What Is Risk Assessment And How Can It Help You Make An Informed Investment Decision?

To know what risk assessment is and why it is done, it is first important to know what investment risk is. Investment risk is the likelihood of a loss occurring which is relative to an expected return on the same investment.

In simple words, it is a measure of the level of uncertainty of getting a return on an investment as per the investor expectations. It is basically the extent to which the unexpected result could be realized.

The risk is important and it helps to assess the investment prospects.Most of the investors when making an investment want the less amount of risk. When the risk is less the investment is seen to be more beneficial. However in reality when the risk is higher so is the return.

Risk assessment is very important in financial planning and you need to define and document what the risk is in order to get a better outcome. Knowing what the risks are will not make the future certain but instead, it will give you some amount of comfort when you see that a systematic method has been applied to help you manage your risks.

Risk assessment is explained

The risk and financial planning are basically divided into three broad headings. They are:

  • The investor’s attitude to risk – This is basically a measure of the clients understanding of the risk concepts and how it will apply to their finances.

  • The investor’s tolerance to risk – This seeks to explain how much volatility the investor is comfortable with. This is based on his past experiences and also what his future expectations are.

  • The investor’s capacity to take the risk – This is basically the client’s ability to take losses or how they would be impacted if there was a huge gain or a huge loss on their investment

The firms do a risk assessment and risk rating by using a psychometric risk tolerance test.

Risk assessment and how it helps in investments

There is a methodical approach that is followed in investing. When an investor is assessed for his risk-taking ability then he would be asked to answer some questions like if he is ready for a yearly return of say 10% yearly or a return of 30% in a year and is comfortable losing 20% in a year. Based on what the assessment score is an investor is recommended a particular asset class to save money into.

Analysing The Online Shopping Payment Mode

 

Shopping Customers have increasingly started using the available online options, as their mode of technology access and comfort zone is growing. To sustain in this competitive world, it has become a necessity to set up online stores allowing customers to shop quickly and securely in addition to the available physical factory.The ultimate success of your online business lies in making smart choices in the payment mode.

The moment you start receiving the credit or debit e-card from customers, you have to come across the various payment landscapes that can assist you to make payments to the organization that handles them.

A basic intro to the current payment providers

  • Merchant bank: Also known as the merchant acquirer is the entity who set you with a merchant account. Further, this connects you with your payment processor enabling to collect funds. On customer shopping, payment is processed by using an e-card and funds are debited from your customer’s account by the issuer and the last step to taking money to your account is the duty of an acquirer.
  • The Payment by Technology scheme: This includes a payment gateway connecting you to a website to the payment processor. Additionally, helping you with effectively transferring money from customer’s account via an issuer into merchant’s account.You also have the option of physically entering the card information on a virtual terminal or just wiping a card if you wish to make the payment personally. The whole process is authorized.
  • Customer’s view: This is the simplest and quick mode of electronic payment with respect to customers’ view. They can choose to shop with the credit card and step out easily.

About the payments

The journey of payment series is completely invisible to both the customers and the businesses. Once the card is keyed-into the swiping machine and the ‘buy now’is hit, it goes through many in-between stages operated by various players before they reach your account. The players also charge an amount for processing these transactions.

Know about the basic types of intermediate fees

  • Interchange fee: This is the payment fee to the issuer and it varies depending on the industry, purchase amount and even on the card-type used. This fee has calculated the sum of 2% of the volume and 0.10$ per every transaction made.
  • Assessment fee: This is the fee charged by the credit card associations and can be tallied as the sum of 10% of volume and 0.02$ per transaction.
  • Markup fee: This is the only negotiable fee charged by the merchant bank, the gateway and the payment processors. It is the sum total of 0.25% of volume and $0.10 per processing.
  • Extra fees: These are the ones charged for hardware set up, monthly usage and even include account cancellation.

In general, a better understanding of the pricing models and fees can really help you with wisely choose your payment service.

 

The Mechanism of Digital currencies

Before we start using any tool or technique we need to understand its mechanism. Digital currencies are fairly new and there are many questions in the minds of people about how it is useful and how it actually works etc. Though most people do not understand the mechanism of a refrigerator or a car and do not even try to understand the complicated process that a computer goes through while transmitting data, but they do not want to use the digital currencies without understanding everything as there is a huge monetary value attached to these coins.

The mechanism

This technology works using all the computers in the network, the world over. All the people together manage the transactions happening anywhere in the world. In other words, we can say that the currency is controlled by the network of people and not by any one person or country. It is completely decentralized and the network is used between two parties and yet in the open domain.

We can try to explain it further

  1. A person needs to transact and requests for the same.
  2. The need is transmitted across computer networks, each connected computer in the network is known as a node.
  3. Through algorithms, the requesting computer is validated for use.
  4. The transaction takes place and the information is recorded in every node. It will have the stamp of execution of the order, time and the monetary value in terms of the currency of the network. The currency can be Bitcoin, Ethereum or any other coin that is used by the particular network.
  5. The entire transaction is recorded as another piece of information and this increases the size of the blockchain and is again recorded in every node.
  6. The entire blockchain record is permanent and cannot be changed or erased.
  7. The transaction is completed.

The security aspects

The information about each transaction is not only recorded in the nodes of the participants, but it is recorded in the nodes across the world and each node has the same information. These pieces of data keep increasing in size and need super powerful computers for keeping so much data. The servers and nodes all follow security protocols to ensure that no one can breach and see the private details or transactions.

Conclusion

Once you know the working mechanism of any technique then all the doubts can be cleared easily. Once you understand then only you can trust the program and the way it works. The Bitcoin has been working successfully now for almost ten years without any major disruption due to the advanced algorithm. We can see the mechanisms improving in the coming years and making these cryptocurrencies more popular and easily accessible.

Brief information about CSR

 

The definition of CSR, in short, is if a particular company applies rules and regulations for the welfare of its investors and society as their duty. In the fast growing and globally competitive world companies must present them to be socially responsible and this is one of their best strategies to gain an advantage in reaching their goals. From many past decades, there was a lot of pressure on corporate companies to get involved in CSR for which most of the firms were not ready as many firms thought it as a waste of time and money. But some companies used their strategies to gain support from the public to strengthen their existence in national and global markets.

CSR involves various activities like charity, fund donations, educating children, women empowerment and doing some social contributions. CSR and financial performance are related to each other if a firm is interested in CSR and doing activities related to it form the profits gained, if the results are positive from those activities then the companies will be more interested to do activities and get profit maximization. If the social activities done by them effect negatively then they will not show any interest in CSR and adopt stable approach related to these activities.

CSR is not only related to social activities but it also focuses on stakeholders and their lifestyle improvement. As already known an act was passed by law in 2013 in which the companies with turnover more than 1000 crore should participate in CSR without fail, if they fail to do so then they will be charged according to law. Companies can implement the CSR activities according to the local conditions after seeking the approval from the CSR board of the company. Every corporate company should have CSR committee. And the role of the board in building CSR is:

  • Form CSR committee
  • Study and approve the policies of CSR
  • The board should make sure that members of CSR are implementing the rules listed
  • Make sure that 2% of net profits is pent for the purpose of social activities and wellness of stakeholders
  • If the members of CSR fail to spend so, then the committee should make an inquiry about it.
  • The committee of CSR consists of more than three directors of which one should be an independent director
  • They should recommend the activities and expenditure related to CSR
  • They should be up to date with changes done in policy from time to time.

 

Does stock market fluctuations affect small and medium businesses at all?

It is only ten years since the most recent depression passed over our heads and while a lot of businesses were affected because of the poor economic conditions to the extent that 60 percent of them closed shop, a lot of other business owners still thought that it was no major event for them.

I am dead sure that the small businesses that were caught unaware during the most recent recession would not have thought in their wildest dreams that they would be affected. The idea generally is that I am only a small enterprise and how can a market fluctuation affect me when I don’t even have a stake there or when I myself am so small to become listed there.

This is the mistake that most small entrepreneurs do. There is no doubt whatsoever that the fluctuations in the stock market however small have an impact on the small enterprises. It has an impact on everyone. So, while these small businesses may think that they are immune from any such changes and marker fluctuations is only kidding himself into believing something that is well nigh impossible.

No one is actually immune from fluctuations, not even individuals. With regard to the small businesses the following are the reasons why staying in business and not getting affected by market fluctuations is utopian.

  1. The entire economy works on credit:

The economy is almost entirely working on the credit system. Businesses across the industry do not want to put their own money in their enterprise. They rather borrow and raise the capital as a loan and then pay the principal along with an interest.

Say A owns a departmental store and he wants to operate it. He rushes to the bank and finds them ready to give him a loan at a stipulated rate of interest. He takes the loan and furnishes stock in the store. Similarly, we all buy gadgets even grocery with a credit card and then pay it at a later date failing which interest on the late payment also becomes due.

  1. Consumer behavior

Market fluctuations definitely affect the psyche of the common public. When the stock prices touch the sky people are seen buying things not only that they like but also the ones they like but don’t really need. When the market plummets the people start behaving cautiously and start saving money instead of buying goods.

  1. Competitions:

Small businesses sometimes do not feel so threatened by bigger enterprises in fact what they must be afraid of is competitions from other companies their own size.

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The tools that are available to assess and analyze risks in an organization

Whoever said that risks can be totally eliminated has never been disillusioned ever. Risks are imminent whether we are talking about our personal lives or professional ones. It is easy to say that a life without risks would even be boring because then we would have no fun in conquering our weaknesses and proving ourselves each time.

There are a lot of tools that are devised to assess risks in management as well as the personal setting. The most popular one is called the SWOT test. The acronym stands for Strength, Weaknesses, Opportunities, and threats.

A detailed analysis of your corporate status according to the SWOT matrix can tell you a lot about your company. It is a real test but a lot depends on the way the test is approached. Because the test is a self-approached, there are chances that some of the strengths and opportunities are overbearingly given importance and the weaknesses and the threats are not properly addressed. With time and practice, the skill to assess according to the SWOT format also improves.

It is important to be realistic rather than be an escapist:

There is no point really in having a flattering SWOT analysis because it defeats the purpose of actually taking this exercise. The test is to determine not just how good the strength of the company is but also to determine its weaknesses and the threats.

Albert S Humphrey is universally believed to be the father of this test. The test is also widely used as an ice-breaking tool in any organization or meeting and is a way to warm up the members of a group. At the corporate level, this is a serious strategizing tool to assess the risks that are prevalent in a particular industry.

SWOT can also help become better than competitors:

Identifying the company’s strengths and weaknesses is a natural progression towards self-awareness and can help in eliminating competitors. It is a powerful tool to distinguish yourself from other competitors and helping you gain a foothold in the areas where they lack.

Apart from this test, there is also another test called the PEST analysis which stands for the political, economic, social and technological analysis. This is more analytical than SWOT however it has not surpassed the former in popularity.

The SWOT test is sometimes referred to as the internal-external test also because the strength and the weaknesses are more often the internal factors whereas the opportunities and threats are mostly the external ones. For this reason, the SWOT matrix is also referred to as the IE matrix.

 

 

Payment Platform And Its Business Implications

When we are associated with a business and we have taken it to the online level there are many challenges we may face every day. One important such challenge can be the way we regulate the payment dealings. Making them safe and authorized is the best way to deal in online cash transfers.

But, how do we choose the best such company which can be our secure and convenient financial partner? There are a number of financial services which are readily available as these days this feature has become very popular. We can closely take a look at the functionalities of a payment gateway and choose from it.

The considerations to choose the best payment gateway are:

  1. Encryption standards: when a customer uses your online cash transfer method, he will have to disclose his bank credentials without any problem, and your payment mode should ensure encryption of data so that this information is not breached out at any time. The first important thing to be considered is the safety of the customer.
  2. Modern or classic. You need to decide if you need a modern or classic payment gateway. The classic one requires you to have a direct merchant account but a modern one doesn’t require this method. Both are beneficial and you can choose upon your need.
  3. Speed: different options of payment gateways have different speed of operation. Some follow many steps to get the transaction complete and take up to 2 days, but some are quicker. So choose the one which best suits your business the best way
  4. Compatibility: some payment gateways require some unique technology improvement to your entire website but some may be easily compatible, choose the one which is more economical and suits your business dealings.
  5. Fraud detection and security: there is a basic check of authenticity required which is very crucial in any business contract. Go to the providers with this facility.
  6. Reporting features: getting a clear and detailed review of your transaction history when required by the merchants should be possible. A payment gateway in such manner is essential for our business to be clear in all ways.
  7. Costs and fees: a feature which suits our business well and also doesn’t involve huge fees and costs can be considered a very effective and helpful one. And most importantly they should have a free set up options and complete trial run facility so that we can be assured of an easy service throughout the use of such systems.

The above guidelines can be very easy to follow and to be kept in mind while choosing the best payment gateway as required by you.