Financial Risks and Risk Management in XYZ Corporation

This presentation discusses the financial risks associated with financing solutions and how XYZ Corporation can manage them effectively. It covers credit, specific, operational, liquidity, market, and equity risk, and how they can be controlled using fundamental, technical, and quantitative analysis. The presentation also provides insights into how XYZ Corporation can reduce financial risk by ensuring cash is available internally when investing, ensuring healthy cash flow, and sourcing multiple funding solutions. The presentation cites relevant references to support the discussion.

Financial Risks
Name
Institutional Affiliation

Financial Risks
• The financial risks associated with this financing solution include:
• Credit, specific, operational, liquidity, market, and equity risk.
• Credit risk refers to default risk, and it is linked to borrowing.
• If the XYZ Corporation fails to repay the loan, it will default (Cox,
Brounen & Neuteboom, 2015).
• Investors will suffer from decreased income from repayments and
lost interest and principle.
• Creditors will experience increased debt collection costs.

Risks Management
• XYZ can easily control and manage financial risk using
such tools or methods to analyze this risk as:
• Fundamental, technical, and quantitative analysis.
• Fundamental Analysis will help the corporation in
measuring security intrinsic value via evaluation of each
aspect of the underlying business, which includes its
earnings and assets from the project (Chan & Wong,
2015).

Risk Management Cont.
• XYZ will reduce the financial risk; XYZ should ensure cash is available
internally when investing and ensure healthy cash flow to the back
project.
• XYZ should ensure current debts can refinance, roll over, or repay at
maturity. It should also source multiple funding solutions, thus
optimizing capital structure in loosened or tightened credit market
(Burtonshaw-Gunn, 2017).
• XYZ must keep moderate gearing level via general rule and sensitive
analysis. Balancing between timing, profitability, gearing, flexibility, and
certainty.

References
• Burtonshaw-Gunn, S. A. (2017). Risk and financial management in
construction. Routledge, 12(2), 11-45.
• Chan, N. H., & Wong, H. Y. (2015). Simulation techniques in
financial risk management. John Wiley & Sons, 13(2), 14-56.
• Cox, R., Brounen, D., & Neuteboom, P. (2015). Financial literacy,
risk aversion and choice of mortgage type by households. The
Journal of Real Estate Finance and Economics, 50(1), 74-112.
• Sweeting, P. (2017). Financial enterprise risk management.
Cambridge University Press, 10(3), 1-67.