CORPORATE RISK MANAGEMENT Essay Example | Topics and Well Written Essays - 1000 words

CORPORATE RISK MANAGEMENT - Essay ExampleCompanies incur a substantial marrow of cost in the management of the ventures (Ridley & Channing, 1999). Companies hire experts in order to mitigate the trys associated with its operations. The amount of seek to be mitigated varies from telephoner to telephoner and operation to operation. The dependency is related with the intensity of the lay on the line as the luck shall be high when it affects the companys operation at maximum (Agrawal, 2009). Although the risk is attached with all(prenominal) operation of the company but there are some certain areas in which the concern of the risk is substantial and companies need to focus more upon those. The costs associated with risk management is dependent upon both, the intensity of the risk and the cling to of that risk. The intensity and value tend to differ in every operation and every company. any(prenominal) companies are more come to ab go forth stock out than other whereas some co mpanies are more concern about the halt in the companys operations. The management of risk is carried out with finis focus and importance when an investment is to be do. A decision to choose from many investments is to be made and usually the investment associated with least risk is preferred over others. The basic goal of a company is the maximizing the wealth of its shareholders. A companies manages all risk in such a manner that the company is not derailed from its progress towards its goals. For the pharmaceutical companies the intensity attached with the risk of the new drug is much discriminating as it has many implications of the respective legislations (Ncbi.nlm.nih.gov, 2013). The high intensity of risk demands high risk management as in the failure of managing the risk shall be leading to the closure of the company. Pharmaceutical companies have more risk intensity than that of other companies as the products of the company is medications and thus greater restrictions a nd regulations are applied to them (Brown & Mannan, 2004).. Costs in risk management are both qualitative and quantitative as per the objectives of the company. Companies hire expert in management and they evaluate the procedures and the risks involved in it and thus have to incur costs as in terms of salaries of the hired experts. The companies incur cost as direct salaries but the prison term that is consumed in the exhibit is the cost that the company bear in terms of lateness in the selection criteria as the time value of money is considered to be deteriorating. In short term this cost is of intense importance as the time is short as when the selection is done and the company has to over go with the selected option and carry out the procedures. Whereas in the long run the cost of delaying as because of the time taken in the appraisals and selection is considered authorized as well where the deteriorating value of money is considered over the time (Jorda?o & Sousa, 2010). Risk management is concerned with the measurement of the risk and the intensity of the risk which is a time consuming method (Krause, 2006). The returns upon the project risk is associated with the market rate of return. The comparison between the two is done in order to appraise the project. at that place are high probabilities in certain cases where the company sees the project feasible as less wondering(a) and afterwards due to the