Chapter 22 presented a case study in creating value from uncertainty, and chapter 25 presented the use of efficient frontier analysis in SRM. Assume you are the project lead for the analysis team that
Madhur Bellamkonda
Week 11 - Uses of Efficient Frontier Analysis in SRM
COLLAPSE
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Hello Friends,
Working in the business makes you learn multiple techniques that are especially explaining the process happening in the business indeed which makes it easy to resolve an issue. Such many issues are present in the business and indeed making you run the business smoothly, by making Strategic Risk Management – SRM, ERM – Enterprise Risk Management and many more. All of these comes with a systematic process, that indeed gives you a step by step process to answer all of your questions for your life. To explain more about SRM here you will see that SRM is a closed system, which is actuality in a continuous cycle that is special with a robust opportunity for many kinds of an entity to find out and examine risk profiles that are within the context of a strategy setting, now you may also focus toward establishing their trade-off between risk transfer and even risk assumption.
While building a principle you may need to make assumptions that are indeed allowing you to check what are the possible issues and good things that can happen when you use this process. Most of this from the portfolio is exclusively interested in the optimization issues. All parties here from the portfolio are considered rational and also risk-averse. Asset returns are mainly jointly normally expressed and random. Here the performance of the portfolio is mainly considered price takers, and even with their behaviours and all other choice does not include or influence the overall price market for their portfolio (Fraser, Simkins, & Narvaez, 2015).
Here most of the things are made to keep your business well in a technical manner, now this is a mandate for a person to know what is important and what is not. People here must have some technical background if not they would not be able to understand what is necessary and what is not. In case if the person in charge of this is not a technical background, then you may need to explain step by step here to make them understand what you usually understood from your process analysis. Risk in business need not be a technical risk, this could also be a risk from any area, but it all depends on how well you manage to analyse the process, to know since when is this is happening and how the issue hampering the process. What might happen if the same is not taken care, what are the procedures that you have built to overcome those issues? Revenue that it is hampering the business indeed can make a loss towards the end of the year (Fraser, Simkins, & Narvaez, 2015).
Usually, when it is a loss, no one likes this, but more often, you may have to have suitable steps that can help you to overcome the same issues. There are fewer issues that can bring it back to the normal stage, wherein you will use disaster recovery, business continuity plan and some addons that can bring more value to your business. All of these processes are explained in normal words so that anyone can understand loss and profit. You can suggest them if these steps are done, then they can take care of the loss and move towards the profit zone in a short while. This is nothing but you may need to know general form or English that can be easily understood by anyone and a proper technique to explain your strategy well. So if you are a person explaining the same process to a manager or who is authorized to know the issues that are analysed from ERM, SRM, then work with full imagination power, seek others help and build more plans that can make the person happy when they hear about your approach.
References
Fraser, J. R., Simkins, B. J., & Narvaez, K. (2015). Implementing Enterprise Risk Management. John Wiley & Sons, Inc.
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Prashanth Kumar Belde
Discussion Board
COLLAPSE
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Chapter 22 presented a case study in creating value from uncertainty, and chapter 25 presented the use of efficient frontier analysis in SRM. Assume you are the project lead for the analysis team that uses Efficient Frontier Analysis to evaluate risks of the portfolio presented in chapter 25. How would you explain the results of the analysis to non-technical decision makers? What recommendation would you make, assuming the risk appetite presented in chapter 25?
Unlike the work on comprehensive management frameworks risk tolerance was based mainly on narrow essentially risk estimates. Most important was its ability to create opportunities for collaboration and risk of discovery are the multiple benefits of SRM. Any inability to policymakers who might wonder if their organization's risk profile is a competitive opportunity; while the perception of risk appetite and risk tolerance, associated with scenarios and stress tests, suggests a more comprehensive analytical framework. To calculate and to project it consists of several mathematical formulas. It is used to calculate the impact of the risk that contractors adjust their investment plans; while MPT (Modern Portfolio Theory) consists of several mathematical formulas. The performance of a given portfolio is considered the weighted combination of the performance of asset flows; when the risk profile is less than the value of an asset. This is a continuous cycle, the various parts of the company constituting a unique opportunity to recognize and consider the risk profile in the context of a strategy to find a compromise between the transfer and management of risk; while first impressions may suggest that the SRM structure is a closed system (Ching, 2020).
Risks such as earthquakes can destroy the building, insurance against accidents at work; while analyzes using the concept of the effective border should help assess the risk and performance of the investment portfolio. As a key analysis, financial projection individual asses will be used. We will establish a structure that will show the entire portfolio after the end of the analysis. Over the past 25 years, behavioral and quantitative financial analyzes increased. For the impact of portfolio risk venture, we have also taken the growing commitment to try to improve and predict performance. For the risk of financial market performance, the single decision can lead to misinterpretation. The collapse of the financial market is an example apparent in 2007. By changing the risk and integrating management framework in what is called today quietly enterprise risk management or strategic risk management (SRM); take advantage of huge data analysis methods used to stimulate analysis of borders (Scheel et al, 2020).
References
Ching, W. (2020). Uses of Efficient Frontier Analysis Strategic Risk Management: A Technical Examination. Retrieved from, https://ebrary.net/10038/management/uses_efficient_frontier_analysis_strategic_risk_management_technical_examination
Scheel et al. (2020). IS THE EFFICIENT FRONTIER EFFICIENT? Retrieved from, https://www.casact.org/pubs/proceed/proceed01/01236.pdf
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