Financial and risk management practiceIntroductionOrganizations need to manage funds in a more effective and efficient way and thus employ financial management practices. The current financial and risk management aims at assessment which is an important component for organizations, however, it is necessary in the education sector and a principle driver to learning. According to Arnold (2007), risk and financial assessment employs an approach that equips students with innovativeness required in learning. This is achieved through the management functions, assessment techniques and procedures involved in the financial and risk management practice. This paper illustrates the assessment regime of financial and risk management practices and their efficiency and effectiveness in other sectors, organizations and to learners.
Tapiero (2004) states that, risk and financial management is becoming an integral part of organizations moving from qualitative assessment to more actual quantitative assessments. Risk management contributes a high percentage of organization’s profitability through effective and efficient risk mitigation plans that reduces impact of losses on the organization or prevent occurrence of the loss (Hennie & Brajovic, 2009). It should be a continuous process since risks arise every time in different operations.
Risk management plan should observe aspects of time and outline strategies and techniques through which risks are acknowledged and confronted. It also involves prediction of what is likely to happen in the future and how the organization will handle it. Risk management applies in buildings, business operations and organizational functions. Currently, countries’ governments provide regulations and legislative procedures that govern risk management within and outside businesses (Carpenter, 2012). Over the past decades, the benefits of international diversification have been extended to stock portfolios. According to Allen (2013), investors of international stock markets consider themselves enjoying the substantially higher return with less risk than investment in single market.
Risk-averse investors tend to avoid risk and would rather invest in markets with fewer risks and a lower return than in markets with high risks but possibly better returns. The aspect of risk brings about need for financial management in investment projects and business enterprises. Financial management involves all aspects of efficient and effective control including managerial finance, and corporate finance (Fisher 2012). Companies need to evaluate their financial health and stability of their operations.
Other than the top management level, financial calculation and evaluation is important for the overall company and its continuity. Managers need information from the finance unit in the resource allocation process and facilitate the routine operations of the company. According to McLaney (2011), financial ratio analysis aids in instilling confidence among managers while they manage the business resources. Given the financial reports and statements, related contents of the statement can be evaluated to identify business’ performance. Through this, managers can gauge the market performance, liquidity, efficiency, gearing and profitability of the company (Dun and Bradstreet Corporation, 2007).
Financial managementThe current financial management involves financial operations like funds utilization and procurement which is planned for, organized to function together, directed and controlled so as the organization meets its financial objectives. Financial assessment involves employing financial analysis techniques such as ration analysis. Financial management process includes planning for finances where adequate funds are allocated and made available for the right project or undertaking at the right time that is required to achieve organization’s goals. This depends on if the goals are long-term or short term such as funds required investing on stocks and credit sales or increasing the organization’s product base and making new acquisitions (Brigham & Ehmardt, 2011s).