财务风险管理外文翻译英文文献

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财务风险管理外文文献翻译

文献出处: Sharifi, Omid. International Journal of Information, Business and Management6.2 (May 2014): 82-94.原文Financial Risk Management for Small and Medium Sized Enterprises(SMES)Omid SharifiMBA, Department of Commerce and Business Management,Kakatiya University, House No. 2-1-664, Sarawathi negar,1．ABSTRACTmedium sized Enterprises (SME) do also face business risks, Similar to large companies, Small and Mwhich in worst case can cause financial distress and lead to bankruptcy. However, although SME are a major part of the India and also international - economy, research mainly focused on risk management in large corporations. Therefore the aim of this paper is to suggest a possible mean for the risk identification, analysis and monitoring, which can be applied by SME to manage their internal financial risks. For this purpose the financial analysis, which has been used in research to identify indicators for firm bankruptcy, was chosen. The data required for the study was collected from Annual report of the Intec Capital Limited. For the period of five years, from 2008 to 2012.the findings showed the data and the overview can be used in SME risk management.Keywords: Annual report, Small and Medium sized Enterprises, Financial Risks, Risk Management.2．INTRUDUCTIONSmall and medium sized enterprises (SME) differ from large corporations among other aspects first of all in their size. Their importance in the economy however is large . SME sector of India is considered as the backbone of economy contributing to 45% of the industrial output, 40% of India’s exports, employing 60 million people,create 1.3 million jobs every year and produce more than 8000 quality products for the Indian and international markets. With approximately 30 million SMEs in India, 12 million people expected to join the workforce in next 3 years and the sector growing at a rate of 8% per year, Government of India is taking different measures so as to increase their competitiveness in the international market. There are several factors that have contributed towards the growth of Indian SMEs.Few of these include; funding of SMEs by local and foreign investors, the new technology that is used in the market is assisting SMEs add considerable value to their business, various trade directories and trade portals help facilitate trade between buyer and supplier and thus reducing the barrier to trade With this huge potential, backed up by strong government support; Indian SMEs continue to post their growth stories. Despite of this strong growth, there is huge potential amongst Indian SMEs that still remains untapped. Once this untapped potential becomes the source for growth of these units, there would be no stopping to India posting a GDP higher than that of US and China and becoming the world’s economic powerhouse.3. RESEARCH QUESTIONRisk and economic activity are inseparable. Every business decision and entrepreneurial act is connected with risk. This applies also to business of small andmedium sized enterprises as they are also facing several and often the same risks as bigger companies. In a real business environment with market imperfections they need to manage those risks in order to secure their business continuity and add additional value by avoiding or reducing transaction costs and cost of financial distress or bankruptcy. However, risk management is a challenge for most SME. In contrast to larger companies they often lack the necessary resources, with regard to manpower, databases and specialty of knowledge to perform a standardized and structured risk management. The result is that many smaller companies do not perform sufficient analysis to identify their risk. This aspect is exacerbated due to a lack in literature about methods for risk management in SME, as stated by Henschel: The two challenging aspects with regard to risk management in SME are therefore:1. SME differ from large corporations in many characteristics2. The existing research lacks a focus on risk management in SMEThe following research question will be central to this work:1.how can SME manage their internal financial risk?2.Which aspects, based on their characteristics, have to be taken into account for this?3.Which mean fulfils the requirements and can be applied to SME?4. LITERATURE REVIEWIn contrast to larger corporations, in SME one of the owners is often part of the management team. His intuition and experience are important for managing the company.Therefore, in small companies, the (owner-) manager is often responsible for many different tasks and important decisions. Most SME do not have the necessary resources to employ specialists on every position in the company. They focus on their core business and have generalists for the administrative functions. Behr and Guttler find that SME on average have equity ratios lower than 20%. The different characteristics of management, position on procurement and capital markets and the legal framework need to be taken into account when applying management instruments like risk management. Therefore the risk management techniques of larger corporations cannot easily be applied to SME.In practice it can therefore be observed that although SME are not facing less risks and uncertainties than largecompanies, their risk management differs from the practices in larger companies. The latter have the resources to employ a risk manager and a professional, structured and standardized risk management system. In contrast to that, risk management in SME differs in the degree of implementation and the techniques applied. Jonen & Simgen-Weber With regard to firm size and the use of risk management. Beyer, Hachmeister & Lampenius observe in a study from 2010 that increasing firm size among SME enhances the use of risk management. This observation matches with the opinion of nearly 10% of SME, which are of the opinion, that risk management is only reasonable in larger corporations. Beyer, Hachmeister & Lampenius find that most of the surveyed SME identify risks with help of statistics, checklists, creativity and scenario analyses. reveals similar findings and state that most companies rely on key figure systems for identifying and evaluating the urgency of business risks. That small firms face higher costs of hedging than larger corporations. This fact is reducing the benefits from hedging and therefore he advises to evaluate the usage of hedging for each firm individually. The lacking expertise to decide about hedges in SME is also identified by Eckbo, According to his findings, smaller companies often lack the understanding and management capacities needed to use those instruments.5. METHODOLOGY5.1. USE OF FINANCIAL ANALYSIS IN SME RISK MANAGEMENTHow financial analysis can be used in SME risk management?5.1.1 Development of financial risk overview for SMEThe following sections show the development of the financial risk overview. After presenting the framework, the different ratios will be discussed to finally presenta selection of suitable ratios and choose appropriate comparison data.5.1.2. Framework for financial risk overviewThe idea is to use a set of ratios in an overview as the basis for the financial risk management.This provides even more information than the analysis of historical data and allows reacting fast on critical developments and managing the identified risks. However not only the internal data can be used for the risk management. In additionto that also the information available in the papers can be used.Some of them state average values for the defaulted or bankrupt companies one year prior bankruptcy -and few papers also for a longer time horizon. Those values can be used as a comparison value to evaluate the risk situation of the company. For this an appropriate set of ratios has to be chosen.The ratios, which will be included in the overview and analysis sheet, should fulfill two main requirements. First of all they should match the main financial risks of the company in order to deliver significant information and not miss an important risk factor. Secondly the ratios need to be relevant in two different ways. On the one hand they should be applicable independently of other ratios. This means that they also deliver useful information when not used in a regression, as it is applied in many of the papers. On the other hand to be appropriate to use them, the ratios need to show a different development for healthy companies than for those under financial distress. The difference between the values of the two groups should be large enough to see into which the observed company belongs.5.1.3. Evaluation of ratios for financial risk overviewWhen choosing ratios from the different categories, it needs to be evaluated which ones are the most appropriate ones. For this some comparison values are needed in order to see whether the ratios show different values and developments for the two groups of companies. The most convenient source for the comparison values are the research papers as their values are based on large samples of annual reports and by providing average values outweigh outliers in the data. Altman shows a table with the values for 8 different ratios for the five years prior bankruptcy of which he uses 5, while Porporato & Sandin use 13 ratios in their model and Ohlson bases his evaluation on 9 figures and ratios [10]. Khong, Ong & Yap and Cerovac & Ivicic also show the difference in ratios between the two groups, however only directly before bankruptcy and not as a development over time [9]. Therefore this information is not as valuable as the others ([4][15]).In summary, the main internal financial risks in a SME should be covered by financial structure, liquidity and profitability ratios, which are the main categories ofratios applied in the research papers.Financial structureA ratio used in many of the papers is the total debt to total assets ratio, analyzing the financial structure of the company. Next to the papers of Altman, Ohlson and Porporato & Sandin also Khong, Ong & Yap and Cerovac & Ivicic show comparison values for this ratio. Those demonstrate a huge difference in size between the bankrupt and non-bankrupt groups.Figure 1: Development of total debt/ total assets ratioData source: Altman (1968), Porporato & Sandin (2007) and Ohlson (1980), author’s illustrationTherefore the information of total debt/total assets is more reliable and should rather be used for the overview. The other ratios analyzing the financial structure are only used in one of the papers and except for one the reference data only covers the last year before bankruptcy. Therefore a time trend cannot be detected and their relevance cannot be approved.Cost of debtThe costs of debt are another aspect of the financing risk. Porporato & Sandin use the variable interest payments/EBIT for measuring the debt costs. The variable shows how much of the income before tax and interest is spend to finance the debt. This variable also shows a clear trend when firms approach bankruptcy.LiquidityThe ratio used in all five papers to measure liquidity is the current ratio, showingthe relation between current liabilities and current assets (with slight differences in the definition). Instead of the current ratio, a liquidity ratio setting the difference between current assets and current liabilities, also defined as working capital, into relation with total assets could be used.Figure 2: Development of working capital / total assets ratioData source: Altman (1968) and Ohlson (1980); author’s illustratioBasically the ratio says whether the firm would be able to pay back all its’ current liabilities by using its’ current assets. In case it is not able to, which is wh en the liabilities exceed the assets, there is an insolvency risk.6. CRITICAL REVIEW AND CONCLUSIONWhen doing business, constantly decisions have to be made, whose outcome is not certain and thus connected with risk. In order to successfully cope with this uncertainty, corporate risk management is necessary in a business environment, which is influenced by market frictions. Different approaches and methods can be found for applying such a risk management. However, those mainly focus on large corporations, though they are the minority of all companies[13].Furthermore the approaches often require the use of statistical software and expert knowledge, which is most often not available in SME. They and their requirements for risk management have mainly been neglected [17][13].This also includes the internal financial risk management, which was in the focus of this paper. Due to the existing risks in SME and their differences to larger corporations as well as the lack of suitable risk management suggestions in theory, there is a need for a suggestion for a financial risk management in SME. Theaim was to find a possible mean for the risk identification, analysis and monitoring, which can be applied by SME to manage their internal financial risks. For this purpose the financial analysis, which has been used in research to identify indicators for firm bankruptcy, was chosen. Based on an examination and analysis of different papers, despite of their different models, many similarities in the applied ratios could be identified. In general the papers focus on three categories of risk, namely liquidity, profitability and solvency, which are in accordance to the main internal financial risks of SME. From the ratios the most appropriate ones with regard to their effectiveness in identifying risks.译文中小企业的财务风险管理奥米德沙利菲1、摘要中小型企业(SME)和大型企业一样，也面临着业务风险，在最糟糕的情况下，可能会导致金融危机，甚至破产。

银行财务风险的外文文献

银行财务风险的外文文献银行财务风险的外文文献：1. Bank Financial Risk Management: A Practical Guide to Managing and Mitigating Financial Risks本书是由银行财务风险管理专家写的一本实践指南，介绍了银行在管理和缓解金融风险方面的具体策略和方法。

包括了市场风险、信用风险、利率风险、流动性风险等方面的内容。

2. Managing Financial Risks: From Global to Local该书是一本汇集了全球各地知名专家的讲座，内容涵盖了银行金融风险的最新研究成果。

从宏观经济风险到信用风险等方面，对银行金融风险管理提供了全面的视角和思路。

3. Financial Risk Manager Handbook该书是由全球金融风险管理协会GARP撰写的指南手册，涵盖了金融风险管理的理论、实践和案例研究。

介绍了金融风险的识别、量化、监控和管理等重要方面。

4. Risk Management and Financial Institutions该书是一本行业标准教材，由两位金融风险管理领域的权威合著，涉及了金融风险定义、评估和管理的关键内容。

书中还包括了现代金融和银行业的最新发展和趋势等方面的内容。

5. Financial Risk: Theory, Evidence and Implications该书是一本由多位学者合著的金融风险研究专著，旨在为银行业和投资机构等金融市场从业者提供有关金融风险识别和管理的理论和实践指南。

通俗易懂的语言介绍了金融市场的基本原则，包括风险、收益、投资组合构建和风险管理等重要方面。

财务风险管理外文翻译英文文献

财务风险管理中英文资料翻译Financial Risk ManagementAlthough financial risk has increased significantly in recent years, risk and risk management are not contemporary issues. The result of increasingly global markets is that risk may originate with events thousands of miles away that have nothing to do with the domestic market. Information is available instantaneously, which means that change, and subsequent market reactions, occur very quickly. The economic climate and markets can be affected very quickly by changes in exchange rates, interest rates, and commodity prices. Counterparties can rapidly become problematic. As a result, it is important to ensure financial risks areidentified and managed appropriately.Preparation is a key component of risk management.What Is Risk?Risk provides the basis for opportunity. The terms risk and exposure have subtle differences in their meaning. Risk refers to the probability of loss,while exposure is the possibility of loss, although they are often used interchangeably. Risk arises as a result of exposure.Exposure to financial markets affects most organizations, either directly or indirectly. When an organization has financial market exposure, there is a possibility of loss but also an opportunity for gain or profit. Financial market exposure may provide strategic or competitive benefits.Risk is the likelihood of losses resulting from events such as changes in market prices. Events with a low probability of occurring, but that may result in a high loss, are particularly troublesome because they are often not anticipated. Put another way, risk is the probable variability of returns.Since it is not always possible or desirable to eliminate risk, understanding it is an important step in determining how to manage it. Identifying exposures and risks forms the basis for an appropriate financial risk management strategy.How Does Financial Risk?Financial risk arises through countless transactions of a financial nature,including sales and purchases, investments and loans, and various other businessactivities. It can arise as a result of legal transactions, new projects, mergers andacquisitions, debt financing, the energy component of costs, or through the activitiesof management, stakeholders, competitors, foreign governments, or weather. When financial prices change dramatically, it can increase costs, reduce revenues,orotherwise adversely impact the profitability of an organization. Financial fluctuationsmay make it more difficult to plan and budget, price goods and services, and allocatecapital.There are three main sources of financialrisk:1. Financial risks arising from an organization ' s expionsmuraerktoetcphrai cnegse,ssuch as interest rates, exchange rates, and commodityprices.2. Financial risks arising from the actions of, and transactions with, other organizations such as vendors, customers, and counterparties in derivatives transactions3. Financial risks resulting from internal actions or failures of the organization,particularly people, processes, andsystemsWhat Is Financial Risk Management?Financial risk management is a process to deal with the uncertaintiesresultingfrom financial markets. It involves assessing the financial risks facing an organizationand developing management strategies consistent with internal priorities and policies.Addressing financial risks proactively may provide an organization with a competitiveadvantage.It also ensures that management,operational staff, stakeholders, and theboard of directors are in agreement on key issues ofrisk.Managing financial risk necessitates making organizational decisions about risksthat are acceptable versus those that are not. The passive strategy of taking no actionis the acceptance of all risks bydefault.Organizations manage financial risk using a variety of strategies andproducts. Itis important to understand how these products and strategies work to reduceriskwithin the context of the organization toleran'ces arinskdobjectives.Strategies for risk management often involve derivatives. Derivatives are traded widely among financial institutions and on organized exchanges. The value of derivatives contracts, such as futures, forwards, options, and swaps, is derived from the price of the underlying asset. Derivatives trade on interest rates, exchange rates, commodities, equity and fixed income securities, credit, and even weather.The products and strategies used by market participants to manage financial risk are the same ones used by speculators to increase leverage and risk. Although it can be argued that widespread use of derivatives increases risk, the existence of derivatives enables those who wish to reduce risk to pass it along to those who seek risk and its associated opportunities.The ability to estimate the likelihood of a financial loss is highly desirable.However, standard theories of probability often fail in the analysis of financial markets. Risks usually do not exist in isolation, and the interactions of several exposures may have to be considered in developing an understanding of how financial risk arises. Sometimes, these interactions are difficult to forecast, since they ultimately depend on human behavior.The process of financial risk management is an ongoing one. Strategies need to be implemented and refined as the market and requirements change. Refinements may reflect changing expectations about market rates, changes to the business environment, or changing international political conditions, for example. In general, the process can be summarized as follows: 1、Identify and prioritize key financial risks.2、Determine an appropriate level of risk tolerance.3、Implement risk management strategy in accordance with policy.4、Measure, report, monitor, and refine as needed.DiversificationFor many years, the riskiness of an asset was assessedbased only on the variability of its returns. In contrast, modern portfolio theory considers not only an asset ' s riskiness, but also its contributiotno the overall riskiness of the portfolio towhich it is added. Organizations may have an opportunity to reduce risk as aresult of risk diversification.In portfolio management terms, the addition of individual components to a portfolio provides opportunities for diversification, within limits. A diversified portfolio contains assets whose returns are dissimilar, in other words, weakly or negatively correlated with one another. It is useful to think of the exposures of an organization as a portfolio and consider the impact of changes or additions on the potential risk of the total.Diversification is an important tool in managing financial risks. Diversification among counterparties may reduce the risk that unexpected events adversely impact the organization through defaults. Diversification among investment assetsreduces the magnitude of loss if one issuer fails.Diversification of customers, suppliers, and financing sources reduces the possibility that an organization will have its business adversely affected by changes outside management' csontrol. Although the risk of loss still exists, diversification may reduce the opportunity for large adverse outcomes.Risk Management ProcessThe process of financial risk management comprises strategies that enable an organization to manage the risks associated with financial markets. Risk management is a dynamic process that should evolve with an organization and its business. It involves and impacts many parts of an organization including treasury, sales, marketing, legal, tax, commodity, and corporate finance.The risk management process involves both internal and external analysis. The first part of the process involves identifying and prioritizing the financialrisks facing an organization and understanding their relevance. It may be necessary to examine the organization and its products, management, customers, suppliers, competitors, pricing, industry trends, balance sheet structure, and position in the industry. It is also necessary to consider stakeholders and their objectives and tolerance for risk.Once a clear understanding of the risks emerges, appropriate strategies canbe implemented in conjunction with risk management policy. For example, it might be possible to change where and how business is done, thereby reducing the organization ' s exposure and risk. Alternatively, exisetixnpgosures may be managed with derivatives. Another strategy for managing risk is to accept allrisks and the possibility of losses.There are three broad alternatives for managing risk:1.Do nothing and actively, or passively by default, accept all risks.2.Hedge a portion of exposures by determining which exposures can and should be hedged.3.Hedge all exposures possible.Measurement and reporting of risks provides decision makers with information to execute decisions and monitor outcomes, both before and after strategies are taken to mitigate them. Since the risk management process is ongoing, reportingand feedback can be used to refine the system by modifying or improving strategies.An active decision-making process is an important component of risk management.Decisions about potential loss and risk reduction provide a forum for discussion of important issues and the varying perspectives of stakeholders.Factors that Impact Financial Rates and PricesFinancial rates and prices are affected by a number of factors. It is essential to understand the factors that impact markets because those factors, in turn, impact the potential risk of an organization.Factors that Affect Interest RatesInterest rates are a key component in many market prices and an important economic barometer. They are comprised of the real rate plus a component for expected inflation, since inflation reduces the purchasing power of a lender ' s assets .The greater the term to maturity, the greater the uncertainty. Interest rates are also reflective of supply and demand for funds and credit risk.Interest rates are particularly important to companies and governments because they are the key ingredient in the cost of capital. Most companies and governments require debt financing for expansion and capital projects. When interest rates increase, the impact can be significant on borrowers. Interest rates also affect prices in otherfinancial markets, so their impact is far-reaching.Other components to the interest rate may include a risk premium to reflect the creditworthiness of a borrower. For example, the threat of political or sovereign risk can cause interest rates to rise, sometimes substantially, as investors demand additional compensation for the increased risk of default.Factors that influence the level of market interest rates include: 1、Expected levels of inflation 2、General economic conditions 3、Monetary policy and the stance of the central bank 4、Foreign exchange market activity 5、Foreign investor demand for debt securities 6、Levels of sovereign debt outstanding 7、Financial and political stabilityYield CurveThe yield curve is a graphical representation of yields for a range of terms to maturity. For example, a yield curve might illustrate yields for maturity from one day (overnight) to 30-year terms. Typically, the rates are zero coupon government rates.Since current interest rates reflect expectations, the yield curve providesuseful 's expectations oinf tfeurteusret rates. Implied interest rates for forward-starting terms can be calculated using the information in the yieldcurve. For example, using rates for one- and two-year maturities, the expected one-year interestrate beginning in one year The shape of the yield curve is widely analyzed and monitored by marketparticipants. As a gauge of expectations, it is often considered to be a predictor of future economic activity and may provide signals of a pending change in economic fundamentals.The yield curve normally slopes upward with a positive slope, aslenders/investors demand higher rates from borrowers for longer lending terms. Since the chance of a borrower default increases with term to maturity, lenders demand to be compensated accordingly.Interest rates that make up the yield curve are also affected by the expected rate of inflation. Investors demand at least the expected rate of inflation from borrowers, in addition to lending and risk components. If investors expect future inflation to be higher, they will demand greater premiums for longer terms to compensatefor this uncertainty. As a result, the longer the term, the higher the interest rate (all else being equal), resulting in an upward-sloping yield curve.Occasionally, the demand for short-term funds increases substantially, and short-term interest rates may rise above the level of longer term interest rates. This results in an inversion of the yield curve and a downward slope to its appearance. The high cost of short-term funds detracts from gains that would otherwise be obtained through investment and expansion and make the economy vulnerable to slowdown or recession. Eventually, rising interest rates slow the demand for both short-term and long-term funds. A decline in all rates and a return to a normal curve may occur as a result of the slowdown.information about the markets time can be determined.Source: Karen A. Horcher, 2005.“ What Is Financial RiskManagement?”. Essentialsof Financial Risk Management, John Wiley & Sons, Inc.pp.1-22.财务风险管理尽管近年来金融风险大大增加，但风险和风险管理不是当代的主要问题。

外文文献及中文翻译_财务风险的重要性How Important is Financial Risk_

How Important is Financial Risk?IntroductionThe financial crisis of 2008 has brought significant attention to the effects of financial leverage. There is no doubt that the high levels of debt financing by financial institutions and households significantly contributed to the crisis. Indeed, evidence indicates that excessive leverage orchestrated by major global banks (e.g., through the mortgage lending and collateralized debt obligations) and the so-called “shadow banking system” may be the underlying cau se of the recent economic and financial dislocation. Less obvious is the role of financial leverage among nonfinancial firms. To date, problems in the U.S. non-financial sector have been minor compared to the distress in the financial sector despite the seizing of capital markets during the crisis. For example, non-financial bankruptcies have been limited given that the economic decline is the largest since the great depression of the 1930s. In fact, bankruptcy filings of non-financial firms have occurred mostly in U.S. industries (e.g., automotive manufacturing, newspapers, and real estate) that faced fundamental economic pressures prior to the financial crisis. This surprising fact begs the question, “How important is financial risk for non-financial firms?” At the heart of this issue is the uncertainty about the determinants of total firm risk as well as components of firm risk.StudyRecent academic research in both asset pricing and corporate finance has rekindled an interest in analyzing equity price risk. A current strand of the asset pricing literature examines the finding of Campbell et al. (2001) that firm-specific (idiosyncratic) risk has tended to increase over the last 40 years. Other work suggests that idiosyncratic risk may be a priced risk factor (see Goyal and Santa-Clara, 2003, among others). Also related to these studies is work by Pástor and Veronesi (2003) showing how investor uncertainty about firm profitability is an important determinant of idiosyncratic risk and firm value. Other research has examined the role of equity volatility in bond pricing (e.g., Dichev, 1998, Campbell, Hilscher, and Szilagyi, 2008).However, much of the empirical work examining equity price risk takes the risk of assets as given or tries to explain the trend in idiosyncratic risk. In contrast, thispaper takes a different tack in the investigation of equity price risk. First, we seek to understand the determinants of equity price risk at the firm level by considering total risk as the product of risks inherent in the firms operations (i.e., economic or business risks) and risks associated with financing the firms operations (i.e., financial risks). Second, we attempt to assess the relative importance of economic and financial risks and the implications for financial policy.Early research by Modigliani and Miller (1958) suggests that financial policy may be largely irrelevant for firm value because investors can replicate many financial decisions by the firm at a low cost (i.e., via homemade leverage) and well-functioning capital markets should be able to distinguish between financial and economic distress. Nonetheless, financial policies, such as adding debt to the capital structure, can magnify the risk of equity. In contrast, recent research on corporate risk management suggests that firms may also be able to reduce risks and increase value with financial policies such as hedging with financial derivatives. However, this research is often motivated by substantial deadweight costs associated with financial distress or other market imperfections associated with financial leverage. Empirical research provides conflicting accounts of how costly financial distress can be for a typical publicly traded firm.We attempt to directly address the roles of economic and financial risk by examining determinants of total firm risk. In our analysis we utilize a large sample of non-financial firms in the United States. Our goal of identifying the most important determinants of equity price risk (volatility) relies on viewing financial policy as transforming asset volatility into equity volatility via financial leverage. Thus, throughout the paper, we consider financial leverage as the wedge between asset volatility and equity volatility. For example, in a static setting, debt provides financial leverage that magnifies operating cash flow volatility. Because financial policy is determined by owners (and managers), we are careful to examine the effects of firms’ asset and operating characteristics on financial policy. Specifically, we examine a variety of characteristics suggested by previous research and, as clearly as possible, distinguish between those associated with the operations of the company (i.e. factors determining economic risk) and those associated with financing the firm (i.e. factors determining financial risk). We then allow economic risk to be a determinant of financial policy in the structural framework of Leland and Toft (1996), or alternatively,in a reduced form model of financial leverage. An advantage of the structural model approach is that we are able to account for both the possibility of financial and operating implications of some factors (e.g., dividends), as well as the endogenous nature of the bankruptcy decision and financial policy in general.Our proxy for firm risk is the volatility of common stock returns derived from calculating the standard deviation of daily equity returns. Our proxies for economic risk are designed to capture the essential characteristics of the firms’ operations and assets that determine the cash flow generating process for the firm. For example, firm size and age provide measures of line of- business maturity; tangible assets (plant, property, and equipment) serve as a proxy for the ‘hardness’ of a firm’s assets; capital expenditures measure capital intensity as well as growth potential. Operating profitability and operating profit volatility serve as measures of the timeliness and riskiness of cash flows. To understand how financial factors affect firm risk, we examine total debt, debt maturity, dividend payouts, and holdings of cash and short-term investments.The primary result of our analysis is surprising: factors determining economic risk for a typical company explain the vast majority of the variation in equity volatility. Correspondingly, measures of implied financial leverage are much lower than observed debt ratios. Specifically, in our sample covering 1964-2008 average actual net financial (market) leverage is about 1.50 compared to our estimates of between 1.03 and 1.11 (depending on model specification and estimation technique). This suggests that firms may undertake other financial policies to manage financial risk and thus lower effective leverage to nearly negligible levels. These policies might include dynamically adjusting financial variables such as debt levels, debt maturity, or cash holdings (see, for example, Acharya, Almeida, and Campello, 2007). In addition, many firms also utilize explicit financial risk management techniques such as the use of financial derivatives, contractual arrangements with investors (e.g. lines of credit, call provisions in debt contracts, or contingencies in supplier contracts), special purpose vehicles (SPVs), or other alternative risk transfer techniques.The effects of our economic risk factors on equity volatility are generally highly statistically significant, with predicted signs. In addition, the magnitudes of the effects are substantial. We find that volatility of equity decreases with the size and age of the firm. This is intuitive since large and mature firms typically have more stable lines ofbusiness, which should be reflected in the volatility of equity returns. Equity volatility tends to decrease with capital expenditures though the effect is weak. Consistent with the predictions of Pástor and Veronesi (2003), we find that firms with higher profitability and lower profit volatility have lower equity volatility. This suggests that companies with higher and more stable operating cash flows are less likely to go bankrupt, and therefore are potentially less risky. Among economic risk variables, the effects of firm size, profit volatility, and dividend policy on equity volatility stand out. Unlike some previous studies, our careful treatment of the endogeneity of financial policy confirms that leverage increases total firm risk. Otherwise, financial risk factors are not reliably related to total risk.Given the large literature on financial policy, it is no surprise that financial variables are,at least in part, determined by the economic risks firms take. However, some of the specific findings are unexpected. For example, in a simple model of capital structure, dividend payouts should increase financial leverage since they represent an outflow of cash from the firm (i.e., increase net debt). We find that dividends are associated with lower risk. This suggests that paying dividends is not as much a product of financial policy as a characteristic of a firm’s operations(e.g., a mature company with limited growth opportunities). We also estimate how sensitivities to different risk factors have changed over time. Our results indicate that most relations are fairly stable. One exception is firm age which prior to 1983 tends to be positively related to risk and has since been consistently negatively related to risk. This is related to findings by Brown and Kapadia (2007) that recent trends in idiosyncratic risk are related to stock listings by younger and riskier firms.Perhaps the most interesting result from our analysis is that our measures of implied financial leverage have declined over the last 30 years at the same time that measures of equity price risk (such as idiosyncratic risk) appear to have been increasing. In fact, measures of implied financial leverage from our structural model settle near 1.0 (i.e., no leverage) by the end of our sample. There are several possible reasons for this. First, total debt ratios for non-financial firms have declined steadily over the last 30 years, so our measure of implied leverage should also decline. Second, firms have significantly increased cash holdings, so measures of net debt (debt minus cash and short-term investments) have also declined. Third, the composition of publicly traded firms has changed with more risky (especially technology-oriented)firms becoming publicly listed. These firms tend to have less debt in their capital structure. Fourth, as mentioned above, firms can undertake a variety of financial risk management activities. To the extent that these activities have increased over the last few decades, firms will have become less exposed to financial risk factors.We conduct some additional tests to provide a reality check of our results. First, we repeat our analysis with a reduced form model that imposes minimum structural rigidity on our estimation and find very similar results. This indicates that our results are unlikely to be driven by model misspecification. We also compare our results with trends in aggregate debt levels for all U.S. non-financial firms and find evidence consistent with our conclusions. Finally, we look at characteristics of publicly traded non-financial firms that file for bankruptcy around the last three recessions and find evidence suggesting that these firms are increasingly being affected by economic distress as opposed to financial distress.ConclusionIn short, our results suggest that, as a practical matter, residual financial risk is now relatively unimportant for the typical U.S. firm. This raises questions about the level of expected financial distress costs since the probability of financial distress is likely to be lower than commonly thought for most companies. For example, our results suggest that estimates of the level of systematic risk in bond pricing may be biased if they do not take into account the trend in implied financial leverage (e.g., Dichev, 1998). Our results also bring into question the appropriateness of financial models used to estimate default probabilities, since financial policies that may be difficult to observe appear to significantly reduce risk. Lastly, our results imply that the fundamental risks born by shareholders are primarily related to underlying economic risks which should lead to a relatively efficient allocation of capital.Some readers may be tempted to interpret our results as indicating that financial risk does not matter. This is not the proper interpretation. Instead, our results suggest that firms are able to manage financial risk so that the resulting exposure to shareholders is low compared to economic risks. Of course, financial risk is important to firms that choose to take on such risks either through high debt levels or a lack of risk management. In contrast, our study suggests that the typical non-financial firm chooses not to take these risks. In short, gross financial risk may be important, but firms can manage it. This contrasts with fundamental economic and business risks thatare more difficult (or undesirable) to hedge because they represent the mechanism by which the firm earns economic profits.References[1]Shyam,Sunder.Theory Accounting and Control[J].An Innternational Theory on PublishingComPany.2005[2]Ogryezak,W,Ruszeznski,A. Rom Stomchastic Dominance to Mean-Risk Models:Semide-Viations as Risk Measures[J].European Journal of Operational Research.[3] Borowski, D.M., and P.J. Elmer. An Expert System Approach to Financial Analysis: the Case of S&L Bankruptcy [J].Financial Management, Autumn.2004;[4] Casey, C.and N. Bartczak. Using Operating Cash Flow Data to Predict Financial Distress: Some Extensions[J]. Journal of Accounting Research,Spring.2005;[5] John M.Mulvey,HafizeGErkan.Applying CVaR for decentralized risk management of financialcompanies[J].Journal of Banking&Finanee.2006;[6] Altman. Credit Rating:Methodologies,Rationale and Default Risk[M]．Risk Books,London.译文：财务风险的重要性引言2008年的金融危机对金融杠杆的作用产生重大影响。

中小企业的财务风险管理外文文献翻译2014年译文3000字

中小企业的财务风险管理外文文献翻译2014年译文3000字Financial Risk Management for Small and Medium-Sized Enterprises (SMEs)Financial risk management is an essential aspect of business management。

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公司财务风险中英文对照外文翻译文献

中英文资料外文翻译外文资料Financial ﬁrm bankruptcy and systemic riskIn Fall 2008 when the Federal Reserve and the Treasury injected $85 billion into the insurance behemoth American International Group (AIG), themoney lent to AIGwent straight to counterparties, and very few funds remained with the insurer. Among the largest recipients was Goldman Sachs, to whomabout $12 billionwas paid to undoAIG’s credit default swaps (CDSs). The bailout plan focused on repaying the debt by slowly selling off AIG’s assets, w ith no intention of maintaining jobs or allowing the CDSmarket to continue to function as before. Thus, the government’s effort to avoid systemic risk with AIG was mainly about ensuring that ﬁrms with which AIG had done business did not fail as a result. T he concerns are obviously greatest vis-a-vis CDSs, ofwhich AIG had over $400 billion contracts outstanding in June 2008.In contrast, the government was much less enthusiastic about aiding General Motors, presumably because they believed its failure would not cause major macroeconomic repercussions by imposing losses on related ﬁrms. This decision is consistent with the view in macroeconomicresearch that financialﬁrmbankruptcies pose a greater amount of systemic risk than nonfinancial firmbankruptcies. For example, Bordo and Haubrich (2009) conclude that “...more severe ﬁnancial events are associated withmore severe recessions...” Likewise, Bernanke (1983) argues the Great Depressionwas so severe because ofweakness in the banking systemthat affected the amount of credit available for investment. Bernanke et al. (1999) hypothesize a financial accelerator mechanism, whereby distress in one sector of the economy leads to more precarious balance sheets and tighter credit conditions. This in turn leads to a drop in investment, which is followed by less lending and a widespread downturn. Were shocks to the economy always to come in the form of distress at nonﬁnancial ﬁrms, these authors argue that the business downturns would not be so severe.We argue instead that the contagious impact of a nonfinancial firm’s bankruptcy is expected to be far larger than that of a financial ﬁrm like AIG, although neither would be catastrophic to the U.S. economy through counterparty risk channels. This is not to say that an episode ofwidespread financial distress among our largest banks would not be followed by an especially severe recession, only that such failures would not cause a recession or affect the depth of a recession. Rather such bankruptcies are symptomatic of common factors in portfolios that lead to wealth losses regardless of whether any firm ﬁles for bankruptcy.Pervasive ﬁnancial fragility may occur because the failure of one ﬁrm leads to the failure of other ﬁrms which cascades through the system (e.g., Davis and Lo, 1999; Jarrow and Yu, 2001). Or systemic risk may wreak havoc when a number of ﬁnancial ﬁrms fail simultaneously, as in the Great Depression when more than 9000 banks failed (Benston, 1986). In the former case, the failure of one ﬁrm, such as AIG, Lehman Brothers or Bear Stearns, could lead to widespread failure through ﬁnancial contracts such as CDSs. In the latter case, the fact that so many ﬁnancial institutions have failed means that both the money supply and the amount of credit in the economy could fall so far as to cause a large drop in economic activity (Friedman and Schwartz, 1971).While a weak ﬁnancial systemcould cause a recession, the recession would not arise because one ﬁrm was allowed to ﬁle bankruptcy. Further, should one or the other ﬁrmgo bankrupt, the nonﬁnancial ﬁrmwould have the greater impact on the economy.Such extreme real effects that appear to be the result of ﬁnancial ﬁrm fragility have led to a large emphasis on the prevention of systemic risk problems by regulators. Foremost amo ng these policies is “too big to fail” (TBTF), the logic of which is that the failure of a large ﬁnancial institution will have ramifications for other ﬁnancial institutions and therefore the risk to the economywould be enormous. TBTF was behind the Fed’s decisions to orchestrate the merger of Bear Stearns and J.P.Morgan Chase in 2008, its leadership in the restructuring of bank loans owed by Long Term Capital Management (LTCM), and its decision to prop up AIG. TBTF may be justiﬁed if the outcome is preven tion of a major downswing in the economy. However, if the systemic risks in these episodes have been exaggerated or the salutary effects of these actions overestimated, then the cost to the efﬁciency of the capital allocation system may far outweigh any po tential beneﬁts from attempting to avoid another Great Depression.No doubt, no regulator wants to take the chance of standing down while watching over another systemic risk crisis, sowe do not have the ability to examine empiricallywhat happens to the economy when regulators back off. There are very fewinstances in themodern history of the U.S.where regulators allowed the bankruptcy of amajor ﬁnancial ﬁrm.Most recently,we can point to the bankruptcy of Lehman,which the Fed pointedly allowed to fail.However,with only one obvious casewhere TBTFwas abandoned, we have only an inkling of how TBTF policy affects systemic risk. Moreover, at the same time that Lehman failed, the Fed was intervening in the commercial paper market and aiding money marketmutual fundswhile AIGwas downgraded and subsequently bailed out. In addition, the Federal Reserve and the Treasury were scaremongering about the prospects of a second Great Depression to make the passage of TARPmore likely. Thuswewill never knowifthemarket downturn th at followed the Lehman bankruptcy reﬂected fear of contagion from Lehman to the real economy or fear of the depths of existing problems in the real economy that were highlighted so dramatically by regulators.In this paper we analyze the mechanisms by which such risk could cause an economy-wide col-lapse.We focus on two types of contagion that might lead to systemic risk problems: (1) information contagion,where the information that one ﬁnancial ﬁrmis troubled is associatedwith negative shocksat other ﬁnanc ial institutions largely because the ﬁrms share common risk factors; or (2) counterparty contagion,where one important ﬁnancial institution’s collapse leads directly to troubles at other cred-itor ﬁrms whose troubles snowball and drive other ﬁrms into distress. The efﬁcacy of TBTF policies depends crucially on which of these two types of systemic riskmechanisms dominates.Counterparty contagion may warrant intervention in individual bank failureswhile information contagion does not.If regulators do not ste p in to bail out an individual ﬁrm, the alternative is to let it fail. In the case of a bank, the process involves the FDIC as receiver and the insured liabilities of the ﬁrmare very quickly repaid. In contrast, the failure of an investment bank or hedge fund does not involve the FDIC andmay closely resemble a Chapter 11 or Chapter 7 ﬁling of a nonﬁnancial ﬁrm. However, if the nonbank ﬁnancial ﬁrm inquestion has liabilities that are covered by the Securities Industry Protection Corporation (SIPC), the ﬁrmi s required by lawunder the Securities Industry Protection Act (SIPA) to liquidate under Chapter 7 (Don and Wang, 1990). This explains in large partwhy only the holding company of Lehman ﬁled for bankruptcy in 2008 and its broker–dealer subsidiaries were n ot part of the Chapter 11 ﬁling.A major fear of a ﬁnancial ﬁrm liquidation, whether done through the FDIC or as required by SIPA, is that ﬁre sales will depress recoveries for the creditors of the failed ﬁnancial ﬁrm and that these ﬁre saleswill have ramiﬁcations for other ﬁrms in related businesses, even if these businesses do not have direct ties to the failed ﬁrm (Shleifer and Vishny, 1992). This fear was behind the Fed’s decision to extend liquidity to primary dealers inMarch 2008 – Fed Chairman Bernanke explained in a speech on ﬁnancial system stability that“the risk developed that liquidity pressuresmight force dealers to sell assets into already illiquid markets. Thismight have resulted in...[a] ﬁre sale scenario..., inwhich a cascade of failures andliquidations sharply depresses asset prices, with adverse ﬁnancial and economic implications.”(May 13, 2008 speech at the Federal Reserve Bank of Atlanta conference at Sea Island, Georgia) The fear of potential ﬁre sales is expressed in further detail in t he same speech as a reason for the merger of Bear Stearns and JP Morgan:“Bear...would be forced to ﬁle for bankruptcy...[which] wouldhave forced Bear’s secured creditors and counterparties to liquidate the underlying collateral and, given the illiquidity of markets, those creditors and counter parties might well have sustained losses. If they responded to losses or the unexpected illiquidity of their holdings by pulling back from providing secured ﬁnancing to other ﬁrms, a much broader liquidity crisis wou ld have ensued.”The idea that creditors of a failed ﬁrm are forced to liquidate assets, and to do so with haste, is counter to the basic tenets of U.S. bankruptcy laws, which are set up to allow creditors the ability to maximize the value of the assets now under their control. If that value is greatest when continuing to operate, the laws allow such a reorganization of the ﬁrm. If the value in liquidation is higher, the laws are in no way prejudiced against selling assets in an orderly procedure. Bankruptcy actually reduces the likelihood of ﬁre sales because assets are not sold quickly once a bankruptcy ﬁling occurs. Cash does not leave the bankrupt firm without the approval of a judge.Without pressure to pay debts, the ﬁrm can remain in bankruptcy for months as it tries to decide on the best course of action. Indeed, a major complaint about the U.S. code is that debtors can easily delay reorganizing and slow down the process.If, however, creditors and management believe that speedy assets sales are in their best interest, then they can press the bankruptcy judge to approve quick action. This occurred in the case of Lehman’s asset sale to Barclays,which involved hiring workers whomight have split up were their divisions not sold quickly.金融公司破产及系统性的风险2008年秋，当美联邦储备委员会和财政部拒绝85亿美金巨资保险投入到美国国际集团时，这边借给美国国际集团的货款就直接落到了竞争对手手里，而投保人只得到极少的一部分资金。

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 ReviewAbstractThe 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. IntroductionRisk 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 explorethe most recent advances and research in the field of EFRM to providea comprehensive understanding of the current state of the field.2. Need for EFRMFinancial 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 FrameworksThe 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,commodities, and interest rates. On the other hand, operational risks are the risks associated with the operations of the enterprise. These risks involve internal factors such as personnel, policies, and procedures.Once the financial risks have been identified, the enterprise should develop a risk management strategy and goals that cover the different types of risks. Different risk management tools and techniques can be used to address these risks. These tools and techniques include the use of financial analysis, financial simulation, portfolio management, financial derivatives, and enterprise risk management systems (ERM). Additionally, regulations and compliance must be taken into account when devising a risk management framework.4. Regulations and ToolsAnother important aspect of EFRM is the application of regulations. The enterprise should ensure compliance with all applicable regulators and laws and should develop a comprehensive risk management system that adheres to all the relevant laws and regulations. Furthermore, enterprise risk management systems (ERM) have become increasingly important in the management of financial risks. ERM systems are computer-based systems that allow enterprises to manage their financial risks in an efficient and integrated manner. These systems provide support in forecasting, reporting, and decision-making.5. Recent Research EffortsOver the past few years, there has been an increasing number of research studies in the field of EFRM. Some of the recent research efforts include the development of models for financial forecasts, the assessment of ERM systems, the design of financial derivatives and structured products, and the application of artificial intelligence and machine learning in financial forecasting. Further research is needed to identify new techniques and approaches that can be used to improve the effectiveness of the EFRM systems.6.ConclusionIn conclusion, effective EFRM is essential for a successful enterprise due to the increasing complexity of the global business environment. Risk management tools, techniques, and regulations must be applied to address the different types of financial risks. Additionally, research efforts in the field of EFRM are continuously increasing, and it is important to keep up to date with the latest developments.。

中小企业的财务风险管理外文文献翻译2014年译文3000字

文献出处：Sharifi, Omid. International Journal of Information, Business and Management 6.2 (May 2014): 82-94.2014年，最新文献翻译，译文3000多字原文Financial Risk Management for Small and Medium SizedEnterprises(SMES)Omid SharifiMBA, Department of Commerce and Business Management,Kakatiya University, House No. 2-1-664, Sarawathi negar,Gopalpur, Hanamakonda, A.P., IndiaE-Mail: **********************, Phone: 0091- 8808173339RESEARCH QUESTIONRisk and economic activity are inseparable. Every business decision and entrepreneurial act is connected with risk. This applies also to business of small and medium sized enterprises as they are also facing several and often the same risks as bigger companies. In a real business environment with market imperfections they need to manage those risks in order to secure their business continuity and add additional value by avoiding or reducing transaction costs and cost of financial distress or bankruptcy. However, risk management is a challenge for most SME. In contrast to larger companies they often lack the necessary resources, with regard to manpower, databases and specialty of knowledge to perform a standardized and structured risk management. The result is that many smaller companies do not perform sufficient analysis to identify their risk. This aspect is exacerbated due to a lack in literature about methods for risk management in SME, as stated by Henschel: The two challenging aspects with regard to risk management in SME are therefore:1. SME differ from large corporations in many characteristics2. The existing research lacks a focus on risk management in SMEThe following research question will be central to this work:1.how can SME manage their internal financial risk?2.Which aspects, based on their characteristics, have to be taken into account for this?3.Which mean fulfils the requirements and can be applied to SME? LITERATURE REVIEWIn contrast to larger corporations, in SME one of the owners is often part of the management team. His intuition and experience are important for managing the company.Therefore, in small companies, the (owner-) manager is often responsible for many different tasks and important decisions. Most SME do not have the necessary resources to employ specialists on every position in the company. They focus on their core business and have generalists for the administrative functions. Behr and Guttler find that SME on average have equity ratios lower than 20%. The different characteristics of management, position on procurement and capital markets and the legal framework need to be taken into account when applying management instruments like risk management. Therefore the risk management techniques of larger corporations cannot easily be applied to SME.In practice it can therefore be observed that although SME are not facing less risks and uncertainties than large companies, their risk management differs from the practices in larger companies. The latter have the resources to employ a risk manager and a professional, structured and standardized risk management system. In contrast to that, risk management in SME differs in the degree of implementation and the techniques applied. Jonen & Simgen-Weber With regard to firm size and the use of risk management. Beyer, Hachmeister & Lampenius observe in a study from 2010 that increasing firm size among SME enhances the use of risk management. This observation matches with the opinion of nearly 10% of SME, which are of the opinion, that risk management is only reasonable in larger corporations. Beyer,Hachmeister & Lampenius find that most of the surveyed SME identify risks with help of statistics, checklists, creativity and scenario analyses. reveals similar findings and state that most companies rely on key figure systems for identifying and evaluating the urgency of business risks. That small firms face higher costs of hedging than larger corporations. This fact is reducing the benefits from hedging and therefore he advises to evaluate the usage of hedging for each firm individually. The lacking expertise to decide about hedges in SME is also identified by Eckbo, According to his findings, smaller companies often lack the understanding and management capacities needed to use those instruments.METHODOLOGYUSE OF FINANCIAL ANALYSIS IN SME RISK MANAGEMENTHow financial analysis can be used in SME risk management?Development of financial risk overview for SMEThe following sections show the development of the financial risk overview. After presenting the framework, the different ratios will be discussed to finally present a selection of suitable ratios and choose appropriate comparison data. Framework for financial risk overviewThe idea is to use a set of ratios in an overview as the basis for the financial risk management.This provides even more information than the analysis of historical data and allows reacting fast on critical developments and managing the identified risks. However not only the internal data can be used for the risk management. In addition to that also the information available in the papers can be used.Some of them state average values for the defaulted or bankrupt companies one year prior bankruptcy -and few papers also for a longer time horizon. Those values can be used as a comparison value to evaluate the risk situation of the company. For this an appropriate set of ratios has to be chosen.The ratios, which will be included in the overview and analysis sheet, should fulfill two main requirements. First of all they should match the main financial risks of the company in order to deliver significant information and not miss an importantrisk factor. Secondly the ratios need to be relevant in two different ways. On the one hand they should be applicable independently of other ratios. This means that they also deliver useful information when not used in a regression, as it is applied in many of the papers. On the other hand to be appropriate to use them, the ratios need to show a different development for healthy companies than for those under financial distress. The difference between the values of the two groups should be large enough to see into which the observed company belongs.Evaluation of ratios for financial risk overviewWhen choosing ratios from the different categories, it needs to be evaluated which ones are the most appropriate ones. For this some comparison values are needed in order to see whether the ratios show different values and developments for the two groups of companies. The most convenient source for the comparison values are the research papers as their values are based on large samples of annual reports and by providing average values outweigh outliers in the data. Altman shows a table with the values for 8 different ratios for the five years prior bankruptcy of which he uses 5, while Porporato & Sandin use 13 ratios in their model and Ohlson bases his evaluation on 9 figures and ratios [10]. Khong, Ong & Yap and Cerovac & Ivicic also show the difference in ratios between the two groups, however only directly before bankruptcy and not as a development over time [9]. Therefore this information is not as valuable as the others ([4][15]).In summary, the main internal financial risks in a SME should be covered by financial structure, liquidity and profitability ratios, which are the main categories of ratios applied in the research papers.Financial structureA ratio used in many of the papers is the total debt to total assets ratio, analyzing the financial structure of the company. Next to the papers of Altman, Ohlson and Porporato & Sandin also Khong, Ong & Yap and Cerovac & Ivicic show comparison values for this ratio. Those demonstrate a huge difference in size between the bankrupt and non-bankrupt groups.Figure 1: Development of total debt/ total assets ratioData source: Altman (1968), Porporato & Sandin (2007) and Ohlson (1980), author’s illustrationTherefore the information of total debt/total assets is more reliable and should rather be used for the overview. The other ratios analyzing the financial structure are only used in one of the papers and except for one the reference data only covers the last year before bankruptcy. Therefore a time trend cannot be detected and their relevance cannot be approved.Cost of debtThe costs of debt are another aspect of the financing risk. Porporato & Sandin use the variable interest payments/EBIT for measuring the debt costs. The variable shows how much of the income before tax and interest is spend to finance the debt. This variable also shows a clear trend when firms approach bankruptcy.LiquidityThe ratio used in all five papers to measure liquidity is the current ratio, showing the relation between current liabilities and current assets (with slight differences in the definition). Instead of the current ratio, a liquidity ratio setting the difference between current assets and current liabilities, also defined as working capital, into relation with total assets could be used.Figure 2: Development of working capital / total assets ratioData source: Altman (1968) and Ohlson (1980); author’s illustratioBasically the ratio says whether the firm would be able to pay back all its’ current liabilities by using its’ current assets. In case it is not able to, which is when the liabilities exceed the assets, there is an insolvency risk.ProfitabilityFor measuring the firms’ profitability or productivity a wide range of ratios is used in the different papers. The ratio sales /total assets is used as well by as also Porporato & Sandin (they use total assets / sales, which can easily be transformed to be comparable) and therefore available as a time series.Figure 3: Development of sales / total assets ratioData source: Altman (1968) and Porporato & Sandin (2007), author’s illustratioThe remaining ratios measuring the last period’s profitability are net income / equity, EBIT /debt and net income or EBIT / total assets.The last groups of profitability ratios, which can be found in the literature, are those focusing on retained earnings of the firms. These measures show the cumulated profitability of the firm over time.Retained earnings ratios measure the buffer of funds the company was able to earn over time and which can be used in times of crisis to balance losses.译文中小企业的财务风险管理Omid Sharifi研究问题风险与经济活动是密不可分的。

财务风险管理研究外文文献

THE BUSINESS SCHOOL FOR FINANCIAL MARKETSThe University of ReadingThe Present and Future of Financial Risk ManagementISMA Centre Discussion Papers in Finance 2003-1210 September 2003Carol AlexanderChair of Risk Management and Director of Research ISMA Centre, University of Reading, Whiteknights, P.O. Box 242, Reading RG6 6BA, UKPaper presented at the 1st International Derivatives and Financial Markets ConferenceOrganized by BM&FCampos de Jordao, Brazil, August 20th – 23rd , 2003Copyright 2003 Carol Alexander and BM&F Brazil. All rights reserved.The University of Reading • ISMA Centre • Whiteknights • PO Box 242 • Reading RG6 6BA • UKTel: +44 (0)118 931 8239 • Fax: +44 (0)118 931 4741Email: research@ • Web: Director: Professor Brian Scott-Quinn, ISMA Chair in Investment BankingThe ISMA Centre is supported by the International Securities Market AssociationAbstractAs a result of recent global trends in financial markets, financial institutions face important challenges in their management of risks. In particular, to develop an intelligent way to aggregate risks, and to develop management processes that cover the new types of risks that are becoming increasingly important. These new types of risks include operational, business and systemic risks. We show that current trends towards more accurate and timely assessments of risks could in fact pose a threat to the stability in financi a l markets. The root of this threat is in the homogeneity of both risk assessments and the objectives of risk control. At the level of the economy, heterogeneity in risk modelling (‘risk model risk’) and in the decisions made to control financial risks, are desirable. With this in mind, classical statistical techniques should be less prevalent in both risk assessment and risk control. Currently we are learning much from the quantitative assessment of operational risks, where a Bayesian view is essential. In the future, we welcome the emergence of a Bayesian approach to risk assessment, and a behavioural view of risk management and control.Contacting Author Details:Carol AlexanderISMA Centre, University of Reading, Whiteknights, Box 242, Reading, RG6 6BA,Tel: +44–118–378–6134; fax: +44–118–378–4741.E-mail address: c.alexander@AcknowledgementsI would like to thank Prof. Jose Carlos de Souza Santos of BM&F, Brazil, Dr. Mario Prado of Analitix, Brazil and Leonardo Nogueira of the ISMA Centre for providing the data on Brazilian equities and interest rates. Also many thanks to Anca Dimitriu of the ISMA Centre for optimising the hedge fund models on the Brazilian data, and to the Foundation for Managed Derivatives Research, for the research grant enabling the use of the HFR data set. Finally I would like to thank my husband, Dr. Jacques Pezier, also of the ISMA Centre, for his many insightful comments. Any errors or oversights are, of course, my own.This discussion paper is a preliminary version designed to generate ideas and constructive comment. Please do not circulate or quote without permission. The contents of the paper are presented to the reader in good faith, and neither the author, the ISMA Centre, nor the University, will be held responsible for any losses, financial or otherwise, r esulting from actions taken on the basis of its content. Any persons reading the paper are deemed to have accepted this.I The Present and Future of Risk ManagementAlthough financial risk management has existed as a discipline in its own right for less than 20 years, it is already an enormous subject. A modern day risk manager requires much more than a detailed knowledge of financial markets. Risk assessment in particular has become a statistical science – and art – and model validation requires an understanding of the complex mathematical models that are now used to price financial derivatives. Risk management is a main concern for the front and middle office functions of banks, and is becoming increasingly important for fund managers in the volatile financial markets of today.Given the comprehensive nature of the subject, I have been very selective in the topics covered here. The first part of this paper discusses the global trends in financial markets that have an impact on financial risk management at the level of the firm. I argue that the main challenges that financial institutions now face, as a result of these trends, are:• the proper aggregation of economic capital over all lines of businesses and over the major categories of risks• the development of risk management processes to cover new types of riskThe processes in risk management – identification, assessment, monitoring & reporting, and control – are then examined separately, to envision how these are likely to develop in response to these challenges over the next 10-20 years. More accurate and timely assessments of risks could pose a threat to the stability in financi al markets and we conclude that, at the level of the economy, heterogeneity in the assessment and control of risks is desirable. Consequently we envision the future of risk management as one in which a more ‘holistic’ approach is adopted: where all types o f financial risks are assessed using common risk factors, a common methodology and subjective, as well as objective data; and where the decisions made to control risks reflect the risk tolerance of the whole organisation.I.1 Current Trends in Financial Risk ManagementThree main global trends that can easily be identified in financial markets during the last few decades, and which have been a catalyst for change in risk management practices are: de-regulation of capital flows and financial operations, increasing banking supervision and regulation of firms, and technological advances.a. De-regulation o f Financial Markets: Limits on capital flows and operations have been raised, or removed. Capital flows have increased: for example, under the Bretton-Woods exchange system during the 1950s and 60s the convertibility of some major currencies such as Sterling was strictly limited. Also the scope of financial operations has widened: for example, some banks can now also offer insurance and insurance companies can, to some extent, write market and credit derivatives.b. Increasing Banking Supervision and Regulation: There has been a gradual extension of capital adequacy requirements to cover more types of risks: First credit risks (1988), then market risks (1996) and now operational risks (2004). Before the Basel I Accord in 1988, regulators required only limited reporting of risks and imposed only some simple credit limits. The Basel I Accord introduced the first capital requirements for banks, but the requirements were product based – mainly for loans – with no offsets, netting or market sensitivities. The Basel I Amendment (1996) and the forthcoming Basel 2 Accord (2004) have introduced quantitative measures for capital adequacy that are risk sensitive, but not overly reactive to short term fluctuations.c. Technological Advances: In particular, web and intranet based technology for improved communications, security and management of large databases (through Application Service Provider software), on-line trading, and standardised internet based order management.What are the likely effects of these trends, and what can we deduce about the associated trends in current risk management practices?Risk Aggregation:De-regulation of markets has the effect of grouping all financial services (Insurance, Asset Management, Banking) into ‘Universal’ banks. The convergence of services to these large complex banking groups means that we now need to examine the risks of the organization as a whole. Following regulatory changes, consolidated risk reporting has moved away from ‘product based’ capital requirements to ‘rules based’ capital requirements that may be uniformly applied across all subsidiaries in a large complex group. Also, recent technologicaladvances in firm wide risk management software for consolidated risk reporting now make it easier to take advantage o f new diversification opportunities. But with the need to net risks across the whole enterprise, come aggregation difficulties and reporting ambiguities. In the face of these problems, many large complex groups are now moving towards changing their subsidi aries from independent legal entities to branches that fall under the jurisdiction of the regulator of the head office. This is to avoid any confusion between local and central regulators about the responsibility for regulation, and increases the viability of the proper aggregation of risks.1Increasing Systemic Risk:Systemic risk may be defined as the risk of increased volatility leading to mass insolvencies in the banking and other sectors. Increased capital flows (resulting from the lifting of capital limits, the rapid dissemination of information, the faster transfers of funds, and the increasing popularity of technical trading strategies) are increasing volatility, particularly in equity and commodity markets. Coupled with the trend towards ‘real-time’ risk monitoring, panic reactions now threaten to de-stabilize the whole economy. If all risk managers receive the same signals at the same time, and re-act in a similar fashion, there is a considerable increase in systemic risk.Systemic risk is also affected by the concentration of key services (e.g. custody, or clearing and settlements) in the hands of very few firms. In the event of a crisis (e.g. 9/11, or a computer virus) an essential activity could be gravely affected, with catastrophic consequences. Primarily, this concentration of services is a result of greater competition, but increasing regulation of banking activities, and technological advances have also played an important role: until recently, some services such as agency and custody services, attracted no regulatory capital charges, but under the new Basel Accord this will change. When capital charges are imposed for these services, the best economic solution may be to out-source the service.Increasing Operational Risks:Operational risks have increased because of our increased reliance on technology, and to some extent because of the concentration of key services, and key individuals, in a few geographical locations. The increased complexity of financial instruments, with banks now1 If subsidiaries have to meet capital requirements on a solo basis, they must physically hold the necessary capital. Suppose risk is aggregated using correlations; then the total capital that must be held in the group that is sufficient to cover the firm-wide minimum capital can be much less than the sum of the capital in the subsidiaries.offering highly structured products having access to wide range of asset classes across the world, has also influenced several types of operational risks.With more complex instruments there is much less transparency in the trading, and an increase in: IT & systems risks because of the reliance on new and complex systems; products and business practice risks because of the danger of mis-pricing and mis-selling these products;and ‘human’ risks in general because now only a few experienced people understand the systems and the products.Increasing Business Risks:Business risk may be defined as the risk of insolvency due to inappropriate management decisions or external factors. Dis-intermediation has had a significant impact on business risk. Rather than relying on a bank for loans, many large companies now favour the direct insurance of debt by issuing bonds and equity. As the demand for loans declines but the need for corporate finance increases, banks now rely more on flow business – fees and commissions on services – for their income. This dis-intermediation has the effect of reducing market and credit risk for banks, but they now face more business risks. Mergers and acquisitions also affect business risk. The convergence of financial services into large, complex banking groups and the concentration of key services in the hands of a few firms have been a driving force behind the growing number of mergers and acquisitions.A case in point is Abbey National, now the 6th largest British bank, but originally just a building society (issuing mortgages). Having obtained a license for retail banking, it rapidly expanded its services to treasury operations – writing complex derivatives products – and to corporate finance. This lasted only a few years, until large losses recently revealed how the management had over-extended itself with these particular decisions.To summarize our main points, current trends in financial risk management are changing our perception of financial risks. In particular, operational, business and systemic risks are all becoming relatively more important, compared with the traditional market and credit risks. Furthermore, the move towards large complex global organizations and consolidated risk reporting has highlighted some important problems with current methods for risk aggregation.I.2 The Future of Financial Risk ManagementFinancial risk management has been defined as a sequence of four processes: Identification; Assessment; Monitoring & Reporting; and Control.2 Let us now consider each of these processes in turn, attempting to extrapolate the current trends identified above and hence envision some of the changes in financial risk management that are likely in the future.a. Identification:For the purpose of regulation, three broad categories of risks have been defined: market, credit and operational risks. But the coverage is uneven, with some important but less easily quantifiable risks simply ignored. Also, the boundaries between these categories are fuzzy (indeed some might even regard all risks as being operational risks!) and the industry has spent much time defining risks, and debating into which category a loss event falls. However, in the future, it is likely that these traditional boundaries will be relaxed, as large complex banking groups adopt a more ‘holistic approach’ to risk management.One motivating factor for adopting a more holistic approach to risk management is that ‘other risks’ such as business and systemic risks – which are currently ignored by the regulators – are likely to be perceived as being important in the future. Also, operational risks, which are currently perceived as less important than market and credit risks, are likely to increase, for example, because of increased reliance on technology. On the other hand credit risks, one of the major risks that we face today because currently we are at a peak of the default cycle, are likely to decrease in relative importance. So, as new, or previously less important risks take the centre stage, the need for a clear distinction between market, credit, operational and other risks dissolves.Current practice is to model the identified risks using completely different frameworks for different categories of risk. For example, we can employ a statistical anal ysis of short-term P&L distributions for market risks; an option theoretic models for credit risk; and an actuarial loss model for operational risks. But this is a great impediment to an important goal of enterprise wide risk management, that is, to ‘integrate’ market, credit and operational risks so that the net effect of a single scenario (such as a 200bp rise in an interest rate) can be assessed at the instrument level. Clearly, another factor which motivates the definition of all risks under one ‘umbrel la’ for the purpose of capital allocation, is that when market, credit2As in “Sound Practices for the Management and Supervision of Operational Risk”, the Basel Committee on Banking Supervision, December 2001, revised July 2002and operational risks are assessed using diverse methodologies, it becomes extremely difficult to perform a consistent scenario risk analysis across all three models.Even if market, credit and operational risks were assessed according to similar principles, the current methods used to aggregate distinct risk estimates are very imprecise. Simple summation provides a possible upper bound,3 and an assumption of zero correlation provides a possible lower bound for total risk (where the total risk is the square root of the sum of the component risks squared). But in some activities, such as interest rate swaps trading, market and credit risks can be negatively correlated, so the net risk could be less than some of the component risks. In this case even the zero correlation assumption is far too conservative.At present, risk assessment and aggregation methods do not properly account for the type of dependencies between risks that are known to exist. In searching for a better risk aggregation methodology, Alexander and Pezier (2003)4 have proposed a factor model approach to risk assessment. Market, credit and operational risks are assumed to be driven by common risk factors such as interest rates, equity prices, the implied volatilities of both, credit spreads, expenses and the business activity level. This approach is very much in its infancy, and the residual market/credit/operational risks are large; the factor model explains only a fraction of the economic capital estimates from individual VaR models. However, in a recent report from the Basel Committee on Banking Supervision, the pressing need for a unified framework such as this has been highlighted.5b. AssessmentLet us amuse ourselves here with a simple analogy. Risk management is like a cake. On the top we have a cherry – or several cherries – the risk assessment model(s); the icing on the cake represent the data used for model estimation and the substance of the cake itself represents the infra-structure – the systems and the management framework that are necessary to support the risk model.Since the industry has long ago agreed on the ‘best practice’ for market risk assessment (by simulating VaR using Monte Carlo data and historic data)6 we can regard market risk management as a cake with only one cherry. The market risk cake also has a relatively3 But not necessarily, since percentiles are not sub-additive4 Alexander, C. and J. Pezier (2003) “Assessment and Aggregation of Banking Risks” Presented to the 9th Annual IFCI Round Table, March 2003 (available from www.ifci.ch)5 Basel Committee for Banking Supervision (August 2003) “Trends in Risk Integration and Aggregation” available from 6 If the portfolio i s linear the Monte Carlo VaR should be equal to the ‘RiskMetrics’ or ‘Covariance VaR.smooth and complete icing, as the appropriate data are relatively easy to obtain, at least for most short-term market risks, compared with other risk types. Many powerful and sophisticated market risk systems are available, indeed, the cake itself is like a fine, English Christmas cake that has been matured in brandy wine for many years.However, the industry has not agreed on a singl e ‘best practice’ model for credit risk capital assessment.7 A bank will normally adopt one (or more) of the following three broad approaches: an option theoretic Merton model, an actuarial (loss model), or a macro-economic model. Within each broad approach, several variants might be available. In short, quite a few different ‘cherries’ are available for the credit risk cake and, without knowing which cherry is best, some banks decide to place them all upon the cake! The credit risk cake icing (the data) is also rather patchy in places – in particular, the marginal and joint distributions of default rates and recovery rates are extremely difficult to assess.Operational risk assessment is at an early stage of development, and the operational risk ‘cake’ is far from complete. First, we potentially have ‘one thousand’ cherries, haphazardly placed all over the cake.8 Secondly, the data are very incomplete, particularly for the important operational risks (the low frequency high impact risks) so there is hardly any icing for these cherries to stand upon. Finally, the substance of the operational risk cake itself is more or less non-existent: some banks have great difficulty obtaining the management ‘buy-in’ that they need for the self-assessment of operational risks, and the IT systems that are necessary to support the reporting and control of these risks are only just now being developed.Perhaps the most challenging task of all is to provide appropriate data for assessing operational risks. And, in this respect, the industry has at least seen some benefit from the expensive task of implementing an operational risk management framework. That is because we have learned an important lesson about market and credit risk assessment: the need for operational risk q uantification has forced the industry to consider using ‘subjective’ data for operational risks (in the form of self-assessments and/or expert opinions) and we now recognise that the problem of incomplete data extends to all types of risks, to a greater or lesser extent. With much historic data available for assessing market risks, risk managers have been lulled into a false sense of security, believing that it was possible to assess even long-term risks with some degree of accuracy. But now we are, quite rightly, beginning to7 Although a simple portfolio model is proposed in the Basel II ‘Internal Rating Based’ approach.8 The Basel working group on operational risk assessment have suggested that, for the Advanced Measurement Approaches, the industry should ‘let one thousand flowers bloom’.question the validity of historical data because it is not ‘forward looking’. It has become increasingly clear that ‘subjective’ data will improve and enhance our assessments of credit and market risks, as well as operational risks.9The use of data from different sources, based on both subjective beliefs and objective historical samples is not a new development. In fact, it is a very old science. Thomas Bayes, a seventeenth century English Presbyterian minister, laid the foundations for all modern statistical inference in his fanous essay ‘A Doctrine towards the Theory of Chance’. From Bayes’ ideas, the ‘classical’ statistics of today evolved as but a poor relative, a restricted form of Bayes’ original doctrine, and it is only during the last few years that the Bayesian approach has witnessed a renaissance.Thanks to Thomas Bayes, in place of a single VaR estimate, we have a whole VaR distribution, where the uncertainty of VaR arises from our ‘subjective beliefs’ about risk model parameter values. As a consequence of the move towards using more subjective data for risk assessments, there will be increased reliance in the future on sophisticated individual models for assessing market, credit and operational risks. It is only progressing from there – possibly far into the future – that our aim should be towards unification of these models into one ‘Universal VaR’ model.c. Monitoring and ReportingMonitoring and reporting may be the most important part of the risk management process for some activities, such as fund management. Fund managers need to take risks, rather than control them, but it is their duty to inform clients promptly and accurately of the risks that they take. However, this is not necessarily a ‘good thing’ from the perspective of systemic risk. In fact, good risk management at the level of the firm, as we know it today, can actually increase systemic risk!To see why, suppose good risk management means reducing exposure to risky assets and passing on the risk to others. Most pension funds, which have liabilities to current pensioners and risky assets comprising mainly bonds and equities, behave like this. If a market performs well, pension funds take more risk in that market, which produces an upwards price pressure; on the other hand, when a market under-performs, they sell off those risky assets. Suppose the price of some risky assets fall – let us say that equity prices go down. Those funds that have not performed well must maintain their solvency ratio and may therefore be forced to sell9 See Alexander, C. (ed) Operational Risks: Regulation, Analysis and Management FT-Prentice Hall (a division of Pearson Education), 2003.risky assets. Assuming they sell the assets that are under-performing, the price of these assets will be depressed even further. But now the next level of funds – which were not originally concerned by their solvency ratio – will be forced into selling assets. The vicious circle continues and a downwards spiral in prices has been instigated.In the past, this type of behaviour was observed in the ‘portfolio insurance’ strategies that were followed by pension funds during the late 1970’s and 1980’s. These strategies had a great run – until they contributed to the global equity market crash of 1987. More recently, a similar crisis happened to insurance companies after 09/11. However, this time the regulators relaxed solvency ratios and a global melt-down in equity markets was prevented.The growing trend towards real-time risk monitoring and reporting also tends to increase systemic risk. With real-time monitoring we are immediately aware of variations in the solvency ratio. Even if there is no breach of the minimum, just knowing VaR in real-time could produce a panic reaction when traders use VaR-based limits in place of the traditional sensitivity based limits. A VaR limit could be easily be breached intermittently in a particular activity and, when previously we wouldn’t know it, now with real-time VaR monitoring, we do. We may feel forced into selling, cutting down our positions in risky assets that have not performed well. We would have to take a capital loss, and of course this process will increase volatility in that asset. A vicious circle could be set in motion, where other risk managers now exceed their VaR limits and, if market participants all perceive the same danger at the same time and they all act in the same way, systemic risk will increase.10d. ControlIf all risk managers are aware of all risks, at all times, this does not necessarily imply that risks will be reduced. It all depends on the risk control strategies. Decisions about risk control are best taken at the senior management level in the organisation. Only in that case will the decision maker be able to take advantage of opportunities for diversification of risks. It is important that the monitoring and reporting of risks be independent of the decisions made to control the risk.Efficient global hedging of risks should mean that the decision maker can choose to increase some risks, if it benefits the organization as a whole. However in the current system, junior managers normally ‘own’ risks at the same time as monitoring and reporting them, and10 In an attempt to prevent daily variation coming into play in this way, regulator introduced the rule that VaR = max(average of last 60 days VaR, or latest VaR * k). Economic capital calculations may not be calculated like this, in which case internal panic reactions can still be a problem.having the power to make decisions about the control of these risks. These people are often rewarded on an individual basis, usually for reducing their ‘own’ risks, regardless of the effect on other risks within the organisation. It is therefore highly unlikely that efficient global hedging can be done for the enterprise as a whole. Risk control should be based on a business model, a decision theoretic framework that takes into account major costs and benefits to the global enterprise. In this sense, the role of risk control should be no different from the traditional management role.II A Study of Risk Management in the Brazilian MarketsMarket, credit and operational Value-at-Risk (VaR) models are being continuously refined and improved by academic research. In some cases these advances serve to make the risk model more complex, for example because they are based on more general assumptions; in other cases a risk model can be much simplified, for example because a unified framework, or new insights, have been developed.The second part of this paper examines the application of some new, advanced risk models to Brazilian equities and interest rates. Section II.1 simply introduces the data used in this study, then section II.2 will focus on model risk. Here we provide two examples of model risk in VaR models, based on our Brazilian market data. We ask whether VaR models are, in fact, appropriate for the assessment of market risks in Brazil. Section II.3 examines the dependencies between risks that need to be accounted for in portfolio models. We show that dependencies within Brazilian interest rates and within Brazilian equities are highly non-linear, so correlation is an inappropriate tool for the risk management of portfolios. Section II.4 successfully applies some new hedging models to Brazilian equities in the Ibovespa index, including a method that is based on ‘cointegration’ rather than correlation.。

财务风险管理中英文对照外文翻译文献

中英文资料翻译Financial Risk ManagementAlthough financial risk has increased significantly in recent years, risk and risk management are not contemporary issues. The result of increasingly global markets is that risk may originate with events thousands of miles away that have nothing to do with the domestic market. Information is available instantaneously, which means that change, and subsequent market reactions, occur very quickly. The economic climate and markets can be affected very quickly by changes in exchange rates, interest rates, and commodity prices. Counterparties can rapidly become problematic. As a result, it is important to ensure financial risks are identified and managed appropriately. Preparation is a key component of risk management.What Is Risk?Risk provides the basis for opportunity. The terms risk and exposure have subtle differences in their meaning. Risk refers to the probability of loss, while exposure is the possibility of loss, although they are often used interchangeably. Risk arises as a result of exposure.Exposure to financial markets affects most organizations, either directly or indirectly. When an organization has financial market exposure, there is a possibility of loss but also an opportunity for gain or profit. Financial market exposure may provide strategic or competitive benefits.Risk is the likelihood of losses resulting from events such as changes in market prices. Events with a low probability of occurring, but that may result in a high loss, are particularly troublesome because they are often not anticipated. Put another way, risk is the probable variability of returns.Since it is not always possible or desirable to eliminate risk, understanding it is an important step in determining how to manage it. Identifying exposures and risks forms the basis for an appropriate financial risk management strategy.How Does Financial Risk?Financial risk arises through countless transactions of a financial nature, including sales and purchases, investments and loans, and various other business activities. It can arise as a result of legal transactions, new projects, mergers and acquisitions, debt financing, the energy component of costs, or through the activities of management, stakeholders, competitors, foreign governments, or weather. When financial prices change dramatically, it can increase costs, reduce revenues, or otherwise adversely impact the profitability of an organization. Financial fluctuations may make it more difficult to plan and budget, price goods and services, and allocate capital.There are three main sources of financial risk:1. Financial risks arising from an organization’s exposure to changes in market prices, such as interest rates, exchange rates, and commodity prices.2. Financial risks arising from the actions of, and transactions with, other organizations such as vendors, customers, and counterparties in derivatives transactions3. Financial risks resulting from internal actions or failures of the organization, particularly people, processes, and systemsWhat Is Financial Risk Management?Financial risk management is a process to deal with the uncertainties resulting from financial markets. It involves assessing the financial risks facing an organization and developing management strategies consistent with internal priorities and policies. Addressing financial risks proactively may provide an organization with a competitive advantage. It also ensures that management, operational staff, stakeholders, and the board of directors are in agreement on key issues of risk.Managing financial risk necessitates making organizational decisions about risks that are acceptable versus those that are not. The passive strategy of taking no action is the acceptance of all risks by default.Organizations manage financial risk using a variety of strategies and products. It is important to understand how these products and strategies work to reduce riskwithin the context of the organization’s risk tolerance and objectives.Strategies for risk management often involve derivatives. Derivatives are traded widely among financial institutions and on organized exchanges. The value of derivatives contracts, such as futures, forwards, options, and swaps, is derived from the price of the underlying asset. Derivatives trade on interest rates, exchange rates, commodities, equity and fixed income securities, credit, and even weather.The products and strategies used by market participants to manage financial risk are the same ones used by speculators to increase leverage and risk. Although it can be argued that widespread use of derivatives increases risk, the existence of derivatives enables those who wish to reduce risk to pass it along to those who seek risk and its associated opportunities.The ability to estimate the likelihood of a financial loss is highly desirable. However, standard theories of probability often fail in the analysis of financial markets. Risks usually do not exist in isolation, and the interactions of several exposures may have to be considered in developing an understanding of how financial risk arises. Sometimes, these interactions are difficult to forecast, since they ultimately depend on human behavior.The process of financial risk management is an ongoing one. Strategies need to be implemented and refined as the market and requirements change. Refinements may reflect changing expectations about market rates, changes to the business environment, or changing international political conditions, for example. In general, the process can be summarized as follows:1、Identify and prioritize key financial risks.2、Determine an appropriate level of risk tolerance.3、Implement risk management strategy in accordance with policy.4、Measure, report, monitor, and refine as needed.DiversificationFor many years, the riskiness of an asset was assessed based only on the variability of its returns. In contrast, modern portfolio theory considers not only an asset’s riskiness, but also its contribution to the overall riskiness of the portfolio towhich it is added. Organizations may have an opportunity to reduce risk as a result of risk diversification.In portfolio management terms, the addition of individual components to a portfolio provides opportunities for diversification, within limits. A diversified portfolio contains assets whose returns are dissimilar, in other words, weakly or negatively correlated with one another. It is useful to think of the exposures of an organization as a portfolio and consider the impact of changes or additions on the potential risk of the total.Diversification is an important tool in managing financial risks. Diversification among counterparties may reduce the risk that unexpected events adversely impact the organization through defaults. Diversification among investment assets reduces the magnitude of loss if one issuer fails. Diversification of customers, suppliers, and financing sources reduces the possibility that an organization will have its business adversely affected by changes outside management’s control. Although the risk of loss still exists, diversification may reduce the opportunity for large adverse outcomes.Risk Management ProcessThe process of financial risk management comprises strategies that enable an organization to manage the risks associated with financial markets. Risk management is a dynamic process that should evolve with an organization and its business. It involves and impacts many parts of an organization including treasury, sales, marketing, legal, tax, commodity, and corporate finance.The risk management process involves both internal and external analysis. The first part of the process involves identifying and prioritizing the financial risks facing an organization and understanding their relevance. It may be necessary to examine the organization and its products, management, customers, suppliers, competitors, pricing, industry trends, balance sheet structure, and position in the industry. It is also necessary to consider stakeholders and their objectives and tolerance for risk.Once a clear understanding of the risks emerges, appropriate strategies can be implemented in conjunction with risk management policy. For example, it might bepossible to change where and how business is done, thereby reducing the organization’s exposure and risk. Alternatively, existing exposures may be managed with derivatives. Another strategy for managing risk is to accept all risks and the possibility of losses.There are three broad alternatives for managing risk:1. Do nothing and actively, or passively by default, accept all risks.2. Hedge a portion of exposures by determining which exposures can and should be hedged.3. Hedge all exposures possible.Measurement and reporting of risks provides decision makers with information to execute decisions and monitor outcomes, both before and after strategies are taken to mitigate them. Since the risk management process is ongoing, reporting and feedback can be used to refine the system by modifying or improving strategies.An active decision-making process is an important component of risk management. Decisions about potential loss and risk reduction provide a forum for discussion of important issues and the varying perspectives of stakeholders.Factors that Impact Financial Rates and PricesFinancial rates and prices are affected by a number of factors. It is essential to understand the factors that impact markets because those factors, in turn, impact the potential risk of an organization.Factors that Affect Interest RatesInterest rates are a key component in many market prices and an important economic barometer. They are comprised of the real rate plus a component for expected inflation, since inflation reduces the purchasing power of a lender’s assets .The greater the term to maturity, the greater the uncertainty. Interest rates are also reflective of supply and demand for funds and credit risk.Interest rates are particularly important to companies and governments because they are the key ingredient in the cost of capital. Most companies and governments require debt financing for expansion and capital projects. When interest rates increase, the impact can be significant on borrowers. Interest rates also affect prices in otherfinancial markets, so their impact is far-reaching.Other components to the interest rate may include a risk premium to reflect the creditworthiness of a borrower. For example, the threat of political or sovereign risk can cause interest rates to rise, sometimes substantially, as investors demand additional compensation for the increased risk of default.Factors that influence the level of market interest rates include:1、Expected levels of inflation2、General economic conditions3、Monetary policy and the stance of the central bank4、Foreign exchange market activity5、Foreign investor demand for debt securities6、Levels of sovereign debt outstanding7、Financial and political stabilityYield CurveThe yield curve is a graphical representation of yields for a range of terms to maturity. For example, a yield curve might illustrate yields for maturity from one day (overnight) to 30-year terms. Typically, the rates are zero coupon government rates.Since current interest rates reflect expectations, the yield curve provides useful information about the market’s expectations of future interest rates. Implied interest rates for forward-starting terms can be calculated using the information in the yield curve. For example, using rates for one- and two-year maturities, the expected one-year interest rate beginning in one year’s time can be determined.The shape of the yield curve is widely analyzed and monitored by market participants. As a gauge of expectations, it is often considered to be a predictor of future economic activity and may provide signals of a pending change in economic fundamentals.The yield curve normally slopes upward with a positive slope, as lenders/investors demand higher rates from borrowers for longer lending terms. Since the chance of a borrower default increases with term to maturity, lenders demand to be compensated accordingly.Interest rates that make up the yield curve are also affected by the expected rate of inflation. Investors demand at least the expected rate of inflation from borrowers, in addition to lending and risk components. If investors expect future inflation to be higher, they will demand greater premiums for longer terms to compensate for this uncertainty. As a result, the longer the term, the higher the interest rate (all else being equal), resulting in an upward-sloping yield curve.Occasionally, the demand for short-term funds increases substantially, and short-term interest rates may rise above the level of longer term interest rates. This results in an inversion of the yield curve and a downward slope to its appearance. The high cost of short-term funds detracts from gains that would otherwise be obtained through investment and expansion and make the economy vulnerable to slowdown or recession. Eventually, rising interest rates slow the demand for both short-term and long-term funds. A decline in all rates and a return to a normal curve may occur as a result of the slowdown.财务风险管理尽管近年来金融风险大大增加，但风险和风险管理不是当代的主要问题。

财务风险外文原文

Political and Financial Risks and Their Mitigation Measures in Public Private Partnershipsby LIAO BOJING CHAPTER 4FINANCIAL RISKS AND THEIR MITIGATION MEASURES4.1 Interest Rate RiskIn construction project finance ventures, there is always the risk of fluctuations in interest rates. Credit is always granted with a variable rate, due to the long life of such PPP projects. In addition, unlike exchange rate risk, interest rate risk indiscriminately strikes both domestic and international projects as well as ventures with multi-currency cash flows. Sponsors and their advisors have to decide whether or not to cover against this risk, a decision that is not exactly identical throughout the life of the project (Gatti, 2008). The mitigation measures for interest rate risk mainly include:(1)Adopting an appropriate multicurrency portfolio, e.g., a dual-currency contract, which uses a foreign currency of lower rate interest, and a local currency for repayment of the principal. Various currencies have different interest rates. The private sector and its advisers must make the effects on making an ideal combination of a variety of foreign currency and cooperating with the banks so as to reduce interest rate risk. Dual-currency is to use a lower rate currency for interest accrual, and choose the local currency for repayment of the principal.(2)Balancing the floating rate and fixed-rate debt in the financing structure. When there is a lack of capital supplies in the international finance market, the interest rate will rise. Under this situation, the private sector should choose a fixed rate. When there is a surplus of capital supplies in the international finance market, the interest rate tends to go down. Therefore, a floating rate should be selected. The balanced proportion on the fixed rate and floating rate will reduce the risk and profit lost.(3)Seeking a reasonable interest rate that is guaranteed by the host government. The host government will provide a guaranteed interest rate to the private sector. During the project period,if the interest rate exceeds the required percentage, the private sector will be compensated. For example, for the north-to-south highway project in Malaysia, the project company, PLUS, received a guaranteed interest rate from the Malaysian government: if the growth of the interest rate exceeds 20%, the project company will obtain redressment of the margins from the compensation package.(4)Using interest rate derivatives(e.g., forward rate agreements, interest rate futures, swaps, options ) to insure against future interest rate fluctuations so as to reduce the interest rate risk.Forward Rate Agreements (FRA)With an FRA, the buyer pledges to pay the seller interest accrued on the principal at a pre-agreed rate, starting at a future date, and for certain period of time. The FRA buyer sets the future rate and is covered from interest rate risk. If in fact the future rate is higher than what was agreed on in thecontract, the seller of the forward rate agreement pays the difference between the two rates to the buyer. Conversely, it will be paid by the buyer if the future rate proves to be lower than the pre-set rate.Interest Rate FuturesA future is a forward agreement in which all contractual provisions are standardized. Due to this fact, futures differ from forward contracts in light of their lower risk for counterparties and greater market liquidity. In project finance ventures, interest rate futures can be used to curb the negative effect ofa rise in interest rates on a loan raised by the private sector.Interest Rate SwapIn their simplest form, interest rate swaps are a periodic exchange of fixed rate streams against floating rate streams (usually indexed to LIBOR) for a given time horizon. In an interest rate swap, one of the counterparty agrees to pay either a fixed or floating rate denominated in a particular currency to the other counterparty. In such a way, the financial cost can be well locked.Interest Rate Option (caps/floors/collars)Options are contracts that allow (but do not oblige) the buyer to purchase(call option) or sell (put option) a commodity or a financial asset at a fixed price (strike price) at a future date in exchange for payment of a premium. In project finance deals, interest rate options are used for protecting the private sector’s cash flows from interest rate risk.(5)Using bond financing in which the interest rates fixed to reduce the risk of future interest rate increase. Bonds can have fixed and floating rates of interest. In this regard, bond financing is often used in reducing interest cost and in mitigating the interest rate fluctuation risk. However, bond issuance is a long and expensive process compared to acquiring bank loans.(6)Using the supplier's credit to reduce the amount of debt and get the debt at a lower interest rate Interest rates of supplier's credit is generally lower than that in capital lending market under the same conditions, and interest rate differentials can be gained from the exporting country government subsidy.(7)Acquisition of loans and assistance from international financial institutions (e.g., Asian Development Bank and World Bank) to make the projects secure and less risky. These kinds of banks are multilateral development financial institutions. Their mission is to help developing member countries to reduce poverty and improve the quality of life of their citizens. Take Asia Development Bank (ADB) as an example. It aims to promote economic and social development in Asian and Pacific countries through loans and technical assistance. From this perspective, finance projects from these institutions can be secured and are less risky.(8)Predicting the changing trend of future interest rate and making the corresponding financing preparation. Predict the trend of the future interest rate through collecting multi information. For example, ininternational financial markets with a lackof capital supply, the interest rate will gradually increase so that fixing the interest rate is appropriate; whereas whenthere is an excess supply of capital in the markets, the interest rates tend to decline so the floating rates is better.4.2 Inflation RiskIn practice, the biggest problem arising from economic mismanagement is inflation, especially for a foreign firm with assets in a country. With high inflation, the value of the cash flows received from assets will fall as the country’s currency depreciates on the foreign exchange market. The likelihood of this occurring decreases the attractiveness of foreign investment in the country (Kapila1 and Hendrickson 2001). Inflation risk derives from the fact that most contracts between SPVs and their commercial counterparties are based on revision mechanisms for rates or installments based on the behavior ofa given price index. Both industrial and financial costs and revenues are impacted by inflation risk.The mitigation measures for inflation risk mainly include:(1)Increasing the proportion of hardcurrencies in the cash flow. In general, the best way for the private sector to mitigate inflation risk is by maximizing the proportion of cash flows in hard currencies to be channeled through off-shore mechanisms.(2)Indexing the price of the service or productfrom the project to the inflation rate. Prescribe the relevant items in concession agreements and combine the price of the product and service with the price index or inflation rate of the host country. Using the pricing adjustment formula, which consists ofinflation rate factors, as the method for checking the pricing in the future terms, will allow one to adjust pricing when the inflation rate’s movement exceeds a certain range, or accordingly raise the fees, or extend the permitted period in order to guarantee sufficient cash flow to pay off debts and to assure the investment profit.(3)Including a price adjustment clause inthe long term purchase contract. If the Inflation Index adjust the price of products, the Project Company could increase charging standards on their own based on CPI. However,the foundation of the adjustment must be established by strict accounting and be effective after the government’s approval.(4)Drawing up an inflation swap to transfer inflation risk through an exchange of cash flows. To cover against inflation risk, a swap contract is signed between two parties. In an inflation swap, the private sector pays a fixed rate on a notional principal amount, while the other party pays a floating rate linked to an inflation index, such as the Consumer Price Index (CPI). The party paying the floating rate pays the inflation adjusted rate multiplied by the notional principal amount. For example, one party may pay a fixed rate of 3% on a two year inflation swap, and in return receives the actual inflation.(5)Investing in Treasury Inflation Protected Securities to insure the purchasing power of the project company in the future and reduce the inflation influence.A treasury security is indexed to inflation in order to protect the private sectors from the negative effects of inflation. TIPS are considered an extremely low-risk investment since they are backed by the U.S. government andsince their par value rises with inflation, as measured by the Consumer Price Index, while their interest rate remains fixed. Interest on TIPS is paid semi-annually.(6)Choosing the favorable form of construction contract (e.g., Fixed-price Contract and Turn-key Contract) to transfer the increased cost due to inflation to contractors.Making a fixed price contract, turn-in-key contract and cost-plus contract with contractors, the risk of costoverruns caused by the increasing price of cement, steel and the labor can be transferred to the contractors.(7) Predicting the changing trend of future inflation and adjusting the price of product or service accordingly. The project company makes an inflation expectation during the period and confirms the price of the productsfor each annual operation, thus the risk can be avoided.(8) Enhancing the management of the receivable accounts to accelerate the recovery of the project funds. The receivable accounts are managed as the important aspect of financial administration, which influences the managementstate of the project company. Effective receivable accounts management brings favorable cash flow which determines the development or decline of the project.(9) Reducing the operating costs of the projectby strengthening the cost management. Cost management is also a significant part of financial management which can maintain and improve healthy financial statement of the project company.4.3 Currency Exchange RiskForeign exchange risk results from the mismatch between the revenue of the currency and payment obligations for taxes, operating expenses, debt service payments and dividend payments and profit repatriation (Wang et al.,2000). This often occurs in international projects where costs and revenues are computed in different currencies. However, a similar situation may arise in domesticprojects when the counterparty wants to bill the SPV in foreign currency (Gatti, 2008). Here is such an example in China. For investment in China's PPP projects, the foreign companies will invariably receive nearly all of their revenues in RMB. A significant portion of this revenue will need to be converted to other currencies, primarily US dollars, and remitted outside of China. The remittances are used to meet foreign currency obligations to equipment suppliers, to repay borrowings from foreign lenders and to make payments to the companies in respect of equity distributions and shareholder loans. The RMB is not freely convertible into USdollars; even if it is convertible，the exchange rate fluctuates all the time in the market or is subject to the approval of the State Administration for Exchange Control (SAEC). Also, there can be no assurance that the Chinese Government will continue to provide approvals.The mitigation measures for currency exchange risk mainly include:(1) Obtaining currency exchange risk sharing clause from host government. In the PPP agreement there usually exists a foreign exchange risk sharing clause, which means that if theexchange rate fluctuates within a range, the loss is borne by the private sector, but once the changes are beyond a certain value,the loss caused by the exchange rate fluctuations are borne by the host governmentor shared in proportion by both sides. Foreign exchange guarantee in PPP is not an international practice. Whether local government makes a guarantee highly depends on the degree of financial liberalization and complete.(2) Selecting appropriate currency to evade the currency exchange risk, e.g. foreign currency invoicing, loan currency invoicing, hard currency invoicing, and dual-currency agreement. A reasonable foreign currency structure would maintain the appropriate proportion between various currencies and optimize the multi-currency portfolio. The private sector may require the user to pay directly in the currency of the project sponsor country (foreign project sponsor) or adjust the fee structure in which a certain percentage of the loans are used for payment so as to reduce foreign exchange risk, or choose the strong currencies which show few exchange rate movements in the a long term such as US dollar and the euro and other strong currencies. Using a dual-currency or multi-currency agreement, namely you can pay by local currency or partially in other foreign currencies.(3) Enlarging financing proportion in local currency. The private sector needs to seek local lenders or structure their debt in local currency to mitigate risks. Because the revenue from projects can be used to repay the capital and interest, there is no foreign exchange problem and avoid exchange rate risk completely.(4) Using Exchange Rate Proviso Clause which can make a proper adjustment of repayment once the exchange rate exceeds the ratio between the repayment currency and hedge currency (e.g. gold proviso clause, hard currency hedge, and basket of currencies). If valuation in the contract is based on the local currency denominated, according to international practice and the "Guide to Contracting industrial projects in developing countries" developed by the United Nations, the clause on hedging should be provided in the contract terms in order to prevent any exchange rate risk. An Exchange Rate Proviso Clause is one measure that can make a proper adjustment of repayment based on the exchange rate between the repayment currency and the hedge currency, for instance, gold proviso clause, the hard currency hedge, and a basketof currencies. The latter can maintain the value of contracts in relation to the composite currency, like Special Drawing Right (SDR).(5) Using Leads and Lags to mitigate risks or improve profits. Leads will result when private sector making payments expect an increasing foreign-exchange rate, while lags arise when the exchange rate is expected to fall. Leads will result when the private sector making payments and expects an increasing foreign-exchange rate, while lags arise when the exchange rate is expected to fall. Leads and lags are used in an attempt to mitigate risks or improve profits.(6)Buying export credit insurance with export credit agencies against the currency exchange risk. Export credit insurance protects the foreign receivables against virtually all commercial and political risks that could result in non-payment of project company’s export invoices. This insurance especially is offered by national export credit agencies to help exporters to deal withthecurrency exchange risk.(7) Using Letter of Credit to substitute a portion of the security deposit, so the project company may take currency back in advance tomitigate foreign exchange rate risk. Letters of credit are often used in international transactions to ensurethat payment will be received. A letter from a bank can guarantee that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. By using a letter of credit to substitute a portion of the security deposit, the project company may take currency back inadvance to mitigate foreign exchange rate risk.(8) Using financial derivatives to prevent currency exchange rate risk, such as forward exchanges, swaps, foreign exchange futures/options, and currency swaps.Forward ExchangeA forward contract involves an exchange with a delayed settlement. Traders set down contract conditions (specifically the date ofsettlement and the price) upon signing the contract, and the exchange is actually settled at a future, pre-agreed date. A forward contract might pertain to a currency exchange rate (on maturity, the traders sell each other one form of currency for another on the basis of an exchange rate set when the contract is drawn up).Futures on Exchange RatesA future is a forward agreement in which all the contractual provisions are standardized. In futures markets, a clearing house serves to guarantee obligations resulting from futures exchanges. This organization requires traders to pay an initial margin as collateral and daily variation margins until the position closes. Due to this fact, futures differ from forward contracts in light of their lower risk for counterparties and greater market liquidity. Futures markets, in fact, offer contracts written on the most widely exchanged currencies on an international level (Gatti 2008).Options on Exchange RatesA currency option is a viable alternative to futures, swaps, and forwards because it represents a right to buy or sella currency at a price and accounts for the volatility or the swings in currency prices. However, options are quite expensive, because protection is bought against adverse movements in the financial price but gains are also allowed from a favorable movement in the price (Clark & Marois, 1996).Currency SwapsCurrency swaps represent an agreement between two entities where one entity promises payment in one currency and the other promisesto make payments in another currency. Basically, a foreign exchange swap indicates there is a swap of a spot buy or a sale of foreign exchange offset by a forward sale or a buy. Currency swaps are a method to swap the risk for one party while the other party assumes a certain degree of risk. However, this is probably not the best mitigation tool due tothe high expenses involved if one of the currencies is not a desired/maincurrency (Chandra and Chang, 2000).(9)Balancing lending and investing to control exchange rate risk.The Balance method is effectively used in international transactionsfor controlling currency exchange risk. Take one example of balancing lending and investing is that during the same period, the private sector makes a investment which involves a local currency with the same quantity and opposite trend in order to avoid foreign exchange risk. Other ways ofbalancing are such as Borrowing, Investing, Borrow-Spot-Invest (BSI), Lead-Spot-Invest (LSI), Forfeiting, etc.(10) Utilizing multi-currency options of a syndicated loan to arrange the financing monetary structure. From project finance practice, more than 3000 million US dollar in developing countries, or more than 100 million in developed countries, of debt financing must be resolved by syndicated loans. The project sponsor should fully consider the demand for different currencies at all stages of project implementation and make full use of multi-currency options, especially in a syndicated loan, to make reasonable arrangements for currencies structure in order to minimize the foreign exchange risk, which may cause cash flow uncertainty, such as maintaining the balance between borrowing currencies and charge currency.(11) Getting advice from international institutions regarding the project’s currency exchange risk and useful actions to minimize this risk.There are numerous institutions providing services for forecasting exchange rates. Besides, the project manager should establish his/her own group which focuses on observing exchange rate fluctuations that have occurred and analyzing its impact on project progress, while providing a prediction of the tendency of short-term and long-term exchange rate.In accordance with the above discussion, a comparison of different mitigation measures faced exchange rate risk can be concluded, as below in Table 4.1.4.4 Currency Convertibility RiskMany countries impose foreign exchange restrictions or controls to prevent currency speculation and to protect their reserves. These restrictions affect the availability and value of a currency. These controls are designed to limit a customer's ability to freely convert one currency into another. Permission to exchange currencies must be given by the central bank of that country before the transaction can take place.The mitigation measures for currency convertibility risk mainly include:(1) Obtaining the host government’s guarantees on convertibility. This applies to concessions where the convertibility of currency can be guaranteed. Obtaining guarantees from the government is always the most effective measure for mitigating the exchange rate and convertibility risks.(2) Adopting alternative forms of currencies (local and foreign currency) as repayment in contract to mitigate currency convertibility risk. Set dual-currency selective repayment in contracts to mitigate lower currency convertibility risk. Which means one portion of the payment can be made in local currency and the other payment can be in the foreign currency. This measure is significant for lower currency convertibility risk.(3) Increasing bond financing to reduce the amount of direct loans, thus reducing the project company’s currency risk. The private sector can reduce the amount of direct loans by issuing bonds that can be of fixed and floating rates of interest, thus avoiding the currency risk. In this regard, bond financing is often used in reducing interest rate risk and currency convertibility risk. However, bond issuance is a long and expensive process compared to acquiring bank loans.(4)Establishing a contingency credit facility to cover unanticipated expenses. The private sector can extract the provision of risk by a certain percentage from profits each year so as to meet unexpected financial losses.(5) Training the senior management team of the project company with the related financial knowledge. Special attention should be paid to exchange rate risk for international PPP projects. In particular, company leaders and decision-makers, management personnel, financial personnel should have an understanding about foreign exchange tendency and international economic dynamics associated with the projects. Contract negotiators’understanding of exchange rate risk should bestrengthened so as to have affective planning to avoid exchange rate risk.。

Financial-Risk-Management财务风险管理大学毕业论文外文文献翻译及原文

毕业设计（论文）外文文献翻译文献、资料中文题目：财务风险管理文献、资料英文题目：Financial Risk Management 文献、资料来源：文献、资料发表（出版）日期：院（部）：专业：班级：姓名：学号：指导教师：翻译日期： 2017.02.14财务管理类本科毕业论文外文翻译译文：[美]卡伦·A·霍契.《什么是财务风险管理？》.《财务风险管理要点》.约翰.威立国际出版公司,2005:P1-22.财务风险管理尽管近年来金融风险大大增加，但风险和风险管理不是当代的主要问题。

全球市场越来越多的问题是，风险可能来自几千英里以外的与这些事件无关的国外市场。

意味着需要的信息可以在瞬间得到，而其后的市场反应，很快就发生了。

经济气候和市场可能会快速影响外汇汇率变化、利率及大宗商品价格，交易对手会迅速成为一个问题。

因此，重要的一点是要确保金融风险是可以被识别并且管理得当的。

准备是风险管理工作的一个关键组成部分。

什么是风险？风险给机会提供了基础。

风险和暴露的条款让它们在含义上有了细微的差别。

风险是指有损失的可能性，而暴露是可能的损失，尽管他们通常可以互换。

风险起因是由于暴露。

金融市场的暴露影响大多数机构，包括直接或间接的影响。

当一个组织的金融市场暴露，有损失的可能性，但也是一个获利或利润的机会。

金融市场的暴露可以提供战略性或竞争性的利益。

风险损失的可能性事件来自如市场价格的变化。

事件发生的可能性很小，但这可能导致损失率很高，特别麻烦，因为他们往往比预想的要严重得多。

换句话说，可能就是变异的风险回报。

由于它并不总是可能的，或者能满意地把风险消除，在决定如何管理它中了解它是很重要的一步。

识别暴露和风险形式的基础需要相应的财务风险管理策略。

财务风险是如何产生的呢？无数金融性质的交易包括销售和采购，投资和贷款，以及其他各种业务活动，产生了财务风险。

它可以出现在合法的交易中，新项目中，兼并和收购中，债务融资中，能源部分的成本中，或通过管理的活动，利益相关者，竞争者，外国政府，或天气出现。

财务风险外文文献

外文文献The Important Of Financial RiskSohnke M. Bartram Gregory W. Brown and Murat AtamerAbstract:This paper examines the determinants of equity price risk for a largesample of non-financial corporations in the United States from 1964 to 2008. Weestimate both structural and reduced form models to examine the endogenous natureof corporate financial characteristics such as total debt debt maturity cash holdingsand dividend policy. We find that the observed levels of equity price risk areexplained primarily by operating and asset characteristics such as firm age size assettangibility as well as operating cash flow levels and volatility. In contrast impliedmeasures of financial risk are generally low and more stable than debt-to-equity ratios.Our measures of financial risk have declined over the last 30 years even as measuresof equity volatility e.g. idiosyncratic risk have tended to increase. Consequentlydocumented trends in equity price risk are more than fully accounted for by trends inthe riskiness of firms’assets. Taken together the results suggest that the typical U.S.firm substantially reduces financial risk by carefully managing financial policies. As aresult residual financial risk now appears negligible relative to underlying economicrisk for a typical non-financial firm.Keywords：Capital structure；financial risk；risk management；corporate finance1 1.IntroductionThe financial crisis of 2008 has brought significant attention to the effects offinancial leverage. There is no doubt that the high levels of debt financing by financialinstitutions and households significantly contributed to the crisis. Indeed evidenceindicates that excessive leverage orchestrated by major global banks e.g. through themortgage lending and collateralized debt obligations and the so-called “shadowbanking system”may be the underlying cause of the recent economic and financialdislocation. Less obvious is the role of financial leverage among nonfinancial firms.To date problems in the U.S. non-financial sector have been minor compared to thedistress in the financial sector despite the seizing of capital markets during the crisis.For example non-financial bankruptcies have been limited given that the economicdecline is the largest since the great depression of the 1930s. In fact bankruptcyfilings of non-financial firms have occurred mostly in U.S. industries e.g.automotive manufacturing newspapers and real estate that faced fundamentaleconomic pressures prior to the financial crisis. This surprising fact begs the question“How important is financial risk for non-financial firms”At the heart of this issue isthe uncertainty about the determinants of total firm risk as well as components of firmrisk.Recent academic research in both asset pricing and corporate finance hasrekindled an interest in analyzing equity price risk. A current strand of the assetpricing literature examines the finding of Campbell et al. 2001 thatfirm-specificidiosyncratic risk has tended to increase over the last 40 years. Other work suggeststhat idiosyncratic risk may be a priced risk factor see Goyal and Santa-Clara 2003among others. Also related to these studies is work by Pástor and Veronesi 2003showing how investor uncertainty about firm profitability is an important determinantof idiosyncratic risk and firm value. Other research has examined the role of equityvolatility in bond pricing e.g. Dichev 1998 Campbell Hilscher and Szilagyi2008.However much of the empirical work examining equity price risk takes the riskof assets as given or tries to explain the trend in idiosyncratic risk. In contrast thispaper takes a different tack in the investigation of equity price risk. First we seek tounderstand the determinants of equity price risk at the firm level by considering totalrisk as the product of risks inherent in the firms operations i.e. economic or businessrisks and risks associated with financing the firms operations i.e. financial risks.Second we attempt to assess the relative importance of economic and financial risksand the implications for financial policy.Early research by Modigliani and Miller 1958 suggests that financial policymay be largely irrelevant for firm value because investors can replicate manyfinancial decisions by the firm at a low cost i.e. via homemade leverage andwell-functioning capital markets should be able to distinguish between financial andeconomic distress. Nonetheless financial policies such as adding debt to the capitalstructure can magnify the risk of equity. In contrast recent research on corporate riskmanagement suggests that firms may also be able to reduce risks and increase valuewith financial policies such as hedging with financial derivatives. However thisresearch is often motivated by substantial deadweight costs associated with financialdistress or other market imperfections associated with financial leverage. Empiricalresearch provides conflicting accounts of how costly financial distress can be for atypical publicly traded firm.We attempt to directly address the roles of economic and financial risk byexamining determinants of total firm risk. In our analysis we utilize a large sample ofnon-financial firms in the United States.Our goal of identifying the most importantdeterminants of equity price risk volatility relies on viewing financial policy astransforming asset volatility into equity volatility via financial leverage. Thusthroughout the paper we consider financial leverage as the wedge between assetvolatility and equity volatility. For example in a static setting debt provides financialleverage that magnifies operating cash flow volatility. Because financial policy isdetermined by owners and managers we are careful to examine the effects of firms’asset and operating characteristics on financial policy. Specifically we examine avariety of characteristics suggested by previous research and as clearly as possibledistinguish between those associated of the company(i.e. factors determining economic risk) and those associated with financing the firm(i.e. factors determining financial risk).We then allow economic risk to be a determinant of financial policy in the structural framework of Leland and Toft(1996),or alternatively, in a reduced form model of financial leverage.An advantage of the structural model approach is that we are able to account for both the possibility of financial and operating implciations ofsome factors(e.g .dividends),as well as the endogenous nature of the bankruptcy decision and financial policy in general.Our proxy for firm risk is the volantility if common stock returns derived from calculating the standard deviation of daliy equity returns.Our proxies for econmic risk are designed to capture the essential charactersitics of the firm’s operations and assets that determine the cash flow generating process for the firm.For example,firm size and age provide measures of line of –business maturity; tangible assets(plant,property,and equipment)serve as a proxy for the ‘hardness’of a firm’s assets;capital expenditures measure captial intensity as well as growth potential.Operating profitability and operating profit volatility serve as measures of the timeliness and riskiness of cash flows.To understand how financial factors affect firm risk,we examine total debt,debt maturity,dividend payouts,and holdings of cash and short-term investments.The primary resuit or our analysis is surpriing:factors determining economic risk for a typical company exlain the vast majority of the varation in equity volatility.Correspondingly,measures of implied financial leverage are much lower than observed debt ratios. Specifically, in our sample covering 1964-2008 average actual net financial (market) leverage is 1.50 compared to our estimates of between 1.03 and 1.11 (depending on model specification and estimation technique).This suggests that firms may undertake other financial policise to manage financial risk and thus lower effective leverage to nearly negligible levels.These policies might include dynamically adjusting financial variables such as debt levels,debt maturity,or cash holdings (see,for example , Acharya,Almeida,and Campello,2007).In addition,many firms also utilize explicit financial risk management techniques such as the use of financial dervatives,contractual arrangements with investors (e.g. lines of credit,call provisions in debt contracts ,or contingencies in supplier contracts ),spcial purpose vehicles (SPVs),or other alternative risk transfer techniques.The effects of our ecnomic risk factors on equity volatility are generally highly statiscally significant, with predicted size and age of the firm.This is intuitive since large and mature firms typically have more stable lines of business,which shoule be reflected in the volatility. This suggests that companties with higher and more stable operating cash flows are less likely to go bankrupt, and therefore are potentially less risky .Among economic risk variables,the effects of firm size ,prfit volatility,and dividend policy on equity volatility stand out. Unlike some previous studies,our careful treatment of the endogeneity of financial policy confirms that leveage increases total firm risk. Otherwise,fiancial risk factors are not reliably to total risk.Given the large literature on financial policy , it is no surprise that financial variables are , at least in part , determined by the econmic risks frims take.However, some of the specific findings are unexpected. For example , in a simple model of capital structure ,dividend payouts should increase financial leverage since they represent an outflow of cash from the firm(i.e.,increase net debt ).We find that dividends are associated with lower risk. This suggests that paying dividends is not as much a product of financial policy as a characteristic of a firm’s operations(e.g.,a mature company with limited growth opportunities). We also estimate howsensitivities to different risk factors have changed over time.Our result indicate that most relations are fairly stable. One exception is firm age which prior to 1983 tends to be positively related to risk and has since been consisitently negatively related to risk.This is related to findings by Brown and Kapadoa (2007) that recent trends in idiosyncratic risk are related to stock listings by younger and riskier firms.。

企业财务风险管理外文文献翻译

文献出处：Błach J. Financial Risk Identification Based on the Balance Sheet Information[J]. Managing and Modelling of Financial Risks, 2016,1: 10-19.第一部分为译文，第二部分为原文。

默认格式：中文五号宋体，英文五号Times New Roma，行间距1.5倍。

基于资产负债表信息的财务风险识别摘要：现代经济风险暴露不断增加，所有企业都要承担不同类型的风险。

本文研究财务风险的定义，组成部分，因素和后果，以及通过资产负债表提供的信息的使用来识别和分析财务风险。

此外，还介绍了这种财务风险评估方法的优缺点，以100个最大波兰公司10年（2000-2009年）的汇总数据为例，测试了根据资产负债表信息确定财务风险的潜力。

关键词：财务风险，财务分析，风险评估，资产负债表。

1. 引言现代社会往往被描述为“风险社会”，这意味着社会的财富生产伴随着社会风险生产。

因此，在这种环境下经营的企业，被迫采取不同类型的风险识别，以发展自己，提高效率。

考虑到不同类型的标准，有各种各样的企业风险进行分析和分类。

企业风险最重要的类型之一是财务风险。

2.财务风险定义及其组成部分文献中没有统一的财务风险定义。

但问题始于风险的一般定义。

在理论上，提出了风险定义的两个概念。

第一个-负面概念将风险描述为潜在损失的威胁。

第二个-中立概念表明，风险不仅是威胁，也是机会，所以风险意味着获得不同于预期的结果的可能性。

因此，风险的定义主要取决于风险的方法，并且可能导致管理者采取的不同行动。

如果采取负面做法，管理人员的主要目标是尽可能减少潜在的损失，并设法避免危险行为，以稳定公司的情况。

在第二种情况下，经理们不仅要尽量减少损失，还要尽量利用承担风险，改善公司状况。

因此，可以从中性或消极的角度分析任何类型的风险的金融风险。

财务风险管理外文翻译

译文：[美]卡伦·A·霍契.《什么是财务风险管理？》.《财务风险管理要点》.约翰.威立国际出版公司,2005:P1-22.财务风险管理尽管近年来金融风险大大增加，但风险和风险管理不是当代的主要问题。

全球市场越来越多的问题是，风险可能来自几千英里以外的与这些事件无关的国外市场。

意味着需要的信息可以在瞬间得到，而其后的市场反应，很快就发生了。

经济气候和市场可能会快速影响外汇汇率变化、利率及大宗商品价格，交易对手会迅速成为一个问题。

因此，重要的一点是要确保金融风险是可以被识别并且管理得当的。

准备是风险管理工作的一个关键组成部分。

什么是风险？风险给机会提供了基础。

风险和暴露的条款让它们在含义上有了细微的差别。

风险是指有损失的可能性，而暴露是可能的损失，尽管他们通常可以互换。

风险起因是由于暴露。

金融市场的暴露影响大多数机构，包括直接或间接的影响。

当一个组织的金融市场暴露，有损失的可能性，但也是一个获利或利润的机会。

金融市场的暴露可以提供战略性或竞争性的利益。

风险损失的可能性事件来自如市场价格的变化。

事件发生的可能性很小，但这可能导致损失率很高，特别麻烦，因为他们往往比预想的要严重得多。

换句话说，可能就是变异的风险回报。

由于它并不总是可能的，或者能满意地把风险消除，在决定如何管理它中了解它是很重要的一步。

识别暴露和风险形式的基础需要相应的财务风险管理策略。

财务风险是如何产生的呢？无数金融性质的交易包括销售和采购，投资和贷款，以及其他各种业务活动，产生了财务风险。

当金融的价格变化很大，它可以增加成本，降低财政收入，或影响其他有不利影响的盈利能力的组织。

金融波动可能使人们难以规划和预算商品和服务的价格，并分配资金。

有三种金融风险的主要来源：1、金融风险起因于组织所暴露出来的市场价格的变化，如利率、汇率、和大宗商品价格。

财务风险管理中英文对照外文翻译文献

财务风险管理中英文对照外文翻译文献译文：[美]卡伦〃A〃霍契.《什么是财务风险管理？》.《财务风险管理要点》.约翰.威立国际出版公司,2005:P1-22.财务风险管理尽管近年来金融风险大大增加，但风险和风险管理不是当代的主要问题。

全球市场越来越多的问题是，风险可能来自几千英里以外的与这些事件无关的国外市场。

意味着需要的信息可以在瞬间得到，而其后的市场反应，很快就发生了。

经济气候和市场可能会快速影响外汇汇率变化、利率及大宗商品价格，交易对手会迅速成为一个问题。

因此，重要的一点是要确保金融风险是可以被识别并且管理得当的。

准备是风险管理工作的一个关键组成部分。

什么是风险？风险给机会提供了基础。

风险和暴露的条款让它们在含义上有了细微的差别。

风险是指有损失的可能性，而暴露是可能的损失，尽管他们通常可以互换。

风险起因是由于暴露。

金融市场的暴露影响大多数机构，包括直接或间接的影响。

当一个组织的金融市场暴露，有损失的可能性，但也是一个获利或利润的机会。

金融市场的暴露可以提供战略性或竞争性的利益。

风险损失的可能性事件来自如市场价格的变化。

事件发生的可能性很小，但这可能导致损失率很高，特别麻烦，因为他们往往比预想的要严重得多。

换句话说，可能就是变异的风险回报。

由于它并不总是可能的，或者能满意地把风险消除，在决定如何管理它中了解它是很重要的一步。

识别暴露和风险形式的基础需要相应的财务风险管理策略。

财务风险是如何产生的呢？无数金融性质的交易包括销售和采购，投资和贷款，以及其他各种业务活动，产生了财务风险。

当金融的价格变化很大，它可以增加成本，降低财政收入，或影响其他有不利影响的盈利能力的组织。

金融波动可能使人们难以规划和预算商品和服务的价格，并分配资金。

有三种金融风险的主要来源：1、金融风险起因于组织所暴露出来的市场价格的变化，如利率、汇率、和大宗商品价格。

中小企业财务风险管理外文文献翻译2017

外文文献翻译原文及译文文献出处: Sharifi, Omid. International Journal of Information, Business and Management 6.2 (May 2017): 82-94.原文Financial R isk M ana gement for Small and M edium SizedEnter pr ises(SM ES)Omid SharifiMBA, Depa rtment of Commerce and Business Ma nagement,Ka ka tiya University, House No. 2-1-664, Sa ra wa thi nega r,1．ABSTR AC Tmedium sized Enterprises (SME) do also face business risks, Similar to large companies, Small and Mwhich in worst case can cause financial distress and lead to bankruptcy. However, although SME are a major part of the India and also international - economy, research mainly focused on risk management in large corporations. Therefore the aim of this paper is to suggest a possible mean for the risk identification, analysis and monitoring, which can be applied by SME to manage their internal financial risks. For this purpose the financial analysis, which has been used in research to identify indicators for firm bankruptcy, was chosen.The data required for the study was collected from Annual report of the Intec Capital Limited. For the period of five years, from 2008 to 2012.the findings showed the data and the overview can be used in SME risk management.Keywor ds: Annual report, Small and Medium sized Enterprises, Financial Risks, Risk Management.2．INTR UDUC TIONSmall and medium sized enterprises (SME) differ from large corporations among other aspects first of all in their size. Their importance in the economy however is large . SME sector of India is considered as the backbone of economy contributing to 45% of the industrial output, 40% of India’s exports, employing 60 million people, create 1.3 million jobs every year and produce more than 8000 quality products for the Indian and international markets. With approximately 30 million SMEs in India, 12 million people expected to join the workforce in next 3 years and the sector growing at a rate of 8% per year, Government of India is taking different measures so as to increase their competitiveness in the international market. There are several factors that have contributed towards the growth of Indian SMEs.Few of these include; funding of SMEs by local and foreign investors, the new technology that is used in the market is assisting SMEsadd considerable value to their business, various trade directories and trade portals help facilitate trade between buyer and supplier and thus reducing the barrier to trade With this huge potential, backed up by strong government support; Indian SMEs continue to post their growth stories. Despite of this strong growth, there is huge potential amongst Indian SMEs that still remains untapped. Once this untapped potential becomes the source for growth of these units, there would be no stopping to India posting a GDP higher than that of US and China and becoming the world’s economic powerhouse.3. R ESEAR C H QUESTIONRisk and economic activity are inseparable. Every business decision and entrepreneurial act is connected with risk. This applies also to business of small and medium sized enterprises as they are also facing several and often the same risks as bigger companies. In a real businessenvironment with market imperfections they need to manage those risks in order to secure their business continuity and add additional value by avoiding or reducing transaction costs and cost of financial distress or bankruptcy. However, risk management is a challenge for most SME. In contrast to larger companies they often lack the necessary resources, with regard to manpower, databases and specialty of knowledge to perform a standardized and structured risk management. The result is that many smaller companies do not perform sufficient analysis to identify their risk. This aspect is exacerbated due to a lack in literature about methods for risk management in SME, as stated by Henschel: The two challenging aspects with regard to risk management in SME are therefore:1.SME differ from large corporations in many characteristics2.The existing research lacks a focus on risk management in SMEThe following research question will be central to this work:1.h ow can SME manage their internal financial risk?2.W hich aspects, based on their characteristics, have to be taken into account for this?3.W hich mean fulfils the requirements and can be applied to SME?4. L ITER ATUR E R EVIEWIn contrast to larger corporations, in SME one of the owners is often part of the management team. His intuition and experience are important for managing the company. Therefore, in small companies, the (owner-)manager is often responsible for many different tasks and important decisions. Most SME do not have the necessary resources to employ specialists on every position in the company. They focus on their core business and have generalists for the administrative functions. Behr and Guttler find that SME on average have equity ratios lower than 20%. The different characteristics of management, position on procurement and capital markets and the legal framework need to be taken into account when applying management instruments like risk management. Therefore the risk management techniques of larger corporations cannot easily be applied to SME. In practice it can therefore be observed that although SME are not facing less risks and uncertainties than large companies, their risk management differs from the practices in larger companies. The latter have the resources to employ a risk manager and a professional, structured and standardized risk management system. In contrast to that, risk management in SME differs in the degree of implementation and the techniques applied. Jonen & Simgen-Weber With regard to firm size and the use of risk management. Beyer, Hachmeister & Lampenius observe in a study from 2010 that increasing firm size among SME enhances the use of risk management. This observation matches with the opinion of nearly 10% of SME, which are of the opinion, that risk management is only reasonable in larger corporations. Beyer, Hachmeister & Lampenius find that most of the surveyed SME identify risks with help of statistics,checklists, creativity and scenario analyses. reveals similar findings and state that most companies rely on key figure systems for identifying and evaluating the urgency of business risks. That small firms face higher costs of hedging than larger corporations. This fact is reducing the benefits from hedging and therefore he advises to evaluate the usage of hedging for each firm individually. The lacking expertise to decide about hedges in SME is also identified by Eckbo, According to his findings, smaller companies often lack the understanding and management capacities needed to use those instruments.5.M ETHODOL OGYE OF FINANC IAL ANAL YSIS IN SM E R ISK M ANAGEM ENTHow financial analysis can be used in SME risk management?5.1.1 Development of financial r isk over view for SM EThe following sections show the development of the financial risk overview. After presenting the framework, the different ratios will be discussed to finally present a selection of suitable ratios and choose appropriate comparison data.5.1.2.Fr a mewor k for fina ncial r isk over viewThe idea is to use a set of ratios in an overview as the basis for the financial risk management.This provides even more information than the analysis of historicaldata and allows reacting fast on critical developments and managing the identified risks. However not only the internal data can be used for the risk management. In addition to that also the information available in the papers can be used.Some of them state average values for the defaulted or bankrupt companies one year prior bankruptcy -and few papers also for a longer time horizon. Those values can be used as a comparison value to evaluate the risk situation of the company. For this an appropriate set of ratios has to be chosen.The ratios, which will be included in the overview and analysis sheet, should fulfill two main requirements. First of all they should match the main financial risks of the company in order to deliver significant information and not miss an important risk factor. Secondly the ratios need to be relevant in two different ways. On the one hand they should be applicable independently of other ratios. This means that they also deliver useful information when not used in a regression, as it is applied in many of the papers. On the other hand to be appropriate to use them, the ratios need to show a different development for healthy companies than for those under financial distress. The difference between the values of the two groups should be large enough to see into which the observed company belongs.5.1.3.Eva lua tion of r a tios for fina ncia l r isk over v iewWhen choosing ratios from the different categories, it needs to be evaluated which ones are the most appropriate ones. For this some comparison values are needed in order to see whether the ratios show different values and developments for the two groups of companies. The most convenient source for the comparison values are the research papers as their values are based on large samples of annual reports and by providing average values outweigh outliers in the data. Altman shows a table with the values for 8 different ratios for the five years prior bankruptcy of which he uses 5, while Porporato & Sandin use 13 ratios in their model and Ohlson bases his evaluation on 9 figures and ratios [10]. Khong, Ong & Yap and Cerovac & Ivicic also show the difference in ratios between the two groups, however only directly before bankruptcy and not as a development over time [9]. Therefore this information is not as valuable as the others ([4][15]).In summary, the main internal financial risks in a SME should be covered by financial structure, liquidity and profitability ratios, which are the main categories of ratios applied in the research papers.Fina ncial str uctur eA ratio used in many of the papers is the total debt to total assets ratio, analyzing the financial structure of the company. Next to the papers of Altman, Ohlson and Porporato & Sandin also Khong, Ong & Yap and Cerovac & Ivicic show comparison values for this ratio. Thosedemonstrate a huge difference in size between the bankrupt and non-bankrupt groups.Figur e 1: Development of tota l debt/tota l a ssets r a tioData sour ce: Altman (1968), Por por a to & Sandin (2007) and Ohlson (1980), author ’s illustr a tionTherefore the information of total debt/total assets is more reliable and should rather be used for the overview. The other ratios analyzing the financial structure are only used in one of the papers and except for one the reference data only covers the last year before bankruptcy. Therefore a time trend cannot be detected and their relevance cannot be approved.C ost of debtThe costs of debt are another aspect of the financing risk. Porporato & Sandin use the variable interest payments/EB IT for measuring the debt costs. The variable shows how much of the income before tax and interest is spend to finance the debt. This variable also shows a clear trend when firms approach bankruptcy.L iquidityThe ratio used in all five papers to measure liquidity is the current ratio, showing the relation between current liabilities and current assets (with slight differences in the definition). Instead of the current ratio, a liquidity ratio setting the difference between current assets and current liabilities, also defined as working capital, into relation with total assets could be used.Figur e 2: Development of wor king capita l /total assets r a tioData sour ce: Altman (1968) and Ohlson (1980); author ’s illustr a t ioBasically the ratio says whether the firm would be able to pay back all its’current liabilities by using its’current assets. In case it is not able to, which is when the liabilities exceed the assets, there is an insolvency risk.6.C R ITIC AL R EVIEW AND C ONC L USIONWhen doing business, constantly decisions have to be made, whoseoutcome is not certain and thus connected with risk. In order to successfully cope with this uncertainty, corporate risk management is necessary in a business environment, which is influenced by market frictions. Different approaches and methods can be found for applying such a risk management. However, those mainly focus on large corporations, though they are the minority of all companies[13].Furthermore the approaches often require the use of statistical software and expert knowledge, which is most often not available in SME. They and their requirements for risk management have mainly been neglected [17][13].This also includes the internal financial risk management, which was in the focus of this paper. Due to the existing risks in SME and their differences to larger corporations as well as the lack of suitable risk management suggestions in theory, there is a need for a suggestion for a financial risk management in SME. The aim was to find a possible mean for the risk identification, analysis and monitoring, which can be applied by SME to manage their internal financial risks. For this purpose the financial analysis, which has been used in research to identify indicators for firm bankruptcy, was chosen. Based on an examination and analysis of different papers, despite of their different models, many similarities in the applied ratios could be identified. In general the papers focus on three categories of risk, namely liquidity, profitability and solvency, which are in accordance to the maininternal financial risks of SME. From the ratios the most appropriate ones with regard to their effectiveness in identifying risks.译文中小企业财务风险管理研究奥米德沙利菲1、摘要中小型企业( SME) 和大型企业一样，也面临着业务风险，在最糟糕的情况下，可能会导致金融危机，甚至破产。

财务管理专业外文翻译--企业并购财务风险研究

外文原文The Study of Financial Risk in M&A1. The background analysis of M&AIn the west countries, M&A have a history about more than 100 years, and transactions have been expanding. The 5th wave of global mergers and acquisitions peaked in 2000.In our country, M&A become more and more popular. For example, many companies Step up the pace of overseas expansion and M&A. However, under the pressure of RMB appreciation, many companies choose M&A to tide over the difficulties. As we known, M&A must have risks, for instance: estimate of target firms, choice of transaction method, or financial risks. How can avoid these risks? Which method should we choose? This is the purpose of this article.2. The cause of financial risk in M&A2.1 Overestimate or underestimate the value of firms lead to the risk2.1.1 Information asymmetry is the major factor which impacts the estimationBecause of Information asymmetry, target firm always conceal adverse information and exaggerate good information. Bidders also exaggerate their strength, disclosure between them are inadequate or distorted. Therefore, failures which result from rash actions can be found everywhere. There are many information risks, for tow important examples: first, equity risk, equity is very important in any firms, however there are difference between the offer information and the real, these illusive information threaten the succeed of M&A; second, debt information risk, if this risk would not be found, a large debt will fall to the bidders with no reasons.2.1.2 Lack of rational evaluation methodsThere are three evaluation methods: replacement cost method; market value method; the present value of earnings, between them, market value method has high request about Information symmetry, for firms can make an exact evaluation only when the information is high symmetry. However, in our country, the level of information symmetry is lower, little firms adopt this method. Most of them adopt replacement method and the present value of earnings method. These two methods also have disadvantages, replacement cost reflects the historical cost which can’t reflect the future profitability; although the present value considers the value-addedrevenue, it has also obvious flaws, that is, future revenue expected is very different.2.1.3 The system of assessment is not perfectHere is the assessment system in the whole industry, rather than a simple method. At present, our country is lack of independent, professional bodies, the majority of overseas M&A is completed by the enterprises themselves, on this point there is a certain degree of irrationality. Because lack of professional skills, and there is no habits of long-term follow-up observation, and can’t receive long-term and stable information and so on, all this lead to the re sult can’t follow the expectation.2.2 Risk result from the choice of transaction methods2.2.1 Cash methodIf you expect there is no risk in cash payment, you must make the present value of incremental of expected cash flow net present value is greater than the paid, whereas shareholders of bidders will bear the loss. When the cost of cash payment is expansion, and face huge debt burden, and the source of funding deadline is unreasonable structure, or lack of short-term financing, it is easy to bring to the acquisition of liquidity pressure. At this time if the new company has a low level of liquid assets, it will have a liquidity risk, and liquidity risk is the most outstanding performance of cash payment.2.2.2 Common stock paymentOn the whole, the major risk of stock payment comes from the value-added expectation, the stock exchange expand the shareholder’s base, leading to the decline of earnings per share, when investors doubt the target firm’s ability of getting back earnings per share, the stock price of bidder will decline because of dilution of earnings per share. It shows that the proportion of equity dilution resulting from the convertible is the most important means of payment risks.2.2.3 Leverage paymentLeverage will inevitably bring the debt risk. Leverage is the bidders make target enterprise assets as collateral for loan to banks, post-merger success with the production and operation activities generated cash to repay the loan. The aim of leverage payment is to solve the fund problem by using the loans, and hope that the acquisition can receive effective leverage benefit. This method is bound to achieve a high return on investment and it need stable cash flows to complete. Otherwise, the acquiring company may go bankrupt because of can’t pay off the higher debt.2.3 Financial risk resulting from adverse integration in the post-mergerIn the integration period, when the role of risk factors come to a certain extent, that will lead to the occurrence of financial risks. According to the manifestations, financial risk can be divided into the mechanisms risk, financial risk and operational risk. Mechanisms risk means in the integration period, because of setting up financial institutions, financial functions, financial management system, update of financial organizations, financial synergies, and other factors, the financial income and financial gains of bidders occurred in a departure from expectations, and thus suffer losses. Financial risk means financial income and financial revenue will depart from the expected if there is something wrong with the financial running. In the process of asset management, bidders control their assets, costs, financial operations, liabilities, profits, and other financial functions in accordance with the principle of maximizing the synergy earnings in order to achieve the final purpose of mergers and acquisitions. However, the uncertainty of macro-and micro-environment affect the decision-making process in the financial operation, which lead to financial risk. Operational risk means financial risk result from inadequate monitoring of financial activities. That shows process ending is not equals to final succeed, financial integration is the end of financial management in the M&A, and is also the most important aspect, if it failed it means the whole M&A is failed.3. Prevention measures of financial risk3.1 Prevention for information riskThe important role for this prevention is to rule out the false information through legitimate and effective method and then to get real, comprehensive information. For the equity risk, there are two main points: an appropriate cautiousness and disclosure. Appropriate cautiousness means a process of investigation, review and evaluation. Bidders must investigate the external and internal situation of target firms, in order to find some government activities which restrict property right transaction. Disclosure means that the target company should tell the bidders just as relevant materials, information, debt claims and so on. Disclosure must be true, complete and not misleading. As for the debt risk, we must first choose the best method; second, you must make an agreement about debt scope.3.2 Establish a perfect evaluation system, and select appropriate assessment methodsAppropriate evaluation methods usually include tow systems: One is the basic system which includes financial analysis, industry analysis, operating conditions analysis. Analysis of the financial system contribute to the understanding of thefinancial situation between the two sides, Industry analysis system, can make the bidder understand the external environment, as well as the status of industry trends. Through the analysis of operating conditions can understand the existing problems the operation, and provide the basis for integration. On this basis, enterprises can avoid this risk. Second is the evaluation system. There are many methods of the evaluation system, just as book value, market value, liquidation value, discounted cash flow and so on. Different valuation methods will lead to different price, so firms should select a better method in accordance with their own motive.3.3 Flexible choice of payment methodsReasonable arrangements for the payment method and financial cost reducing are related to the payment method inwhich cash payment face the most pressure. M & A business can combine their own available resources, diluted earnings per share and stock price volatility, changes in the shareholding structure in order to make their payment as combinations of cash, debt and stock, so that it can meet the need between two sides. For example, M&A takes two-tier payment method, for the first, adopt cash method while mixed method is used when the second step. This payment, on the one hand, because of the size of the transaction, the buyer paid cash consideration of a limited capacity, should maintain a more reasonable capital structure to reduce the enormous pressure on the loan, on the other hand, bidder can induce shareholders of target firm to make sell decision as soon as possible, and then they can reach the goal of obtaining control of the business.3.4 To strengthen the post-merger integration3.4.1 Strengthening financial control, financial integration of human resources, financial institutions and functions of the organization. For example, mergers and acquisitions business was to appoint Chief Financial Officer, Chief Financial Officer has clear responsibility and authority, they play the organization and monitoring role on the M & A business from day-to-day financial activities, and enjoy the decision-making power on a major event involved in the whole enterprise; implementing the structure of the M & A Adjust, the allocation of resources, a significant investment, technology development and other major decision-making to the budget of the corporate mergers and acquisitions, monitoring and controlling various types of the budget implementation, and audit its financial reporting; being responsible for personnel management business of their own financial accounting; r eporting the M & A’s assets operation and financial position on a regular basis. At the same time, when the acquisition is completed, financial institutions and thefunctions should be improved according to the specific circumstances of their organizations, including financial accounting systems, internal control systems, investment and financing system to make it more responsive to the needs of both mergers and acquisitions, and to establish a unified Financial information platform, so that management can be faster, more accurate and more comprehensive access to all types of financial information in order to meet the needs of decision-making.3.4.2 Integration of financial managementFinancial management objective is the starting point and end point of financial working, its determination directly impact on the theory of the financial system, and will determine the choice of a variety of financial decision-making. Upon completion of mergers and acquisitions, firms should make a clear objective of financial management based on the financial side of target firms.3.4.3 Integration of asset and liabilitiesIn M & A business, debt of bidders may increase because of taking over the acquisition's debt, or adopt financial method just as loans and bonds issue. If capital structure is irrational, and financial situation also become deterioration. So the balance of integration aiming at improving the financial situation and enhance the solvency of enterprises.3.5 To enhance the risk awareness of management of enterprise, establish and improve financial risk prediction and monitoring system To raise the risk awareness of management of the business will guard against financial risks of mergers and acquisitions from the source. In addition, establish its own enterprise financial risk prevention and control system within the enterprise, to strengthen business-to-risk M & A forecast is one of the key areas of the establishment of early warning mechanism for risk prevention system. M & A business as a better way with the unique advantages of the expansion of the scale, rapid market strategy, the socio-economic restructuring and resources optimization to become a topic of concern, the financial risk arising from the merger is also a deep wide range of people discussion of the field. As the market matures, I think M & A activity will be more thoroughly researched on mergers and acquisitions of financial risk issues will be further deepened, to achieve a real and practical application of theory to guide practice.中文译文企业并购财务风险研究1企业并购的背景研究并购在西方国家中，有大约超过100年的历史，并且交易规模不断扩大。

投资基金财务风险文献综述中英文资料外文翻译文献

投资基金财务风险文献综述中英文资料外文翻译文献摘要本文综述了有关投资基金财务风险的中英文资料外文翻译文献。

文献说明了投资基金面临的财务风险种类、风险管理策略以及对投资者的影响。

本文旨在为研究投资基金财务风险的学者提供相关资料，以促进对该领域的进一步研究。

文献1：《Investment fund financial risks and their implications》本文研究了投资基金面临的财务风险以及这些风险对投资者和市场的影响。

研究发现，投资基金的财务风险包括市场风险、信用风险和流动性风险。

为了管理这些风险，投资基金公司可以采取多种策略，如多元化投资组合和使用衍生工具。

然而，财务风险仍然存在，并可能对投资者的收益产生负面影响。

本文综述了投资基金的财务风险管理策略。

研究发现，投资基金公司可以通过风险度量、风险分散、风险对冲和流动性管理等方法来管理财务风险。

然而，有效的财务风险管理需要综合考虑投资目标、风险承受能力和环境因素等因素。

因此，投资基金公司应该定期评估和调整其财务风险管理策略。

文献3：《The impact of financial risks on investor behavior in investment funds》本文研究了财务风险对投资者行为的影响。

研究发现，投资基金的财务风险可能导致投资者的情绪波动和投资行为的变化。

投资者在面临财务风险时可能更加保守，减少风险敏感的投资，并选择更稳健的投资策略。

因此，理解财务风险对投资者行为的影响对于投资基金公司和投资者都非常重要。

结论综合上述文献，投资基金面临的财务风险种类多样，包括市场风险、信用风险和流动性风险。

为了管理这些风险，投资基金公司可以采取多种策略，如多元化投资组合和使用衍生工具。

然而，财务风险仍然存在，并可能对投资者的收益产生负面影响。

此外，财务风险还可能影响投资者的行为，导致投资决策的变化。

因此，投资基金公司应该认识到财务风险的存在并采取适当的风险管理策略。

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