Quantitative Risk Management Concepts - Techniques and Tools

Question: Discuss about the Quantitative Risk Management for Concepts, Techniques and Tools. Answer: Introduction: The increased prospect of globalisation is responsible for significant changes in the business context of medium-size and large-size to expand its customer population by expanding to the international market. In the present context, the discussion of international business context and the associated risk conidiation are analysed, taking into a reference of Commonwealth Bank, Australia (Turner, 2014). The strategic strength of this company is linked to its brand popularity, scale (assets and merging strength), and diversified business mix that offer varieties of solutions to its client. The international business projects of Commbank is known to have its global presence since 2008 and marked its presence through retail banking in New Zealand and Indonesia, Banking investment in China and Vietnam, Banking branches in UK, Singapore, India, Japan, China, and New York. Apart from this, the company also offers international services in B2B form to several locations including Beijing, Hanoi , New Zealand, China, and India. It is vital to discuss that international business context is not only about networking to penetrate into the international location and framing strategic alliance to gain competitiveness, but is also linked with risk consideration in an overseas location such that continuity of business can be maintained and that the total asset value of the company should not be a risk (Ang, Benischke and Doh, 2015). The common form of risk that are probable to encounter for banks, as well as other commercial companies in conjunction with overseas projects, include country (legalisation) risk, commercial risk, currency risk, and cross-cultural risk (Turner, 2014). The reason that such factors must be carefully analysed is that with understanding to critical information, the company can avoid financial loss or product failure like situation. In addition to this, with accurate market understanding, the company can also manage the competitiveness in the market and manage the corporate social responsib ilities. Notably, the commonwealth bank has accurately identified such risk propensities, which can be reviewed with fact that they entered into the selective market with selective product lines. The major risk is the country risk which is linked with government intervention and protectionism. For instance, in China, the customer protection framework is poor and that financial liabilities in terms of consumer protection is minimal, because of which Commonwealth tends to expand its branches for financial investment in businesses (Stahl and Tung, 2015). Likewise, another concern is linked with legal safeguards, economic failure due to nations GDP, and adversities with reference to social and political unrest or instability. Particularly, in Asian countries, the GDP is stable only for India, Singapore, and China, whereas social and political interference are more in Pakistan, Nepal, Sri Lank, and Bangladesh, due to which the company have limited product launches. Note that these terms are also i ncluded within the scope of currency risk as the foreign taxation, asset valuation, and fluctuation in currency conversation rate also affects the overall business procedure (McNeil, Frey and Embrechts, 2015). Thus, careful evaluation of these terms, in each financial year is mandatory for global companies, in these nations, for avoiding any major loss in finance, which is accurately handled by Commonwealth Bank. Another significant risk is considered with respect to commercial risks such as weak partner of Merger and Acquisition (MA), the timing of entry into the market, and competitive intensities. It is reflective of the past MAs activities of Commonwealth Bank that they have an association with nationalised banks such that they can make a good return of their share values and can also avoid the risk of asset loss to market fluctuations (Henningsson and Kettinger, 2016). Lastly, the cross-cultural risk is associated with a reference to the local employees, their communication standard, and ways of decision making. For example, the commonwealth can only invest in B2B format to minimise the risk, whereas for the investment into the microeconomic of nations like New Zealand, US, Asia, and other European nation will be difficult unless they have more branches and executives working in the host markets. References: Ang, S.H., Benischke, M.H. and Doh, J.P., 2015. The interactions of institutions on foreign market entry mode.Strategic Management Journal,36(10), pp.1536-1553. Henningsson, S. and Kettinger, W.J., 2016. Understanding Information Systems Integration Deficiencies in Mergers and Acquisitions: A Configurational Perspective.Journal of Management Information Systems,33(4), pp.942-977. McNeil, A.J., Frey, R. and Embrechts, P., 2015.Quantitative risk management: Concepts, techniques and tools. Princeton university press. Stahl, G.K. and Tung, R.L., 2015. Towards a more balanced treatment of culture in international business studies: The need for positive cross-cultural scholarship.Journal of International Business Studies,46(4), pp.391-414. Turner, P., 2014. The global long-term interest rate, financial risks and policy choices in EMEs. [Assessed from https://www.iadb.org/res/centralBanks/publications/cbm77_1166.pdf Dated 24 Mar 2016].