企业财务风险管理外文文献

企业财务风险管理外文文献

Enterprise Financial Risk Management: A Literature Review

Abstract

The enterprise financial risk management (EFRM) is a crucial tool applied by modern enterprise to manage their financial exposure and control risks. EFRM systems have become increasingly complex with time and one must have a thorough knowledge of the different facets of enterprise finance in order to effectively use them. This literature review briefly reviews existing literature and provides current understanding of the EFRM systems. Key topics discussed include the need for EFRM and the various risk management frameworks, regulations, and tools. Additionally, recent research efforts on areas such as Enterprise Risk Management Systems (ERM) and financial forecasts are discussed.

1. Introduction

Risk management is an important aspect of corporate management and is extensively applied in modern enterprises. With the emergence of globalization, uncertainties, and complexity in the global business environment, effective risk management is a necessity for all corporations. Enterprises must manage different types of risks associated with inadequate financial results, including liquidity issues, treasury and debt management, insolvency or bankruptcy, and others. Enterprise Financial Risk Management (EFRM) has become an increasingly important tool to manage the risks associated with corporate financial activities. The purpose of this review is to explore

the most recent advances and research in the field of EFRM to provide

a comprehensive understanding of the current state of the field.

2. Need for EFRM

Financial risks are a major concern in the management of any business. Inadequate risk management can lead to financial losses and even bankruptcy. The EFRM system helps to alleviate the associated financial risks. Financial risks can arise from various sources, such as external environment changes, inadequate financial planning, and insufficient internal control systems. Therefore, enterprises should implement proper EFRM strategies to protect their financial health and minimize the associated risks.

EFRM systems provide the enterprise with a comprehensive risk management framework, allowing them to identify and address any existing and potential financial risks. This risk management system also enables the enterprise to analyze the short-term and long-term effects of different management decisions and to plan and implement adequate responses. Furthermore, EFRM systems facilitate financial forecasting and help management to make informed decisions. Proper risk management reduces uncertainty and increases the enterprises’ profitability.

3. EFRM Risk Management Frameworks

The first step in EFRM is to identify different financial risks. Risks can be divided into two broad categories, namely, market risks and operational risks. Market risks are the risks associated with different types of financial markets, such as foreign exchanges, stocks,