Discuss the different types of financial and non-financial risks which pertain to your organization (you can...

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Finance

Discuss the different types of financial and non-financial riskswhich pertain to your organization (you can also consider anycompany ). Consider your organisation or the company related toyour group industry project, recommend a capital investment projectand discuss what value will it add to the firm and should theorganisation take up the project or not? (Hint: Use capitalbudgeting).

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Financial risk The financial risk of a company can be segregated into two parts Systematic and Unsystematic Systematic It is often called as external risks caused due to the presence of macro factors in the market This types of risk cannot be washed out by applying diversification Examples of such risks are interest risk market risk purchasing power risk etc Interest risk In case of long term investment particularly in the field of debt investment this kind of risk is found The interest rate can be changed frequently so to invest ones fund for the long term basis can the risk like interest rate risk Market risk It is caused do to the variation of return found in the stock market due to the presence of volatility in the market that causes upward movement of the stock prices and its downward movement Purchasing power risk It is likely to happen to the return of the investors caused by inflation The presence of inflation decreases the purchasing power of the currency Unsystematic risk Unsystematic risk also known as internal risk can be minimised by of diversification Anyhow this type of risk occurs internally eg Raw material problem labour problem management problem etc These are the micro factors See Answer

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