Object Finance Analysis Forex

Prudent management is one that measures the risk of turning the business that is, taking the actions to neutralize in a timely manner.

Unlike the uncertainty which cannot be predicted by not having information or knowledge of the future, the risks can be distinguished by being “visible” and can minimize their effects.

CLASSIFICATION OF RISKS

A. CREDIT RISK

Are perhaps the most important because they affect the main asset: the account placements. A liberal policy of approving loans have generated excessive levels of liquidity, and high uptake bullrings, or a relaxation of the requirement for assessing the creditworthiness customers, resulting in a high delinquency, so we must be careful about said “in good times make bad loans.”

B. MARKET RISKS

Occurs due to unexpected changes in prices of trading instruments. Every day, many businesses are closed and others have success. It is entrepreneurship and management which will see the future and to choose successful products to maintain customer loyalty, to preserve the image and confidence.

C. INTEREST RATE RISK

It is produced by the mismatch in the amount and maturity of assets, liabilities and off balance sheet items. Usually when you get loans at variable rates. In some markets the demand for money may affect interest rates can reach the effect of changes in the international economy to levels as those of the debt crisis.

D. LIQUIDITY RISK OR MOORING

It occurs as a result of continued losses portfolio deteriorating working capital. An excessive growth of obligations may also lead to loss of liquidity risk.

E. EXCHANGE RATE RISK

Resulted in fluctuations in currency values. The economies of developing countries like ours are not free of a growing trade deficit or balance of payments. The natural consequence is the devaluation of the exchange rate, affecting raising the value of loans made in dollars, may be unaffordable for borrowers if their economic activity generates income in local currency. To guard against this risk, you must select the portfolio of borrowers putting foreign currency loans only to those who operate in that currency, and assume a rule enclave between captured and placed (at an amount equal captured amount placed in foreign currency)

F. ASSET RISK OF FAILURE

The risk of asset failure, defined as the institutions did not have the capital size appropriate for the level of operations addressed by their credit risk.

G. RISK OF DEBT AND LIABILITIES STRUCTURE

Is defined as the failure to have adequate funding sources for the type of assets that bring corporate objectives. This includes the failure to maintain adequate liquidity and resources to the lowest possible cost.

H. OPERATIONAL RISK MANAGEMENT

Means operating risks the possibility of occurrence of financial loss from defects or failures in internal processes in information technology, in people or occurrences of adverse external events.

Is the risk that the other expenses necessary for the operational management of the institution, such as staff costs and general, cannot be adequately covered by the resulting net interest income? A good operational risk management indicates that originate performing efficiently.

I. LEGAL RISK

May occur as a result of legal changes or the rules of a country that can put an institution at a disadvantage compared to others. Abrupt changes in legislation may lead to confusion, loss of confidence and a possible panic.

J. SOVEREIGN RISK

It refers to the possibility of default on the obligations of the state

K. SYSTEMIC RISK

It covers the entire financial system of the country against internal or external shocks, as an example the impact of the Asian crisis, Russian phenomenon of the child, causing the market volatility and fragility of the financial system.

CONCLUSIONS

.- These risks can be covered by:

‘A professionalized administration (highly specialized in the new trends of the financial system) according to the times of modernization and globalization which we live.

“A prudential regulation established by the competent authority, backed by the board and complied with by the manager.

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