest rates, liquidity, commodity pries (the mariets Futue price), long Supply chain, terrorim, loss of reputation, political change.
The advantages of Ewrm 😒
-Covers all risks
- decreases overall costs
- advantage diversification
- enhancing relationship with stakeholders e.g groups
-lower capital cost people,
-splits capital more efficently by focusing on key risks and reducing volatility of cash flow
Disadvantage of ewrm
complex to manage
-each company has it own risk to reward
-insufficient funds = lack of funds , people and tools
-Too many managers = slower decisions making
-No support from top managers = lack of leaders , lack of authority to succeed
-insufficient education, might not know how to use Ewrm , using incorrectly
when to implement (plan to use) EWRM ?
- uncertainty within a business enviroment - Competitive advantage - Handled by (CRO) cheif risk ofricer
Know the stragies
traditional role of the cop-rate treasury
?🫥
- mangaing risks like foringe exchange
-intrest rates, liquidity, managing banking relationships,capital structure ,
capital Structure ?
funding ?
capital Structure: - best mix of Equity & debt (eig gearing or leavrage) lower cost of capital
funding : increases financing eg Floating and fixed chosing
What treasures do to managed in a downturn.?📉
cash is king - focus on core business
hedging facial risks - keep a good credit rating covenants. -
Maintain banking Rationship ,
access to credit,
get your balance sheet in shape,
take advantage of bad prices and competitor problems
What is focusing on core business and hedging financial risks 📦📦
do diversifation or moving to new markets can expensive, focuse on companies core expertise so you can pick up competitors problems, hedging financial risks
What is per-serving credit rating and covenants ?
- despit poor funding companies with Strong ratings are able to Still secure competitly price panding, during a down turn many companes credit rating can fall finding it hard to or expenin to access credit mariets, sales falling can lead to faling asset prices which can make covernants at risk e.g building indursty.
How Maintaining banking relationships and access to credit ? 📊📊
banking relationship and lenders must be hept infomed on companies current position, and shareholder with be understaing and fixebity.
How to Getting balance sheet in order ?
key arears which should be add hessed or capital structure, asset quality, payable and receivable and working capital
How to managing counter party risk ? 🎊🎉
being careful of giving cedit to customers as they will also be struggling fiancial over resilience on one or more is not, lack of credit insurance
How to stakeholders managment ?📍🧮
- need to be informed of business performance with adverse trading or enomic downturn, reward to customer loyality and open communication with staff.
How to being opportunist ? 🔭📡
position yourself correctly during a downturn by minimising impact, stronger position than your competitors have
opportunities gaining market share, enhance reputation with suppliers and customers
