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Research Paper On Financial Risk Management

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A Study on Financial Risk Management Practices of Selected I.T. Companies in India

Yagnesh Dalvadi 1*, Anu Warrier 2

Affiliations

  • Post Graduate Department of Business Studies, Sardar Patel University, Gujarat, India
  • Dr. APJ Abdul Kalam Government College, Silvassa, India


DOI: 10.17697/ibmrd/2017/v6i1/111652

Abstract


Risk management has become a key factor in assessing the future performance and effectiveness of management. Now a days many companies deal with foreign players, and receive its return in multiple currencies. They face foreign exchange risk because of sudden&drastic changes in exchange rates, which may cause significantly damaging financial losses from otherwise profitable export sales. Information Technology Company faces this risk higher because major share of its income comes from foreign countries in foreign currencies. It is now important to know: what the status of Indian I.T. companies is, in regards to foreign exposure, what are the instruments they are using for risk minimization, what are the recent statistics of its profit/loss due to Forex transactions and what is the resultant impact on its profitability? This research paper focuses on how selected I. T. companies in India manage their financial risk, who has the authority to establish financial risk management in selected I. T. companies, the ways adopted to support financial risk management policy, preference given to the approaches for dealing with risk, types of financial risks managed, model preferred for measuring credit risk, market risk&operational risk, types of derivative instruments used & resultant impact of financial risk management practices on the overall value&net profit of selected large scale I. T. companies.


Keywords

Financial Loss, Financial Risk, Impact of Financial Risk, Risk Management, Risk Measurement Model.


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DOI: http://dx.doi.org/10.17697/ibmrd%2F2017%2Fv6i1%2F111652

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Financial Risk Measurement for Financial Risk Management

Torben G. Andersen, Tim Bollerslev, Peter F. Christoffersen, Francis X. Diebold

NBER Working Paper No. 18084
Issued in May 2012
NBER Program(s):Asset Pricing, Economic Fluctuations and Growth, International Finance and Macroeconomics

Current practice largely follows restrictive approaches to market risk measurement, such as historical simulation or RiskMetrics. In contrast, we propose flexible methods that exploit recent developments in financial econometrics and are likely to produce more accurate risk assessments, treating both portfolio-level and asset-level analysis. Asset-level analysis is particularly challenging because the demands of real-world risk management in financial institutions - in particular, real-time risk tracking in very high-dimensional situations - impose strict limits on model complexity. Hence we stress powerful yet parsimonious models that are easily estimated. In addition, we emphasize the need for deeper understanding of the links between market risk and macroeconomic fundamentals, focusing primarily on links among equity return volatilities, real growth, and real growth volatilities. Throughout, we strive not only to deepen our scientific understanding of market risk, but also cross-fertilize the academic and practitioner communities, promoting improved market risk measurement technologies that draw on the best of both.

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Document Object Identifier (DOI): 10.3386/w18084

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