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It is risk assessment.It is risk assessment.It is risk assessment.It is risk assessment.
Risk that remains after response to ridentified risk is planned/selected
AGGREGATION OF RISKS There has been much discussion of the RAROC and VaR methodologies as an approach to capture total risk management. Yet, frequently, the risk decision is separated from risk analysis. If aggregate risk is to be controlled, this or a similar methodology needs to be integrated more broadly and more deeply into the banking firm. Both aggregate risk methodologies presume that the time dimensions of all risks can be viewed as equivalent. A trading risk is similar to a credit risk, for example. This appears problematic when market prices are not readily available for some assets and the time dimensions of different risks are dissimilar. Yet, thus far no one firm has tried to address this issue adequately.
It is the risk which is due to the factors which are beyond the control of the people working in the market and that's why risk free rate of return in used to just compensate this type of risk in market. This is the risk other than systematic risk and which is due to the factors which are controllable by the people working in market and market risk premium is used to compensate this type of risk. Total Risk = Systematic risk + Unsystematic Risk As systematic risk is beyond the control of people working in market that;s why it is defenately not the relevent risk because anything not controllable is irrelevant and that's why unsystematic risk is the relevant risk because it is in the control of investor to in which security to invest or not.
Probability and Severity are the two factors determine the risk level in the Risk Assessment Matrix.
Investment risk that can be reduced or eliminated by combining several diverse investments in a portfolio. Non-market (non-systemic) risks are diversifiable risks.
another term for market risk is non-diversifiable risk.
Challenges that businesses may face.
one has the word has in and one has the word takes in Diversifiable risk is the risk which can be mitigated by investing in different companies, different sectors, different assets and also different regions. Here we trying to minimize the risk of huge loss by taking the whole risk against one or few companies/ sectors / assets / regions. Non-Diversifiable risk can not be mitigated at all. This is the risk you are exposed to in individual investment. Every investment holds Market risk, i.e. uncertainity of market moving up or down and respective movement of your investment .
recent research has found it would be 50 to 60 stocks .
a. Unsystematic riskb. Diversifiable riskc. Undiversifiable riskd. None of the aboveD. NONE OF THE ABOVE
a security's risk is divided into systematic (Market risk) and Unsystematic risk (Diversifiable risk), the market risk is the risk inherent to the security, it is attributed to macro economic factors such as inflation, war etc. and affects all securities in the market and so cannot be diversified away. Market risk of a security is measured and reflected by the Beta coefficientwhich is an index that measures the security's volatility to market movements i.e. how much the returns of the security will vary if their changes in the market
Beta is also referred to as financial elasticity or correlated relative volatility, and can be referred to as a measure of the asset's sensitivity of the asset's returns to market returns, its non-diversifiable risk, its systematic risk or market risk. On an individual asset level, measuring beta can give clues to volatility and liquidity in the marketplace. On a portfolio level, measuring beta is thought to separate a manager's skill from his or her willingness to take risk.
Differences between CML and SML· Capital market line measures risk by standard deviation, or total risk· Security market line measures risk by beta to find the security's risk contribution to portfolio M· CML graphs only defines efficient portfolios· SML graphs efficient and nonefficient portfolios· CML eliminates diversifiable risk for portfolios· SML includes all portfolios that lie on or below the CML, but only as a part of M, and the relevant risk is the security's contribution to M's risk· Firm specific risk is irrelevant to each, but for different reasons
A residual risk is the remains of a risk on which a response has been performed. As part of CRM, you are managing some risk, for which you will have some risk response or strategy. A residual risk is the reminder of the risk that remains after you have implemented a risk response.
There are many different market risks. Some different market risks are systematic risk, credit risk, country risk, political risk, market risk, interest rate risk and many more.
A residual What_does_residual_risk_mean_in_the_CRM_processis the remains of a risk on which a response has been performed.As part of CRM you are managing some risk, for which you will have some risk response or strategy. A residual risk is the reminder of the risk that remains after you have implemented a risk responseRead more: What_does_residual_risk_mean_in_the_CRM_process