Risk, the Element of Any Economic Activity

Author:Carmen Elena Coca
Pages:354-359
SUMMARY

The financial risks have appeared since the beginnings of trade relations. While the step up where they were recognized, limited and checked differed greatly. Financial losses endured by internationally famous companies, due to inadequate Risk Management activities and especially highly publicized, have raised awareness by managers of growing importance to risk management In the economic and... (see full summary)

 
FREE EXCERPT
European Integration - Realities and Perspectives. Proceedings 2015
354
Risk, the Element of Any Economic Activity
Carmen Elena Coca1
Abstract: The financial risks have appeared since the beginnings of trade relations. While the step up where
they were recognized, limited and checked differed greatly. Financial losses en dured by internationally
famous companies, due to inadequate Risk Management activities and especially highly publicized, have
raised awareness by managers of growing importance to risk management In the economic and financial life,
the risk is an element of an y activity, being exposed in the agenda of company managers. Unforeseeabl e
changes in the interest rate development, the cost of a good or of the exchange rate affects not only the
financial effects of an enterprise, but can cause its b ankruptcy as well. Financial decisions are made
depending on cash flows of contracts foreseen to come, that through excellence are unsafe.
Keywords: risks; economic activity; financial losses
JEL Classification: G32; H12
The financial risks
The risk is thus an uncertain component of financial decisions. It is not at all astonishing that a
significant task of the financial system is the allocation of interest rate risk combined with the
development, the cost of shares, the rates or the cost of replacing certain products. Risk management is
a multilateral activity, and proposes completion of stages in any process of management.
These steps may be consecutive or simultaneous, showing the following specific stages:
- recognition of all types of risk;
- characterization of the Risk Management Policy;
- estimate of the risk
- each type of risk perception;
- producing risk limits;
- checking the risks;
The capital market proposes instruments both for the branching of many risks, and for reallocating
those risks that cannot be branched in a business field by sharing them between many companies. In
Romania, the Risk Management activity is approximately insufficiently evolved. Risk is defined as the
exposure to a great replacement or the likelihood of an opposing deflection for the circumstance
foreseen. Knowledge of risk is a versatile and individual action, therefore the analysis of global,
1 Associate Assistant Professor, Danubius‖ University of Galati, Romania, Address: 3 Galati Boulevard, 800654 Galati,
Romania, Tel.: +40.372.361.102, fax: +40.372.361.290, Corresponding author: zelesneacarmen@yahoo.com.

To continue reading

REQUEST YOUR TRIAL