Financial Risk Identification- A Taxonomy based Study

Abstract

Risk taking is the foundation of business activity. Quantifying it in an accurate manner such that the magnitude, impact, and point in time effect is recognized financially is critical for efficiency in business. Both unhedged and mispriced risk, while opposites in terms of the cost of doing business, have similar effects of loss of capital for the entire community an entity operates with. In this paper, we examine the list of known risks which need to firewalled against for a business to survive as well as thrive. Costing risks and derivatives in a similar manner allows for representing the health of a business in relation to its impact in the reassuringly standardized form of a balance sheet.