Financial Risk Management Process

Which of the following tasks is included in the financial risk management process?

Select the three correct answers from the list provided.

1. Designing strategic plans aligned with organisational goals.

2. Asset-to-Capital ratio.

3. Evaluating an organisation's financial risks.

4. Dealing with the risks which arise due to financial markets.

Answer:

Financial risk management includes evaluating an organization's financial risks, managing risks arising from financial markets, and monitoring the asset-to-capital ratio.

Financial risk management involves several tasks to assess and manage an organization's financial risks.

Evaluating an organization's financial risks:

This involves analyzing different types of risks such as credit risk, market risk, and liquidity risk to identify potential threats to the organization's financial stability.

Dealing with the risks which arise due to financial markets:

Financial markets can be volatile and present various risks. Financial risk management includes strategies to mitigate these risks and ensure the organization's financial well-being.

Asset-to-Capital ratio:

This ratio indicates the financial leverage of a company and helps assess its risk exposure. Financial risk management involves monitoring and managing this ratio to maintain a healthy financial position.