Resilience and Risk: Difference between pages

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1. ''Behavioural skills.''
1.  


The ability of individuals to recover from difficulties or to withstand external pressures.
In the corporate finance context, risk refers to the degree to which future returns may vary.


Risk is often measured by the standard deviation of forecast returns. 


:<span style="color:#4B0082">'''''Practise resilience'''''</span>
It is often estimated by the standard deviation of <u>historic</u> returns, though this process is inherently error-prone when used for <u>forecasting</u> or for risk management purposes.
:Resilience is the best tool for when your environment changes, and this is a skill that can be learned.
:Six ways to practise personal resilience:


:*Attitude – understand your motivational state and how to change it
:*Responses to stress – awareness enables control
:*Commitment – what are your motivations?
:*Control – understand what can and can’t be controlled in your environment
:*Relationships – maintain clear and consistent communication
:*Health – mental and physical


2.
:Four ways to practise personal resilience during COVID-19:


:*Maintain boundaries between home and work especially when working from home
In the Capital Asset Pricing Model, relevant risk is measured by beta.
:*Be transparent
:*Manage your positivity
:*Look out for verbal and non-verbal clues in your work relationships




:''Association of Corporate Treasurers, Mental wellbeing and top tips for thinking in a resilient way, May 2020''
3.


In a more general sense, risk refers to the unknown (or unknowable) nature of future outcomes involving, for example, market prices or market rates.


2. ''Risk management - organisations and systems - finance.''


The ability of organisations or entire systems to recover from major problems, or to withstand adverse external conditions.
4.  


Examples of major problems include climate change, natural catastrophes, cyber-risk, financial market shocks and stresses.
The possibility of <u>adverse effects</u> resulting from:


- Changes in market prices or rates, or


:<span style="color:#4B0082">'''''Rolls-Royce bolsters financial resilience'''''</span>
- Changes in other general conditions in the market, or


:"With the aviation sector decimated by COVID-19 and an entire staff base working from home, Rolls-Royce, which generates around 50% of its annual revenue from civil aerospace, undertook swift action to conserve cash and bolster liquidity through a series of complex transactions in the second half of 2020.  
- Other economic factors specific to the business or other organisation (such as the failure of a key supplier).


:The deals stemmed from overarching aims to:


::1. provide financial resilience and strong liquidity headroom to see the business through any severe but plausible downside scenarios on the recovery in air transport..."
5.  


:''ACT Deals of the Year Awards 2020 - Rolls Royce''
The possibility of an event occurring that will have an impact on the achievement of objectives.


This includes both the upside opportunity and the downside hazard which could either move us towards or drive us away from achieving our objectives.


==See also==
Risk in this context is measured both in terms of (1) its impact and (2) its likelihood.
* [[ACT Competency Framework]]
* [[AMCT]]
* [[Black swan]]
* [[Business skills]]
* [[Call for Action on Adaptation and Resilience]]
* [[Capital Conservation Buffer]]
* [[Climate change: testing the resilience of corporates’ creditworthiness to natural catastrophes]]
* [[Commercial drive and organisation]]
* [[COVID-19]]
* [[Cyber resilience]]
* [[Emotional intelligence]]
* [[Equifinality]]
* [[Event risk]]
* [[Executive coaching]]
* [[Financial Policy Committee]]
* [[FOMO]]
* [[Growth mindset]]
* [[Headroom]]
* [[Influencing skills]]
* [[Liquidity]]
* [[Mind map]]
* [[Redundancy]]
* [[Self management and accountability]]
* [[Self-regulation]]
* [[Silo]]
* [[SMART]]
* [[TCFD Recommendations]]
* [[Technical skills]]
* [[Wellbeing]]
* [[Working effectively with others]]




==External link==
'''Treasury's role in risk management'''


*[https://www.treasurers.org/hub/treasurer-magazine/how-read-your-own-emotions-and-develop-resilience How to read your own emotions and develop resilience, The Treasurer, 2019]
No organisation can eliminate all risk, so risk has to be managed effectively. This is best done through a risk-aware culture.


[[Category:Commercial_drive_and_organisation]]
Generally, treasury is about managing risk rather than taking risks.
[[Category:Influencing]]
 
[[Category:Self_management_and_accountability]]
Many risks should be managed. Risk management is a key activity of the treasury function.
[[Category:Working_effectively_with_others]]
 
[[Category:Planning_and_projects]]
 
== See also ==
* [[Alienation of assets]]
* [[Beta]]
* [[Capital asset pricing model]]
* [[Capital risk]]
* [[Commercial credit risk]]
* [[Commodity risk]]
* [[Counterparty risk]]
* [[Delivery risk]]
* [[Downside risk]]
* [[Effective annual rate]]
* [[Financial market risk]]
* [[Financial market price risk]]
* [[Insurance]]
* [[Legal risk]]
* [[Market risk]]
* [[Market price risk]]
* [[Model risk]]
* [[Regulatory risk]]
* [[Return]]
* [[Risk averse]]
* [[Risk management]]
* [[Guide to risk management]]
* [[Standard deviation]]
* [[Tax risk]]
* [[Transfer risk]]
 
[[Category:Risk_frameworks]]

Revision as of 14:34, 5 June 2016

1.

In the corporate finance context, risk refers to the degree to which future returns may vary.

Risk is often measured by the standard deviation of forecast returns.

It is often estimated by the standard deviation of historic returns, though this process is inherently error-prone when used for forecasting or for risk management purposes.


2.

In the Capital Asset Pricing Model, relevant risk is measured by beta.


3.

In a more general sense, risk refers to the unknown (or unknowable) nature of future outcomes involving, for example, market prices or market rates.


4.

The possibility of adverse effects resulting from:

- Changes in market prices or rates, or

- Changes in other general conditions in the market, or

- Other economic factors specific to the business or other organisation (such as the failure of a key supplier).


5.

The possibility of an event occurring that will have an impact on the achievement of objectives.

This includes both the upside opportunity and the downside hazard which could either move us towards or drive us away from achieving our objectives.

Risk in this context is measured both in terms of (1) its impact and (2) its likelihood.


Treasury's role in risk management

No organisation can eliminate all risk, so risk has to be managed effectively. This is best done through a risk-aware culture.

Generally, treasury is about managing risk rather than taking risks.

Many risks should be managed. Risk management is a key activity of the treasury function.


See also