Risk Management An Investment Decision Making Process

Risk management refers to the process involved in identifying, analyzing and acceptance or preventing of uncertainty in an investment decision making process (Dorfman, 2007). In most cases, risk management is carried out to control losses that may occur as a result of an event that may occur in a business. It is good to note that failure by a business to take adequate risk management can result to severe loss or consequences, not only for the business, but also for individuals. In simple terms, this is a two step process that involves determining the risks that may arise and the dealing with the risks in a way that is most effective for your business investment goals (Hubbard, 2009). This article provides an example of how failure to put the right risk management strategies can lead to massive loss in a business. The article uses Spear Investment Company located in New York as a perfect example of a business that failed to apply risk management properly. The paper will also look at h ow the company management would have acted before to avert the consequences. Staff turnover is one of the major risks that affect many business and this is what made Spear Investment company fail terribly in it mission to attain its goals because it led to massive losses. It was in 2008 when the company faced a massive staff turnover as a result of dissatisfaction by the employees because of the way they were treated by the management of the company. The dissatisfaction led many employees toShow MoreRelatedApplication Of Management Accounting Theories Essay1541 Words   |  7 PagesExecutive Summary Management accounting is one important area which is widely used in many industries and areas. The application of management accounting theories, methods, tools and principles could influence one company’s decision making process, evaluation process, performance estimation and investment management. 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