Market risk analysis Archives - Business Intelligence

Tag: Market risk analysis

Oil and Gas Industry Risk Assessment

Business Risk Management: Ways to Tackle Potential Business Risks

What is business risk management?

Business risk management is a subset of risk management that is used to examine and understand the risk occurring due to changes in the processes, systems, or other business operations. A business risk framework identifies, tracks, prioritizes, and addresses risks to minimize adversities from unexpected events. Companies can gain the ability to make more informed risk-based decisions with the help of business risk management plan.

With a business risk management plan, businesses can prepare for the unexpected by minimizing risks and extra costs before they happen. By having a risk management plan in place, companies can also save money and make the organization’s future secure.

Identifying and tackling business risks is not an overnight task, it requires careful planning and strategic execution. Request a free proposal to know how we can help create an ideal business risk management framework for your organization.

Business risk management process

  • Identifying risks – Identifying the evolving risks by analyzing internal and external factors that affect the key business objectives.
  • Analyzing risks – It includes the standardization and creation of probability distributions of outcomes for each material risk.
  • Responding to risk – Once potential risks are identified and analyzed, an appropriate strategy needs to be incorporated to address the risk. This is done either by establishing new processes or eliminating the risk, depending on the type and severity of the risk.
  • Monitoring risk and opportunities – The final step in a business risk management process involves continually measuring the risks and opportunities of the business environment. Companies must also keep a check on the performance of different management strategies.

 

Business risk management challenges and how to overcome them

Speed of information

In an era where news and information travel faster than wildfire, businesses do not have the luxury of time to undertake decision-making and formulate strategies as a part of business risk management once the news of a risk event is released. In several cases, a single risk event is attached to other unrelated risk events and when combined it may rapidly begin to erode the organization’s reputation and goodwill. To address such situations, some organizations are working proactively to consider their organization’s responses and business risk management strategies more robustly and well in advance of an actual event. Having different response playbooks that have business risks management strategies and responses identified in advance helps them to quickly respond to risk issues and diffuse some of the adverse effects on a timely basis.

Gain access to our complete portfolio of services and learn how we help clients to overcome their business challenges.

Complexity of business

Cyber threats, disruptive innovation, regulatory shifts, and changing social demographics may trigger significant risks for an organization. Furthermore, these risk drivers may be related to or can trigger other risks, adding to the complexity of the business risk management challenge.  Despite this, the top management in most companies fail to recognize the value of embracing a more holistic and team-based enterprise-wide approach to risk assessment and mitigation. To overcome such setbacks, some organizations are rethinking how they approach risk identification and assessment to find ways to bring together the collective minds of a number of individuals to think through potential risk drivers explicitly and proactively. This is done based on the perceived benefits of putting several minds to work when identifying and assessing risks. It is essential to have varied perspectives on complex risk issues in order to face the realities of today’s complex business environment.

Integration of risk oversight and strategy

Some organizations may experience a disconnect between their organization’s business risk management and strategic planning activities. In many companies, business risk management is viewed as a compliance or regulatory activity. This means that often risk management in organizations are transferred to a lower level, non-strategic position. As a result, the organization’s business risk management efforts are often inadequately integrated with strategic planning. To address this challenge, rather than starting off by analyzing what drives value for the organization, companies must first understand what risks are on the horizon. By starting the conversation with what is strategically important to the business and then asking what might prevent that from succeeding, business leaders will be able to identify how business risk management can be positioned to provide strategic value.

Learn more about our business risk management solutions for business

Operational risk analysis

Market Risk Analysis Helped a Financial Services Provider Achieve Savings of $ 4.7 Million – An Infiniti Research Success Story

Business Challenge 

Over the last couple of years, the financial services industry has undergone significant transformation due to factors including business model transformation, adoption of advanced technologies, changing regulatory environments, and more. In an increasingly complex environment of the financial services industry, new complexities arise, requiring an adjustment in risk management systems and procedures. Market risks in the financial sector can potentially cripple the business if not managed on time. Therefore, it is imperative for companies in the financial sectors to implement market risk analysis and management strategies to identify potential risks in advance, analyze them, and take steps to eliminate them.

The client, a financial services provider wanted to develop market risk management strategies to manage risks affecting the growth of the industry. Changes in market variables, including interest rate and exchange rate fluctuations, as well as movements in market prices of securities and financial derivatives created risks that negatively impacted the financial capital of the client. Also, these market risks affected the company’s bottom line. Hence, the client approached Infiniti Research to leverage their expertise in offering market risk analysis solutions. With Infiniti’s market risk analysis solution, the client wanted to develop a comprehensive and dynamic framework for monitoring, measuring and managing liquidity, interest rate, foreign exchange, and commodity price risks.

Interested to learn more about our market risk analysis? Request a FREE brochure to learn more.

Solutions Offered 

With years of expertise in offering actionable market risk analysis solutions, the experts at Infiniti Research helped the client devise an effective market risk management strategy. A three-step approach was adopted to transform processes and improvise strategies associated with market risk analysis. It also involved examining changes in market variables, including interest rate and exchange rate fluctuations, as well as movements in market prices of securities and financial derivatives. Our experts also analyzed historical records to predict when the market fluctuations and disruptions were about to occur. This helped the client to create proactive and reactive methods that can prevent market risks from impacting the security of the organization.

This highly focused approach helped the client to build strategic market risk management strategies that minimized the probability of the problem occurring again. Furthermore, implementing risk management strategy reduced the loss in profit for the client. In a span of seven months, the market risk analysis helped the company to successfully reduce their financial costs and achieve savings of US $4.7 million.

We’ve helped various companies identify the key market risks and implement effective strategies to reduce the impact. Request a FREE proposal to know how our market risk analysis solutions can help your business.

What is Market Risk Analysis?

Market risk analysis is the process of evaluating and managing the potential risks in the market that negatively impacts the organization. Market risk analysis helps organizations understand the potential risk factors affecting their business and implement strategies to reduce them. The market risk analysis strategy gives an idea of the potential risks/events and the time needed to recover and restore operations. Thus, having a robust market risk analysis strategy allows businesses to prepare themselves financially for the most likely problems.

How to do a Risk Assessment?

Capture1What are the Types of Market Risks?

There are several major types of market risks. Let’s have a look at some of them:

Equity risks: Equity price risk refers to the risk arising from the volatility in the stock prices.

Interest rate risk: Risks arising from unpredictable interest rate changes. The prices of most assets are sensitive to changes in interest rates.

Exchange rate risk: Exchange rates can change rapidly as they are affected by a wide range of political and economic conditions. Many businesses have exposure to interest rates both in terms of costs and revenue sources. As a result, changes in exchange rates can lead to volatility in a company’s margins and profitability.

Commodity risk: Commodity price risk refers to the risk of unexpected changes in a commodity price.

CONTACT US to learn more about our market risk analysis solutions.

Close
Infiti Logo

Hello there!

Contact us to know more about our cost-effective custom market research offerings to support efficient market penetration, new product launch, and devise strategies to monitor and outperform your competitors.