Risk, the Element of Any Economic Activity

• Author: Carmen Elena Coca
• Pages: 354-359

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.