Analyzing and Mitigating Financial Risks in International Markets

This report provides an overview of financial risks encountered in international markets, focusing on foreign exchange risk, currency crises, and political risks. It discusses risk mitigation techniques such as avoidance, transfer, acceptance, and limitation, emphasizing the importance of limiting personal guarantees, ensuring the ability to pay, observing corporate formalities, and avoiding the assumption of structured liability. The report reviews the suitability of these techniques for managing global risk, highlighting the significance of timely risk analysis for mitigating potential losses. Key elements of a risk management plan, including risk avoidance, reduction, transfer, and retention, are also discussed. The document concludes with a list of references used for the analysis.

FINANCIAL MANAGEMENT

Main body
3.1 Financial Risks in International Market.
The financial risks refers to various types of risks related with financing which includes
financial transactions that may impact the financial position and performance of the
organisation. There are various types of risks that Mazars may have to face while
dealing in the global market that are evaluated below:-
1. Foreign Exchange Risk
2. Currency Crisis
3. Political Risks

Continued
 3.2 Risk Mitigation techniques
The risk mitigation techniques may also include:-
1. Avoid
2. Transfer
3. Accept
4. Limit

Continued
However, these are the various ways through which Mazars may overcome some
of its risks properly:-
1. Limit Personal Guarantees
2. Get Assurance of Ability to Pay
3. Observe Corporate Formalities
4. Avoid Assumption of structured liability

Continued
3.3 Reviewing suitability of techniques for managing the global risk.
Analysis of risk at the proper time can help the company in mitigating losses as
associated with such risk factors. Risk is related with the level of uncertainty of event.
Companies has to face many types of risk while performing their business operations. The
most common types of risks which companies faces while undertaking business at the
global level includes political risk, social risk as well as economical type.

Continued
Risk management plan basically comprises of Risk Avoidance, Risk reduction,
Risk Transfer and Risk Retention steps. In case of suitability aspects of managing of risk of
global level:
1. Planning
2. Risk Avoidance
3. Risk Identification
4. Risk Factors

REFERENCES
Books and Journals
Butler, K. C., 2016. Multinational Finance: Evaluating the Opportunities, Costs, and Risks of Multinational
Operations. John Wiley & Sons.
Cagliano, A. C., Grimaldi, S. and Rafele, C., 2015. Choosing project risk management techniques. A theoretical
framework. Journal of Risk Research. 18(2). pp.232-248.
Hopkin, P., 2018. Fundamentals of risk management: understanding, evaluating and implementing effective risk
management. Kogan Page Publishers.
Laeven, L., Ratnovski, L. and Tong, H., 2016. Bank size, capital, and systemic risk: Some international
evidence. Journal of Banking & Finance. 69. pp.S25-S34.
Maggiori, M., 2017. Financial intermediation, international risk sharing, and reserve currencies. American Economic
Review. 107(10). pp.3038-71.
Mueller, P., Stathopoulos, A. and Vedolin, A., 2017. International correlation risk. Journal of Financial
Economics. 126(2). pp.270-299.