As the concept of closed economies has become a passé, every economic unit is now vulnerable to financial crises arising in any part of the world. Normally, it is the large organizations that face the maximum brunt of trade cyclical fluctuations.
To help organizations deal with such uncertainties, many advisory services or consultants now provide risk management solutions that include assessing and managing a firm’s exposure to future and current financial risks. They suggest alternative financial solutions as steps to avert the possible risks. They take the holistic view of the economic environment and study the impact of volatility in both money and financial market on their client’s organization.
Risk management services are proactive in nature. Their main objective is to help organizations remain financially stable in an ever-changing environment. Therefore, using tools like stress test and sensitivity analysis, they gauge the sensitivity of the financial portfolio to market risk, credit risk, etc.
Forecasting the preparedness of an organization to deal with operational financial crunch is also a type of financial solution. It includes projecting cash flow patterns, possible gaps in a cash flow cycle, and the impact of money market interest rates, demand and supply of money on the liquidity cost.
There are a number of big and small advisory services mushrooming across the country. They generally adopt a professional approach in their working and try to first analyze a client’s requirement before recommending a solution. Most of them have websites providing a snapshot of their range of services.