Provide a critical review of the current risk management activities of Essay

Provide a critical review of the current risk management activities of any one (large, international) financial institution of y - Essay Example The organization has intensified their cost disciplines while investing in some selective growth areas that support the priorities of execution. Risk management is the process through which potential risks of the organization is identified, analysis is done and then precautionary steps are taken in order to reduce or cut down the risk. In the world of finance this practice is a very common one and is followed by almost every financial institution. Whenever an entity goes with some investment decision they are exposed to a large number of financial risks. The degree of risk involved depends on the type of financial instrument involved in the investment. These financial risks can be of various forms like recession, volatility in the capital market, high inflation and bankruptcy. Therefore, in order to control and minimize the exposure of the investment to such risks, the investors and the fund managers are seen to practice risk management. If adequate attention is not given to the risk management while making important investment decisions then disastrous situation may result during the financial turmoil in the economy (Webster, 2010; The Economic Times, 2013). Different categories of asset classes are attached to different levels of risk. Risk management is a vital function within Barclay, which is operating globally and enjoys great visibility. The risk team formed with the organization plays a significant role by aiding the senior management to incorporate informed decision taking the implications into account. The risk management team of Barclays operates across the organization protects the reputation of the organization by ensuring and securing the financial performance of the organization. The organization has dedicated team of experts who carries out valuable work in managing the issues that causes significant impact on the business (Barclays, 2013a). This study focuses on the risk management of Barclays bank, measures it risk appetite and discusses wheth er corporate governance supports these risk management activities. Figure 1 Source: (Youngberg, 2010) Risk Appetite Good risk management does not signify avoid all types of risk at any cost. It indicates the various types of informed choices that the organization makes related to the risk in pursuit of its measures and objectives that lead to mitigation of risk. Defining the risk appetite of an organization is an integral part of risk management. Best-of-class companies does not design or discuss their risk management as an isolated add-on process but it is viewed as an important part of their strategy execution and design. The new strategic initiative taken by the organization may open attractive opportunities for the organization but the rewards should be balanced properly with the risk that is generated. In order to integrate risk dimensions fully in the strategy design the company needs to be aware of how much risk it is willing to take and how it is planning to balance between opportunities and risks. Foe enterprise risk management defining the risk appetite is very essential (Barfield, R., n.d.). While deciding on the risk appetite of the organization the board of directors should categorize the different types of risk and decides on the capacity. This includes the type and amount of risk the organization is capable of supporting in pursuit to the business objectives and taking into account the access to the