The first step in the financial risk management process is
A) buying insurance.
B) identifying risks.
C) managing risks.
D) monitoring risks.

Question

Quizplus · Accepted Answer

Before any risk can be managed, it must first be identified. This involves identifying potential financial risks that the company may face, such as market risks, credit risks, operational risks, etc. Once these risks have been identified, then they can be managed using various risk management techniques, such as hedging, diversification, insurance, etc. After the risks have been managed, they must then be monitored to ensure that the risk management strategies are effective and to identify any new risks that may arise in the future.

The First Step in the Financial Risk Management Process Is