Tashkent institute of finance department «state finance» presentation on the discipline “Finance” on the Theme

Risk associated with investments in financial assets.

• This risk increases if the household owns various types of financial assets, such as ordinary shares or fixed income securities, denominated in one or more currencies. The source of this type of risk is the uncertainty in the development of the situation faced by the companies, government and other economic entities that issued these securities.

Theme 2.17. «Finance and risks»

Types of enterprise risks

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• Risk associated with production.

• Risk associated with changes in prices for manufactured products.

• Risk associated with changes in prices of factors of production.

Theme 2.17. «Finance and risks»

Description of enterprise risks

Copyright © 2020 Ye. А. Akhunova

• Risk associated with production.

• This is a risk that the equipment (ovens, trucks for the delivery of products, etc.) will fail, that the delivery of the original products (flour, eggs, etc.) will not be completed on time, that there will be no needed workers on the labor market or that due to the introduction of new technologies, the equipment available at the company is morally obsolete.

• Risk associated with changes in prices for manufactured products.

• This is a risk that the demand for baked goods produced by this company will suddenly change due to a sudden change in consumer tastes (for example, celery will be fashionable instead of bread in restaurants) and market prices for baked goods will decrease. Competition may also intensify, as a result of which this company will be forced to lower prices.

• Risk associated with changes in prices of factors of production.

• This is the risk that prices for some factors of production suddenly change. For example, flour will rise in price or wage rates will increase. If a bakery took out a loan on a floating interest rate basis to finance its activities, then it exposes itself to the risk of increasing it.

Theme 2.17. «Finance and risks»

The role of the state authorities

Copyright © 2020 Ye. А. Akhunova

Government bodies at all levels play an important role in risk management. The government either prevents various types of risk or redistributes them. People usually expect protection and financial assistance from the government in the event of natural disasters and various misfortunes caused by the people themselves, a warrior, environmental pollution, etc. An argument in favor of a more active participation of the state in economic development is the fact that the state can easily distribute the risk of investment in infrastructure among all taxpayers. Government officials often use markets and other institutions of the financial system to implement their risk management strategy — much the same way managers of companies and non-governmental organizations do.

As with companies and non-governmental organizations, all types of risk ultimately come from people. When the government offers citizens to insure themselves against natural disasters or the refusal of banks to return deposits, this means that we are dealing with charity. The government either charges a sufficient price for the insured to cover the cost of insurance services, or all taxpayers incur additional costs.