RISK ANALYSIS AND MITIGATION MEASURES
Risk Assessment
This is a technique used to identify and assess factors that may jeopardize success of a project in achieving its goals. This technique also helps to define preventive measures to reduce the probability of these factors from occurring and identify countermeasures to successfully deal with these constraints when they develop to avert possible negative effects on the competitiveness of the company.
Risk Assessment
This is a technique used to identify and assess factors that may jeopardize success of a project in achieving its goals. This technique also helps to define preventive measures to reduce the probability of these factors from occurring and identify countermeasures to successfully deal with these constraints when they develop to avert possible negative effects on the competitiveness of the company.
The Risk Analysis Process
The facilitated risk analysis process assumes that additional efforts to develop any business requires that the risks are quantified and are not therefore cost effective due to the following reasons:-
- Quantified risks are time consuming.
- Risk documentation becomes too voluminous for practical use.
- Specific loss estimates are generally not needed to determine if controls are needed.
- If such assumptions are not made, there is no risk analysis
However, there are risks that affect revenues of a real estate business such as:-
- Unanticipated competition.
- Privacy
- Intellectual property rights problem.
Moreover, unexpected development costs can create risk that can be in the form of more network risk that can be in the form of more network than anticipated including security holes and privacy invasions. All the above risks can be applied to help manage the risks.
The Risk Analysis Process
The facilitated risk analysis process assumes that additional efforts to develop any business requires that the risks are quantified and are not therefore cost effective due to the following reasons:-
- Quantified risks are time consuming.
- Risk documentation becomes too voluminous for practical use.
- Specific loss estimates are generally not needed to determine if controls are needed.
- If such assumptions are not made, there is no risk analysis
However, there are risks that affect revenues of a real estate business such as:-
- Unanticipated competition.
- Privacy
- Intellectual property rights problem.
Moreover, unexpected development costs can create risk that can be in the form of more network risk that can be in the form of more network than anticipated including security holes and privacy invasions. All the above risks can be applied to help manage the risks.
Financial Risk Management
It is important to understand that risk is inherent in any business operation and good risk management is essential if the business developer is able to identify and stop revenue leakage from the business. Of all the risks a business faces, financial risk has the most immediate impact on cash flows. These risks can be anticipated but can be shaded off with a solid financial risk management plan.
Anything that relates to money flowing in and out of the business is a financial risk. However, due to the many risks involved in a business, we can place them under one category, namely, the market risk.
The Market Risk
This is any risk that comes out of the market place where the business operates. Businesses that adapt to serve people online have a better chance of surviving than those businesses which stick to the offline model. However, every business runs the risk of being outpaced by competitors if you don’t keep up with consumer trends in the real estate market and pricing demands, then it is likely that you can lose your market share.
Credit Risk
This is the possibility that you might lose money if someone fails to perform according to the terms of contract. Suppose you sell a property on credit and the customer does not pay on time, you suffer a credit risk. Businesses must retain sufficient cash reserves to cover their accounts payable or otherwise they experience serious cash flow problems.
Liquidity Risk
This risk is also known as a funding risk. This category covers all the risk encountered when trying to sell assets or raise funds. If something is standing in your way of raising cash fast, it is classified as a liquidity risk. Such a situation usually affects a seasonal business to significantly experience cash flow shortages in the off-season. A liquidity risk may also include currency risk and interest rate risk, particularly if the exchange
rate or interest rate suddenly changes.
Operational Risk
This is a catch-all term that covers all the other risks a business might encounter in its daily operations. Staff turnover, theft, fraud, lawsuits, unrealistic financial projections, poor budgeting and inaccurate marketing plans can all pose a risk to the business if not anticipated and handled correctly.
Financial Risk Management
It is important to understand that risk is inherent in any business operation and good risk management is essential if the business developer is able to identify and stop revenue leakage from the business. Of all the risks a business faces, financial risk has the most immediate impact on cash flows. These risks can be anticipated but can be shaded off with a solid financial risk management plan.
Anything that relates to money flowing in and out of the business is a financial risk. However, due to the many risks involved in a business, we can place them under one category, namely, the market risk.
The Market Risk
This is any risk that comes out of the market place where the business operates. Businesses that adapt to serve people online have a better chance of surviving than those businesses which stick to the offline model. However, every business runs the risk of being outpaced by competitors if you don’t keep up with consumer trends in the real estate market and pricing demands, then it is likely that you can lose your market share.
Credit Risk
This is the possibility that you might lose money if someone fails to perform according to the terms of contract. Suppose you sell a property on credit and the customer does not pay on time, you suffer a credit risk. Businesses must retain sufficient cash reserves to cover their accounts payable or otherwise they experience serious cash flow problems.
Liquidity Risk
This risk is also known as a funding risk. This category covers all the risk encountered when trying to sell assets or raise funds. If something is standing in your way of raising cash fast, it is classified as a liquidity risk. Such a situation usually affects a seasonal business to significantly experience cash flow shortages in the off-season. A liquidity risk may also include currency risk and interest rate risk, particularly if the exchange
rate or interest rate suddenly changes.
Operational Risk
This is a catch-all term that covers all the other risks a business might encounter in its daily operations. Staff turnover, theft, fraud, lawsuits, unrealistic financial projections, poor budgeting and inaccurate marketing plans can all pose a risk to the business if not anticipated and handled correctly.
The Risk Mitigation Process
This is a process of understanding and managing the financial risks the business faces now or in the future. It is about understanding what risks you are willing to take, those risks you’d rather avoid and how you are going to develop a strategy on your risk. The key to any financial risk management strategy is the plan of action involving practices, procedures, and policies to be used to ensure that such risks do not happen again.
Implementing Financial Risk Control
The management of risks begins by identifying the financial risks, and their causes. This has to begin with the Balance Sheet that provides the snapshot of the debt, liquidity, foreign exchange exposure, interest rate risk and commodity price vulnerability faced by the company. The income and cash flow statements should also be examined to find out how income and cash flows fluctuate over time and the impact this has on the
organization’s profile.
There are a number of stages in the financial risk management process. These include the following:-
Identifying risk exposures as provided above
The important questions to deal with here include the following:-
- What are the main sources of income of the business?
- Which customers does the company extend credit to?
- What are the credit terms for customers?
- What type of debit does the company have? Is it short term or long term?
- What would happen if interest rates were to rise?
Quantifying Exposure
Analysts often tend to use statistical models such as the standard deviation and regression analysis in order to measure a company’s exposure to various risk factors. The greater the standard deviation, the greater the risk associated with the cash flow you are quantifying.
Liquidity Risk
This risk is also known as a funding risk. This category covers all the risk encountered when trying to sell assets or raise funds. If something is standing in your way of raising cash fast, it is classified as a liquidity risk. Such a situation usually affects a seasonal business to significantly experience cash flow shortages in the off-season. A liquidity risk may also include currency risk and interest rate risk, particularly if the exchange
rate or interest rate suddenly changes.
Operational Risk
This is a catch-all term that covers all the other risks a business might encounter in its daily operations. Staff turnover, theft, fraud, lawsuits, unrealistic financial projections, poor budgeting and inaccurate marketing plans can all pose a risk to the business if not anticipated and handled correctly.
The “Hedging Process”
After you have analyzed the sources of risk, it is necessary to decide on how you will act or use the information as well as make judgements on whether you are able to live with the risk exposure and whether you need to mitigate it or hedge it in some way. Such a decision is based on multiple factors such as the goals of the company, its business environment, its appetite to risk and whether the cost of mitigation justifies the reduction in risk.
In implementing all the above, it might be necessary to consider the following action steps:-
- Reducing cash flow volatility
- Fixing rates of interest on loans to ensure you have more certainty in your financing costs.
- Managing operating costs.
- Managing your payment terms
- Putting rigorous billing and credit control procedures in place.
- Eliminating customers who regularly abuse your credit terms.
- Understanding your commodity price exposure, i.e. your susceptibility to variations in the price of raw materials.
- Giving the right jobs to the right people to reduce the risk of fraud.
- Carrying out due diligence on your projects i.e. considering the uncertainties associated with a partnership.
Responsibility for Managing Financial Risks.
The responsibility for managing the financial risk depends on whether the business is small or bigger. If it is a small business, the business owner and senior managers are responsible for risk management. If the business grows to include multiple departments and activities, it may require a dedicated financial Risk Manager to manage risk, and make recommendations for action on behalf of the company
Management / Mitigation Measures
The process of managing the affairs of Sotos One Group Investments Limited requires that management must be prepared to deal with the issues of risk and uncertainty. The company is therefore faced with the presence of risk and economic activities. This must begin with the process of risk identification, assessment and management as part of the company’s strategic development. To effectively function, such a process must be designed and planned at the top of the echelon (at the level of the Board of Directors).
According to this consultant, “a well-designed company management process should evaluate, control and monitor all risks and their dependencies to which the company is exposed.” The primary risk management activities should include diversification and risk hedging through the implementation of various instruments such as structural products, markets, insurance and self protection aspects
Benefits of Managing Financial Risks
The benefits of managing financial risks include the protection of cash flows and a reduction in earnings volatility. This can contribute to a lower cost of capital and an increase in a company’s ability to access financing and exploit other opportunities
available.
The key to successful risk management in any organization is creating a risk aware culture in which risk management becomes embedded within the organization’s language and methods of working.
The Risk Mitigation Process
This is a process of understanding and managing the financial risks the business faces now or in the future. It is about understanding what risks you are willing to take, those risks you’d rather avoid and how you are going to develop a strategy on your risk. The key to any financial risk management strategy is the plan of action involving practices, procedures, and policies to be used to ensure that such risks do not happen again.
Implementing Financial Risk Control
The management of risks begins by identifying the financial risks, and their causes. This has to begin with the Balance Sheet that provides the snapshot of the debt, liquidity, foreign exchange exposure, interest rate risk and commodity price vulnerability faced by the company. The income and cash flow statements should also be examined to find out how income and cash flows fluctuate over time and the impact this has on the
organization’s profile.
There are a number of stages in the financial risk management process. These include the following:-
Identifying risk exposures as provided above
The important questions to deal with here include the following:-
- What are the main sources of income of the business?
- Which customers does the company extend credit to?
- What are the credit terms for customers?
- What type of debit does the company have? Is it short term or long term?
- What would happen if interest rates were to rise?
Quantifying Exposure
Analysts often tend to use statistical models such as the standard deviation and regression analysis in order to measure a company’s exposure to various risk factors. The greater the standard deviation, the greater the risk associated with the cash flow you are quantifying.
Liquidity Risk
This risk is also known as a funding risk. This category covers all the risk encountered when trying to sell assets or raise funds. If something is standing in your way of raising cash fast, it is classified as a liquidity risk. Such a situation usually affects a seasonal business to significantly experience cash flow shortages in the off-season. A liquidity risk may also include currency risk and interest rate risk, particularly if the exchange
rate or interest rate suddenly changes.
Operational Risk
This is a catch-all term that covers all the other risks a business might encounter in its daily operations. Staff turnover, theft, fraud, lawsuits, unrealistic financial projections, poor budgeting and inaccurate marketing plans can all pose a risk to the business if not anticipated and handled correctly.
The “Hedging Process”
After you have analyzed the sources of risk, it is necessary to decide on how you will act or use the information as well as make judgements on whether you are able to live with the risk exposure and whether you need to mitigate it or hedge it in some way. Such a decision is based on multiple factors such as the goals of the company, its business environment, its appetite to risk and whether the cost of mitigation justifies the reduction in risk.
In implementing all the above, it might be necessary to consider the following action steps:-
- Reducing cash flow volatility
- Fixing rates of interest on loans to ensure you have more certainty in your financing costs.
- Managing operating costs.
- Managing your payment terms
- Putting rigorous billing and credit control procedures in place.
- Eliminating customers who regularly abuse your credit terms.
- Understanding your commodity price exposure, i.e. your susceptibility to variations in the price of raw materials.
- Giving the right jobs to the right people to reduce the risk of fraud.
- Carrying out due diligence on your projects i.e. considering the uncertainties associated with a partnership.
Responsibility for Managing Financial Risks.
The responsibility for managing the financial risk depends on whether the business is small or bigger. If it is a small business, the business owner and senior managers are responsible for risk management. If the business grows to include multiple departments and activities, it may require a dedicated financial Risk Manager to manage risk, and make recommendations for action on behalf of the company
Management / Mitigation Measures
The process of managing the affairs of Sotos One Group Investments Limited requires that management must be prepared to deal with the issues of risk and uncertainty. The company is therefore faced with the presence of risk and economic activities. This must begin with the process of risk identification, assessment and management as part of the company’s strategic development. To effectively function, such a process must be designed and planned at the top of the echelon (at the level of the Board of Directors).
According to this consultant, “a well-designed company management process should evaluate, control and monitor all risks and their dependencies to which the company is exposed.” The primary risk management activities should include diversification and risk hedging through the implementation of various instruments such as structural products, markets, insurance and self protection aspects
Benefits of Managing Financial Risks
The benefits of managing financial risks include the protection of cash flows and a reduction in earnings volatility. This can contribute to a lower cost of capital and an increase in a company’s ability to access financing and exploit other opportunities
available.
The key to successful risk management in any organization is creating a risk aware culture in which risk management becomes embedded within the organization’s language and methods of working.
HOW CAN WE HELP YOU
Contact us at the SOTOS ONE GROUP INVESTMENT LTD nearest to you or submit a business inquiry online.
SOTOS ONE GROUP INVESTMENT LTD really helped us achieve our financial goals. The slick presentation along with fantastic readability ensures that our financial standing is stable.
Amanda Seyfried
SOCIO ECONOMIC JUSTIFICATION
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Employment generation.
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Government Revenue
➢ Corporate tax 30%: Euro 38,272.30 in year 2022 and Euro 65,986.83 in year 2036
CONCLUSION
The Statement of Income and Expenditure shows that this project is innovative. Profitability levels in the Trading, Profit and Loss Account shows improved performance in the purchase of real estate properties carried out by Sotos One Group Investments Limited.
The anticipated benefits and cost advantages to the lender and borrower allow meaningful consideration. In particular, the proposed project of extending business finance to the real estate company for development and improvement of housing in Nicosia, Cyprus is profitable. Based on the project’s feasibility and economic viability, this project is a good investment undertaking and available information in this Business Plan shows that it is commercially and economically sound.
- Michael Karaoli 5, Illiopolis 2546, Dali, Nicosia, Cyprus.
- +35799685207
- investment@sotosgreenpower.com
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SOTOS ONE GROUP INVESTMENT LTD. is authorised and regulated by the Republic of Cyprus.
