Types of Risk Assignment Example | Topics and Well Written Essays - 750 words

Types of Risk - Assignment Example Even though, these value risk models are utilized to quantify risks in the market but there are few limitations that are addressed using stress tests that study the movements of the market on hypothetical grounds (Yufeng, 2011). Supply chains have the aim to increase productivity, ensure cost effective practices and fulfill demands of the markets. However, there are many risks that may disrupt their working thus, in order to manage the risks involved the first step into place them into supply chain risk management (SCRM) (Tummala & Schoenherr, 2011). This would enable them to identify the operations, resources and the sources through which information inflows and outflows, through co-citation analysis. The changing interest are identified in SCRM and then tools such as Failure Modes and Effect Analysis (FMEA), and Fault Tree Analysis (FTA) can be used appropriately in SCRM. Moreover, pricing policies and analysis tools can examine the risks involved in supply chain that help manage supply chain risks in an effective way(Nurmaya, 2012). Credit risk is the kind of risk associated with market and customers. This risk arises when a business feels that borrowers might not pay their debt on time or due date. Thus, in this regard, credit can be managed by setting credits limit. The limits of credits are based on credit ratings. Likewise, funding or liquidity risk occurs when there is the risk that a person is not able to meet his obligations to provide loan commitments. The techniques associated with mitigating funding technique are holding liquid assets, securitizations, creating contingency plans, portfolio management techniques, having extensive databases on defaults and having credit insurance products. Due to increasing number of credit related losses, companies require new analytical solutions to make improvements in their databases