Risk Management

Risk Management Final Examination

Question 1:

One of the specific areas of investor disquiet emanated from the problem of agency. The function of a board in a listed company is to take responsibility for managing the company’s business on behalf of its members or shareholders. Separation between membership and management has many advantages except:

a) Decision making can be entrusted to those with the necessary skills and capacities leaving the members to enjoy the benefits of their association with the organization

b) Facilitates efficient aggregation and use of capital, by enabling the processors of capital to invest in enterprise without requiring them to become involved of its operation

c) Pursuit of short-term share growth, where sustained investment in the company’s asset base might or may not produce long-term benefits for shareholders

d) Allows responsibility for the strategic direction and control of business to be delegated to professional managers who (it is assumed) possess the required entrepreneurial skills...

Explain your answer.

Question 2:

1. Discuss with an experienced Businessman, a prudent Investor in stock market and a successful Bank Manager about Risk, Risk Measurement and Risk Management process.

2. Based on above discussion and own research, write a short summary of understanding on above mentioned topics.

[Hint: Ask them what sort of risks they are dealing every day, how they define those risk, what sort of implication those risks have on the expected return, how they measure/assess the magnitude of a specific risk, whether they follow any standardized risk management policy, how they manage/ diversify specific risk or any other relevant questions.]

Question 3:

Risk management is the process of assessing risk and developing strategies to manage the risk. In ideal risk management, a prioritization process is followed whereby the risks with the greatest loss and greatest probability of...