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Need for PENNY AUCTION MERCHANT ACCOUNT monitoring and risk management in the financial sector

There are several reasons behind the emphasis laid on the management of risk in the financial industry these days. Some of the reasons are listed as follows –

  1. In the current joint stock firms have a structure where the owners of the firms are not managers. Hence, this leads to n increase in the occurrence of risk. Hence, there is a requirement for proper tools in order to achieve desirable results by risk coverage.
  2. The financial industry no longer follows the simple lending and deposit function.
  3. Emerging markets.
  4. Increase in the total number of transactions that takes place across borders which has risks associated with it.
  5. Terrorism remittances.
  6. The complex operations that take place in financial transactions.

Monitoring risks associated with the financial industry is an inevitable as well as crucial part of managing risk. The importance of monitoring risk in the financial industry is of great important due to reasons listed as follows –

  1. Financial sector is a riskier sector when compared to manufacturing and trading.
  2. This sector deals with other people’s money.
  3. The deposit holder has a direct stake.
  4. Due to the recent problems faced by financial institutions such as banks such as stuck portfolio which comes under credit risk.
  5. Due to Barings Bank’s bankruptcy due to long position / short selling which comes under market risk.
  6. Though operational risk has no immediate impact, it is important for progress and continuity of the organisation.

Components of the framework for risk management – The framework for risk management has 5 components. The first component of risk management is risk identification. After identifying the risk, it is then assessed, after which seek management and solution. Quick response followed by the implementation of the solution and the final component is monitoring the process of risk management. It is important to learn from experience so that it does not occur again. For the efficient running of the risk management process, it is necessary that the entire process is well communicated. The ISO or International Organisation for Standardisation defines risk management as risk identification, risk analysis, risk evaluation, risk control or risk treatment, risk monitoring, risk review and finally risk communication. These mentioned activities can either be followed systematically of in an ad-hoc manner. The general rule is that by applying these activities systematically, it will result it enhanced decision-making which in turn will lead to improved outcomes.

Depending on the operations and structure of an organisation, risk management in the financial sector can be applied in various ways. The structure of risk management defines the various organisational levels which could be affected by risk and need to be managed after identification. When risk is monitored, one can take control of the prevailing situation and see that this risk will not affect the functional aspects of the organisation. Hence, with risk management and monitoring of risk, the adverse affects of risk, whenever it occurs, can be kept under control. Contact one of our helpful account representatives to assist you in the setup of a high risk merchant account or offshore merchant account for a high risk merchant.