Identifying and Managing Risk Research Paper Example | Topics and Well Written Essays - 750 words

Identifying and Managing Risk - Research Paper Example The market risk is associated with the uncertainties in the areas of foreign exchange rate fluctuations, fluctuation of interest rates, fluctuation of stock prices and commodity prices. The market risk is managed by the use of interest rate swaps, options and future. The use of derivatives in financial market is important to hedge market risks. The risk management techniques are used to reduce the credit risk of the organization which occurs as a result of default of the counterparties. The credit ratings are used to assess the credit risk of organizations. The credit risk is reduced by limiting the exposure to the parties considered to be risky for repayment (Deventer,  Imai and  Mesler, 2013). The other credit risk management tools used are by the use of collaterals, periodic marking to the market, captive derivative subsidiaries and netting. Netting is a risk management technique through which the amount of cash owed by one party to another is reduced by the amount by the latt er to the former. There are various methods of netting which includes bilateral netting, multilateral netting, payment netting, cross product netting and close-out netting. Several types of derivatives like over the counter derivatives and credit derivatives are used to mitigate the exposure to credit risks. The types of credit derivatives include Total return swaps, Credit Swaps and Credit Options. Several authors have explained different financial risk management techniques that are widely used in the industries. Analysis: Comparison of financial risk management techniques A comparison of the financial risk management techniques explained by Kallman  to that of Cohen and Palmer is given below. Kallman explained that we should a clear idea of the nature of risks that need to be mitigated. According to Kallman, the risk exposures could be categorized into strategic risks, operational risks and economic risks. The strategic risks are the uncertainties that rise in the long term. Th ese may be quality risk, brand risk, etc. The operational risks are the uncertainties that occur within a single operating period as a result of the operations of the company. The economic risks are the areas of uncertainty created as a result of volatility in political and financial conditions (Kallman, 2007). These risk exposures are mainly due to the changes in macro and micro economic conditions. The economic risks take the form of interest rate risk, foreign exchange risk, etc. The risk exposures may be pure which results in a loss of values or speculative which may either result in a gain or loss. The popular risk management tools proposed by the author are risk surveys and checklist. The survey and checklist are important tools to build a risk register in the organization. Flowcharts of organizational process are useful in identifying the risks involved. After identification of risk, the risks are managed by risk management techniques that include statistical analysis, financ ial statement analysis and also personal inspection. The risk management techniques explained by Kallman could be compared to the risk management techniques explained by Cohen and Palmer. According to Cohen and Palmer, the

Strategic managment implementation, for the golar lng company Essay

Strategic managment implementation, for the golar lng company - Essay Example Floating Storage and Regasification Unit is a product of GolarLNG. According to their website, it is based on the conversion of an existing LNG carrier into a floating terminal that can be situated offshore or at a new or purpose-built jetty/pier. It will receive liquid natural gas (LNG) from offloading LNG carriers, and the onboard regasification system provides gas send-out through flexible risers and pipeline to shore. European imports rose 0.9 bcf/d, where Spain led by +0.5 bcf/d and Italy by +0.1 bcf/d. The entire shortfall was absorbed by the US with import s down 1.7 bcf/d year-on-year. In 2009, overall 22 countries were importing LNG. The imports are expected to grow by a large amount in the coming years. The Floating Storage and Regasification Unit have become really popular in the last few years. It is relatively a new concept, and Golar LNG is the first one in the world to deliver it. With this fact that they are the first one to introduce it, they have a competitive edge. With these advantages, Golar LNG has to market its service in a way that it maintains its market share in FSRU. They haven’t marketed their service greatly in order to attract and retain their customers. For this purpose, they need to create a proper marketing plan. Although this service does not have any specific customer. This service is for all the importers of LNG. But in order to start marketing, Golar has to cater to individual regions needs first. This marketing action plan will be the segment catering to the importers in Asia. The segment is made according to the demographics. The FSRU service is for providing ease and comfort to the importers, who would easily be able to import LNG with the help of these floating terminals. The Service is positioned to be inexpensive, yet having a highly advanced technology. Any kind of product or service needs marketing. In maritime industry, marketing is considered to be unimportant. But experts say that marketing is