CORPORATE RISK MANAGEMENT AND AFFECT OF THE FINANCIAL MARKET

Corporate risk refers to the liabilities and dangers that a corporation faces. Risk management is a set of procedures that minimizes risks and costs for businesses. The job of a corporate risk management department is to identify potential sources of trouble, analyse them, and take the necessary steps to prevent losses. The term “risk management” once only applied to physical threats like theft, fire, employee injuries and car accidents. By the end of the 20th century, the term came to apply also to financial risks like interest rates, exchange rates, and e-Commerce. These financial risks are the most applicable type to corporations. Risk management encompasses the identification, analysis, and response to risk factors that form part of the life of a business. Effective risk management means attempting to control, as much as possible, future outcomes by acting proactively rather than reactively. Therefore, effective risk management offers the potential to reduce both the possibility of a risk occurring and its potential impact.