Finance

The existence of virtual universities in the modern world and in the future is now a reality more than ever in the history of the world. During the invention of the internet, the rush to create websites by companies was referred to as a gold rush that would eventually fade away. That assumption has however been proved wrong as the world has become significantly computerized with all enterprise adopting use of customized computer generated software. This is a pointer to the fact that the evolution of the educational superhighway where learning can take place without limits of time and geography will continue becoming more common as technology improves.

The future for online education appears to be set for a complete revolution especially as the young people who were born in the technology age reaches the need to acquire higher education. There is however considerations that ought to be considered even as the online education goes top notch in the future. These include the need to assess the pedagogical principles associated with the emergence of online instruction and the virtual University. There is also the need to assess whether the virtual school is reliable, cost effective and sound. In addition, there is need to evaluate the skills that learners require and the skills and expertise that the virtual schools are going to offer. Another critical consideration is to analyze the ways through which virtual teachers can most effectively provide supportive, interactive and critical learning environment to the learners.

Managing the Virtual University
For the management of a virtual university to be effective, the management issues ought to be first laid down after which strategic management decisions would be adopted. Issues that ought to be considered in management includes the development of online programs that would effectively offer an on demand service, wide range of modules choices and real time interactions between instructors and learners. A prudent organization strategy would involve the establishment of several departments each assigned a specific role. For instance, there should be a department consisting of IT savvy faculty whose role would be to develop the instructional programs and post them in the universities web.

There should also be a department dealing with customer care whose role should be to handle all correspondence within the virtual university. In addition, an IT department would be established to ensure the effective control of internet facilities that would enable dispatch of information and teleconferencing between the lecturers and the learners. It is to be noted here that management practices practiced in the traditional universities would also require adherence. Such includes time observance by instructors and students, integration of professionalism in instruction and an emphasis on the development of quality instructional materials posted to the online learners. The advantages that could be associated with an effectively managed virtual university instructional programs includes

The provision of an on demand service-The most profound and visible effects of a virtual university is the elimination of geographical barriers and time constraints. Learning materials are easy to access since they can be downloaded anywhere in the expanse of the civilized globe. This implies that students can request materials for instruction and the faculty can relay necessary information in real time. There is also a fundamental change in learning emphasis and learning becomes more students centered. The need for a physical university which is clogged by geographical and time barriers is reduced as students become more focused on the learning experience rather than the learning location. The virtual universities have a great potential for becoming larger and virtual as the student body enlarges and diversifies. More people who were initially limited to access information and admission places can gain access to educational courses of their choice from any part of the world.

Reduction of construction costs-Since the virtual universities do not have limitation in time and space, the university can admit as many students as possible, almost without limit.  The University would reduce a focus on physical development as it invests more on funding the virtual education. This calls for institutions management to remain relevant in the coming age. It is highly likely that the near future will see massive investment in training on faculty members on expertise and skills required to conduct training via online programs.

Great Choice of modules-The virtual universities education is able to provide students with a wide range of choice on the modules that they consider taking. It is possible in the virtual universities to take consecutive modules offered from different institutions spread in different geographical locations at the same time. The success of virtual universities however depends on the institutions concerned attention on making sure that their enrolled students reach the minimum requirements and adhere to the set guidelines for graduation.

Improved and easy administration-The administration of virtual universities are improved in terms of their ability to monitor and conference with stakeholders and students online. This includes assessing students learning behavior as well as recording their choices, logging activity and interactions. The fact that materials can be processed online implies that the administration do not waste time with logistics and is therefore able to chat and conference with learners any time they need assistance.

Automated assessment-It is possible to generate online sophisticated grading systems that can test for plagiarism and other crucial functions of grading. For instance, questions requiring multiple choice answers can easily be assessed online and the report card processed immediately for the student. With technology, it is currently possible to have online generated tests with an automated grading system which can evaluate and grade students assignments and tests in very short time thereby revolutionizing the way grading has been traditionally done. This implies that the time that has traditionally been wasted on physical grading will be allocated and utilized for more meaningful tasks.
Improved faculty role-The virtual university presents the faculty with unlimited interaction with individual students. According to Pall off and Pratt the dividing line between the lecturers and the learners is progressively diminished in a virtual university as both of them become partner browsers in the cyberspace library. This effectively reduces the role of traditional teachers to less authoritarian practices.

Geographical Positioning of the Virtual University
It would be prudent to locate the headquarters of the virtual university within the geographical reach of the founders and brain behind it. The virtual university is highly technical skills dependent and is bound to experience shortcomings associated with technology programs. As such, having a good percentage of the technical skills within a common geographic zone would add value to the university. This is because the technical teams such as customer care, IT specialists and program developers can easily conference and suggest improvements when need arises. However, the virtual university can outsource labor in any part of the world and can therefore do so if the existing technical team in the ground can effectively coordinate instruction globally. Based on this, I would consider locating the headquarters in my home country.

Chinas earlier exchange rate have been controlling the capital outflows surplus running on both the overall current and capital account in its Balance of Payment, and accumulating in large amounts the the international reserves. This was not the best system to be adopted as there was a significant undervaluation of the currency, the renminbi (RNB). The China RNB undervaluation is at a preliminary estimates of 15 to 25 order. Anyway the currency misalignment in this manner could be corrected through solving the appreciation trade model for RMB appreciation that would actually yield BOP equilibrium of China. Alternatively, China could fairly contribute towards global payment imbalances reduction especially the United States currency (dollars).
   
The current China exchange rate system can be said to be an ongoing work. In the year 2005, July after a whole year of discussion the government it took to revaluing the China RMB by 2.1, changing to a basket from the dollar peg, giving the RMB chance to float more freely. It expanded the forward market in august by permitting the foreign and local banks with licenses to to take part in foreign exchange market interbank to transact RMB with interbank market and clients, the banks had the power to independently determine the forward rates. By September it did away with inconsistency existing between the rules for dollar fluctuations and basket fluctuations. In the new found Chinese exchange rate regime in July, daily dollar fluctuations were to be restricted to 0.3 per day, while the basket daily fluctuations restricted to 1.5 per day. The major problem in this system was that if the dollar had advantage and moved 2 againstother currencies, event that is not precedented, it may be almost impossible following the rules.1 Due to this, in 23rd September PBOC (Peoples Bank of China) changed RMBs fluctuation by a 3 per day rate against the major currencies non-dollar, Yen and Euro currencies. On 25th November, the regime system regulators chose to continue with market makers system to trade RMB for other currencies. Parallel to this, PBOC improved banks ability on foreign currency hedging through the first ever conducted currency swap domestically, it sold 6 billion to about ten domestic banks. In January 2006, PBOC allowed over counter foreign exchange transactions, running concurrently was the centralized APMC (Automatic Price Matching System), this was basically intended to establish more market oriented  price finding .
   
To assess china s sensitivity in imports and exports to changes in renminbi real exchange rate, I estimate the standard export and import equations. We are interested in the long run equation so we will use the co integration techniques. On top of that I use form import export equations to eliminate bias in equations. Anyway to eliminate omitted variables problems we include the determinants of demand.2
and supply in the reduced equation form. The estimation equations are
Xt  o  1  REERt  Yt  n  i3, i controlst  t
Xt  o  1  REERt  Yt  n  i3, i controlst  t

Where Xt is China export volume
Mt is China import volume
REERt is real effective exchange rate of the reniminb
Yt is foreign demand
YtWWb is china s domestic demand.2
The parameters estimated are 1 export exchange elasticity, 2  income export elasticity, 1  imports exchange rate elasticity, 2  import income elasticity.
  
The Chinese processing sector is very important for the economy we therefore estimate the ordinary exports and the processing sectors separately, the same is applied in ordinary imports and imports for processing. The Chinese data is difficult to work with evidently because no export and import price indexes are available at the aggregate levels. Hence the use of proxy price data. We use China s CPI (Consumer Price Index) as export prices proxy basically because China s National Bureau of Statistics doesn t give producer price index prices. Import prices proxy, we calculate China s weighted index 25 most significant trade partner s export prices and deflate imports index of China. As test of robustness, Hong Kong SAR was used as China s proxy prices of export and results maintained.      

Where N is the currencies involved in the index, which is the with currency weight and reri,  is the bilateral real exchange rate going against every China s trade partners. We use REER, BIS constructed as the robustness test there was a change in the results.3
   
The exports exchange rate elasticity is expected to be negative, as the products from China come to the global market. In Chinese case, the imports exchange elasticity is not clear as expected. If gained power of purchasing is stronger than the decreased demand following the related exports fall then imports should be fostered by a real appreciation. The import structure will also affect the reaction. Price elasticity are expected to be positive if domestic production are mainly substituted by imports.4 However, if the imports generally goods investments taken to the export sector, which is the common factor in China, then appreciation will negatively affect them.
   
Foreign Chinese exports demand is measured through global imports (don t include imports to China) and deflated through the world price index of imports. It s obvious that some production based tactics measures were used, though the data for every month don t exist. For China s local demand for these ordinary imports, industrial production volume is used. GDP is always used to measure the entire nation s output, in the wake of 2005 statistical reform in China, it is about to produce the GDP statistics for the period 1994-2005.5 And for the imports for process sing, processed exports are use as the demand factor for the long run purposes. We expect positive income elasticity for both imports and exports.
   
Additional controls are therefore placed in the import and export equations on their relevance basis in the literature of trade and in the Chinese case. Relevance of rebates of VAT (Value Added Tax) are tested for the case of exports used in China as policies to either discourage or encourage exports depending on the cycle of the business. A positive VAT sign rebates is expected. Capacity utilization measure is used to introduce considerations supply in the reduced form equation. The a priori should be that high utilization capacity should indicate towards the significant supply constraints, which might hinder growth of export. Capacity utilization can therefore be defined in brief as the difference between industrial production the trend in it, Hodrick-Prescott filter is used to calculate the latter.6
   
Finally, inward FDI (Foreign Direct Investment) real stock is the last control variable that is in the export equation. While the export and trade relations are well drawn in literature, it could be very relevant particularly to China now that large capacity of FDI is being directed towards the export industry. Although someone may think that FDI stock increase should foster the exports of China, the production chain complicated structures may bring complications in such an a priori.
   
Let s now move to the import equation, we have to include import tariffs because they have reduced substantially, particularly since China joined the WTO. The FDI stock is the second control. We expect, by principle, to get a positive coefficient on the stock of FDI because the foreign firms are more likely to prefer using imported machinery, parts and components in their production processes than the Chinese firms.7 However as the companies from the foreign countries start to direct their whole chains of production to China, import needs could be reduced and accompanied with FDI stock increase.
   
Finally, both the imports and exports equations include a deterministic trend when it is significant statistically. The variable of the trend should be vital in trapping improvements in
production and the reforms that are ongoing in the China economy, which cannot be measured easily anyway.
   
All the other variables in the model except the import tariffs and VAT rebates measured as value share of imports and exports are all in logarithms. The standard seasonal pattern may not be exactly followed by the Chinese data use of an adjustable series is preferred as we introduce dummies for Chinese December and the New Year.
   
We choose to use every month data for this period 1994 to 2005. Starting the analysis before the year 1994 would have definitely made little sense because there was China s market reforms breakthrough in the same year. Some of these reforms about China market were relevant to all the questions we were asking, i.e. there was unification in the 2 exchange rate systems, a compulsory imports planning was done away with and a reduction in the quotas and licensing requirements. And lastly reforms on prices were pushed forward, renminbi could be converted on the current account and development of private sector derived some benefits from the company laws initiated.

We now test for integration order of the variables involved in the analysis as a preliminary test. We use ADF (Augmented Dickey-Fuller) tests for unit root existence. Almost all the variables are found to be non-stationary in the levels but are stationary in the initial differences. Co integration vectors existence is then tested using the Johansen procedure. We find vector co integration (at least one) for every variable group.9 Co integration vectors presence gives us the chance to estimate lagged determinants regression and their differences using the approach of non-linear least squares as proposed by Loretan and Phillips. Approaches like these yield consistent and unbiased estimates of both the short run and long run parameters.
  
Apart from regressions on import and export equations for our full samples shown earlier (1994-2005), we must also run regression like those in the shorter periods let s say from the year 2000 to 2005 concentrating on the WTO influence period. It is important to consider to differentiate between ordinary trade and processed, running equations for each separately in both import and export case. Three was the short term lag maximum number introduced ultimately we only include the statistically significant ones.  

As expected the China s exports exchange rate elasticity for the long term both ordinary and processed are negative and significant in both the full sample and the one after WTO entry. When transformed appropriately, the long run impact estimated for real exchange rate is about -1.3 for the exports processed in both periods. And for the ordinary exports it reduces from -2.3 for the whole term to -1.6 for more current period. (These results are similar to results that have been founded for U.S, U.K among other OECD states.

For both the processed and ordinary exports, the positive effect of the long run is very small and is not significant statistically in the full sample, though it does become statistically significant after acquiring the WTO membership. To add to that, for most of the current sample, the Chinese export income elasticity is around 1 as is expected.
   
On the control variables, capacity utilization has significant impact over the exports only with a delay of one month or contemporaneously. The capacity utilization sign is negative in conjunction with the idea that proposing that large production shares stays in high growth times in the domestic market. VAT rebates statistically insignificant in all of the specifications we therefore don t include them in the final estimations. The FDI stock data begins in 1997 which is the explanatory variable but only at the more current sub period. A FDI stock surprisingly does not affect the exports of Chinese   an extent that is statistically significant. The trend goes on positive for all the equations while the exports are seen to be reducing at the Chinese New year and reduce during December. If the trends are not included in the estimation both the FDI stock and World demand coefficients would definitely become positive and statistically significant. However the exchange rate elasticity results would remain unchanged.
   
Finally, the imports exchange rate elasticity always come out negative and significant with an exception of imports for processing usually for the latter sub period, where the exchange rate negative coefficient is significant at only the level

The trend of forecasting and estimating the future has always been a difficult one for companies across the globe. The 1930s was the initial period when development into forecasting and predicting models for businesses became relevant for managerial decision making. The use of forecasting and predicting models of consumer demand was the initial area where managers liked to get forecasts for. Ford Motor Company was one of the pioneers in the Western half of the world that used forecasting to make business decisions effective and timely.

Firms employ forecasting techniques in a wide variety of areas for the purpose of decision making. Sales forecasting or rather consumer demand estimation is the most popular area where businesses use some kind of forecasting in order to project their future position. Companies employ a variety of techniques for the estimation of their sales in the future. Linear, self-corrective, aggregate demand forecasting and regression estimations are the most important models that companies use in order to forecast their sales. This area of forecasting is very important for companies due to the fact that this enables a company to formulate their business decisions of expansion, profits and losses. Though forecasting is not an accurate science, it sure gives the business decision makers some direction as to the movement of the future. Businesses engage in forecasting sales in order to project their future positions  on the basis of these projections managers are able to make decisions regarding various business strategies.

Companies like Wal-Mart and K-Mart are perhaps the largest users of forecasting models in the retail stores segment. Sales forecasting enables such retailers to find out whether their position will be better in the future or whether there will be a shortage of liquidity owing to some external reasons. On the basis of the forecasts then, the managers will be able to make decisions ranging from borrowing money to meet the short-term liquidity to perhaps opening a new store to meet the growing demand in that area.

Production companies like Walls rely heavily on forecasting to produce adequate amount of goods. Since the products they produce are fast moving consumer goods that are perishable, it is imperative that there is a good match between the demand and supply of the products. A slight over estimation would mean losses for the company would mean losses while under estimation would mean lost sales. Thus, it is very necessary for fast moving consumer goods companies to estimate their demand curves and thus make appropriate decisions so that they can be competitive and profitable in the marketing place.

On the other hand, companies also need to estimate their costs as time passes. Costing is an important element of business operations. Companies saving on small percentages of their costs are able to get a lot higher increase in the net income. Forecasting future costs is central to making revenue decisions and deciding upon strategic opportunities. Cost estimation is important when it comes to the point in determining the future cash flows and financial position of a company. For companies, it is important to know whether costs will be going up or not further it is important to forecast the percentages by which it will be going up. Financial decision making is completely based upon the net positions of companies in the future. Companies plan for it in advance and thus it is necessary for them to know the market position in future by accurate forecasting and estimation.

Companies across the globe are engaged in a great deal of forecasting and estimation techniques for several domains. The primary purpose of forecasting in sales and cost estimation provides firms with the pre-emptive power of making decisions that would be able to exploit the forecasts. Thus, the need for companies to use forecasting techniques for business decision areas is imperative. Businesses are able to function more effectively and efficiently on the basis of data gathered from forecasting techniques and estimations.

In analyzing the concept of religion in Europe, one aspect that seems prevalent is the dominant Christian memory. The question that often arises queries the extent to which religion is still intact in modern Europe. Gracie Davie poses the dilemma that arises which she postulates to be individual definition of the term intact (Davie 176). It therefore follows that there could only be two faces to the resulting scenario. One way is to look at the intactness of religion as the existence of the memory while at the same time  analyzing it in a manner that acknowledges a majority of Europeans to share the ideologies engendered in Christianity and go on to embrace this ideologies and practices. Another facet that arises while dealing with religion in modern Europe is the prevalent diversification that it exhibits. In this regard, Europes model of European religion has been portrayed more or less as the de facto religion of Europe in the modern era. The balance between personal integration of religion and the diversity of the concept of religion in Europe is the major factor that defines approaches of interpreting it under various levels including society and its various facets that range from politics, gender, secularism, government, economy as well as morality. Under one perspective, it is rendered totally impractical to sustain the historical dimension of religion without appearing biased and superficial to the taste and preference of other religions as well as an array of secular traditions.
A concept that is core in Modern European religion is the vicarious memory. In modern Europe only a few members of society take on the mantle of preserving religious memory signifying that religion is no longer taking the central place in peoples lives (Davie 177). There is no doubt about the fact that Christianity still exists in modern Europe but alongside this existence is a diminished number of individuals who can preserve it by articulating its fundamental tenets. Earlier, religious preservation was the province of men, in modern Europe there has been a shift with women exceeding men, with older generations taking more responsibility than the younger generation. In Western Europe, the literate are more responsible for religious preservation as opposed to peasantry in the pre-modern times. The liturgy has also seen women come to the front to preserve the ancient practice. In order to preserve the mannerisms engendered in the liturgy, religion has redefined the ancient practice which has seen it make amendments as to who is permitted to conduct liturgies.  This has seen ordination of female priests. In a significant number of protestant churches that are spread across Europe, women have been widely accepted and they are able to  The problem of sub-prime mortgage melt down caught many individuals unawares although some speculations were made. It occurred in 2007 a time of stock collapse in the United States and other western countries. As a problem challenging the economic growth of a super power nation, many policies were incorporated by financial institutions and government to handle this situation. The essay paper is a discussion of the failures that occurred in banks as a result of sub prime mortgage melt down and the measures taken by the government to correct this problem.
     A sub-prime mortgage is a form of mortgage that is given to a customer with poor credit background such that the possibility of repaying the mortgage is very low. A sub-prime mortgage has been used in the United States as a way of promoting the growth of housing sector. It has grown dramatically because lenders charge different borrowers prices that are different basing on the credit worthiness of the borrower. This form of mortgage attracts high interest rates than conventional loans and most mortgages have adjustable mortgage rates. In addition, some types of sub prime mortgage loans such as stated income and documentation are made at higher interest rates. Most sub-prime mortgages are branches of Adjustable Rate Mortgage (A.R.M) and they contain adjustable and fixed rates. Sub-prime mortgage have different options for payment which each customer has to make choice (Barrell, Davis, 2008). Payment of interest for this form of mortgage is made within a given period of time.
    In the United States, there has been a rise in mortgage foreclosures that has resulted to sub prime mortgage meltdown that has resulted from a crisis in real estate investment. Banks and financial institutions have been adversely affected by sub prime mortgage in most parts of the world. The current financial crisis of 2007 in the United States has been apparent had has threatened investment in real estate. The value of houses and other real investments in the United States and other global countries is very low compared to past years due to this meltdown. The decline of house prices during this period has made it very difficult for borrowers to refinance their mortgage and this has been a threat in sub-prime mortgages and other financial institutions. Since most of sub-prime mortgages are adjustable rate mortgages, resulted to securities loosing its value. Most stocks that were linked to sub prime mortgage that were held by banks declined in value resulting to capital decline in many financial institution of the United States. Other entities that were sponsored by government were forced to tighten credit terms globally.
    Sub-prime mortgage meltdown can be traced back on 2006 when housing bubble in United States collapsed as a result of high rates of mortgage default. The time before the crisis happened was a boom in economic terms and the banks made loans to be available at very low interest rates. The availability of loans and mortgages attracted many individuals who had higher expectations of return that was never to be (Marks, 2008). The interest rates began to rise and the prices of real estate went down making it difficult for the borrowers to default the loans and mortgages. The initial terms of accessing loan or mortgage had expired and the adjustable rate mortgage interests were very high. Foreclosures resulted in many mortgage firms like the sub-prime mortgage crisis which was a result of poor mortgage payment.
Failures in major banks and industries
    Banks and other form of industries were adversely affected by giving loans and mortgages to uncredit worthiness customers who were unable to refinance. The government had enforced policies that led to banks make bad loans. The government policy is called Community Reinvestment Act which enforces banking laws that leads to banks giving unworthy customers loans or mortgages. Low income earners are encouraged to take mortgages which they could not have afforded. This has led to failure of banks and other financial institutions through bad loans or sub prime mortgages. The banks and mortgage firms that have been exposed to these failures have come up with technique of charging high interest rates to riskier loans or mortgages like sub prime mortgages (Barrell, Davis, 2008). This strategy has led to creation of a crisis in the banking industry and financial institutions.
     The common failure of banks in sub prime mortgage meltdown is the position of banks to be in a position of not recovering fully the loaned amount. This has led to disruption in the way banks work and many financial institutions have collapsed from this crisis. The expectations of many investors were not met and this resulted to investors turning away from the United States to other developing nations. The stock market or securities was adversely affected due to low prices of securities and those who had invested in these markets made unpredicted losses. The mortgages were made for real estate investment like houses however, the prices of these investments were very low such that nobody wanted to invest in real estate.
Corrective actions taken by U.S government
     The government is a key player in safeguarding the welfare of mortgage firms and especially the sub-prime mortgage melt down. First, the government should abolish laws that are misleading as on how to give mortgages and loans. Community Reinvestment Act is one of the policies that government should do away with. This will lead to banks and financial institutions give loans and mortgages to customers who are credit worth. The second action that should be taken by government is to give central bank money that will repay mortgage firms money that had not been refinanced. Thirdly, the government should put good governing rules and regulations about the capacity of some financial institutions to grand customers loans. The government should incorporate measures that will protect the welfare of financial institutions and customers.

Risk is defined the result of unreliability on objectives, both positive and negative. It is a chance or possibility of danger, venturing on something new that involves determination to succeed or accepting the chances of something.  However, Management, is the ability to have control of a workforce, administration of business organization or public undertakings
Risk Management and Development
Barrese (2006) the assessment, identification and prioritization of risks along with economical application and coordination of resources reduce control and monitor the possibility and or impact of unforeseen events or to capitalize on realization of opportunities. Goals, definition and method vary basing on whether the method of risk management is in the context of management of projects, industrial process, engineering, financial portfolios, security, actuarial assessment or public health and safety.   
Challenges to risk management strategies
If ricks are inaccurately prioritized and assessed, time can be used to for purpose especially when dealing with loses of risks that may not happen. Utilizing much time in managing unlikely risks and its assessment can deflect resources that could be capitalized on.
Unforeseen events do happen but if the risk is improbable to happen, it may be better to retain it and deal with the outcome- that is if the loses has occurred. Qualitative assessment of risk is not impartial and has no consistency. The main justification for a formal risk assessment process is the bureaucratic and legal nature. Putting the most important risk management process in a higher position can keep companies from starting a project or getting it accomplished. This is possible if other projects are temporary put on hold until the process of risk management is regarded to be complete. 
Development and Trend
The factors involving development and trend include
Planning the number of processes left.
Identification of the risk in the chosen area.
Information security through mitigation of risk using the organizational, technological and human resource available.
Developing an analysis of risk involving in the process.
Defining the technological  framework for the an agenda and the activity of identification
Mapping out the scope of social risk management, principle upon which risk will be constraints, the objectives and identity of stakeholders.
Planning
Choose the suitable controls to measure risks. It requires to be accepted by the suitable level of management. Risk management plan should suggest effective and applicable security regulation for managing the risks. An efficient risk management plan should involve a schedule for implementation control and the person responsible for those actions.   
Identification
Billions of people connect with each other everyday thus making identity to take a new focus and considering the increase in the particular cases of identity fraud and theft, without instituting the best practices, policies and practice, trust can be uncertain. Risk are the events that when set off can cause problems. It can start with the cause of problem or the problem itself and this include
Source analysis
Problem analysis
Source analysis is when risk sources may be either external or internal to the system which is the aim of risk management while problem analysis are risks that are identified as undesirable threat. When either of the two is known, investigation can be done on the events that a source or problem was triggered.
Information Security
There should be a reformed focus on the tool of privacy management with the ability to mask information specifically in a non production environment. This can strengthen the need for solving ciphers and subsequent request to make complexity simple. Information on statistics is not obtainable on the gone occurrence. Assessing the severity of the results is sometimes complicated for incorporeal assets. Asset worth estimation is another issue that requires to be addressed. The best academic view and reliable statistic are the basic source of information. Such information should be provided for the management of the company that the basic risk is not complex to understand and that the risk management resolution may be prioritized.
Technology
Technology is a complex resource field that is dynamic. In order for an organization to stay competitive in the business environment, it has to use modern technology to meet its targets, speed up operations and produce standard outputs. Though technology has positive impact to the organizational productivity, it can also be used for fraud and illegal dealing. Unfortunately besides its merits, it is expensive change with technology, repair and maintain the machines. It requires a lot of money to buy technological ideas, system and procedures. Spending a lot of time managing and assessing, unlike risks can deflect the direction of resources that could be capitalized.
         Significance
Appropriate countermeasures or controls are significant in measuring each risk. The appropriate level of management need to approve the risk mitigation, for instance the risk involving the reputation of an organization has to have top management approval as the information technology department would have the authority to decide on the risks of computer virus.
The management plan for risk should suggest effective and applicable security regulations for managing the risks. For instance an observed high computer viruses risk should be mitigated by implementing and acquiring antivirus software. A good plan for risk management should include a schedule for responsible persons and control implementation for those actions.
Risk mitigation often means selecting security control which should be recorded in applicability statement that identifies which controls from the standard and particular control objectives, have been used and why.
                Implications
Neil (1986) says that, an organization needs to understand all the mitigation methods for the effect of the risks. Insurance policies have to be purchased for the risks that have been decided to be handed over to an insurer, refrain from all risks that can be evaded without sacrificing the entitys targets, minimize others and continue to have the rest.  
    Initial management plan for risk will never be perfect. Experience, practice and actual loss outcome will necessitate transition in the plan and give information to allow different decision to be made in dealing with the risk at hand. The results of risk analysis and management plan should be up to date periodically in order to assess whether the previous chosen security controls are still effective and applicable to assess the possible level of risk in the business environment. Risk management is the system of controlling, measuring and monitoring risk that organization encounter. Its effect can be on products and services, financial and human resources and external effect on the market, society and environment. Risk management is all about the following activities
Initiating a plan on how risks will be dealt with.
Live projects of risk database should be maintained.
Delegating authority to risk officer with the responsibility of anticipating potential risks.
Anonymous channel for reporting risk should be created.
Mitigation plans for risk that are selected to be mitigated are supposed to be prepared. These plans describe how specific risk is supposed to be dealt with.
Management of risk is a performance of systematically choosing cost effective ways for reducing the impact of the realization of threat to a firm. All risks can be mitigated or avoided fully simply because of practical and financial limitations. Thus all firms have to acknowledge some level of residual risks. Once risks have been found and assessed, the methods used to manage them include
Reduction which is the practice of mitigation.
Avoidance which is the practice of elimination.
Retention which is all about accepting and budgeting.
Sharing which deals with insuring and outsourcing.

In 2008, General Motors was recorded as the third largest automaker in the Fortune 500 by revenue. The company was the largest automaker, by sales, in the United States and the third largest in the world, by sales. With production in 34 countries, GM employed 244,500 workers around the world and sold and serviced vehicles in over 140 countries worldwide.


On 1st June, 2009 filed for Chapter 11 Bankruptcy Reorganization. Not only was it the largest bankruptcy of the year for the US Retail Industry, it was also the 4th largest bankruptcy reorganization in the history of the United States commerce. The new entity has largely been purchased by the US and Canadian Governments along with some holdings for the United Automobile Workers Union and G.M. Bondholder. The companys Hummer and Saturn brands were sold and the Pontiac brand was discontinued. When a company as large as this goes into bankruptcy, not only do its thousands of workers face unemployment, it is also poses a threat to parts manufacturers, dealerships, and myriad other allied industries. The slippery slope threatens to spiral out of control and intervention becomes necessary.
After decades, the company finally brought about an innovative product in the 2011 Chevy Volt which had built an unparalleled hype. Increasing costs during the economic crisis forced GM to shut down factories thus reducing the industrys overcapacity of cars and trucks. Eventually, when a new labor agreement kicks in, the cost of producing a car will go down and GMs products can become more competitive. Despite these factors, five severe obstacles brought General Motors, a giant in the automobile industry, to its knees. This article explores those financial and economic failures (Stoll, John D).

    Economic and Financial Failures

    Demand Shift and Uncertain Energy Policy
The first shot was the dramatic rise in energy prices in the summer of 2008. That caused a rapid mix shift in vehiclesand had a major impact on profitability. GM, Ford and Chrysler have relied on SUVs and trucks for the majority of their profits. Those vehicles commanded high sticker prices and by the late nineties made up 50 percent of the U.S. car market. When demand for the big vehicles dropped quickly and customers went for smaller, less expensive, less profitable cars, auto companies had two major issues to deal with A loss of revenue and a backlog of unwanted trucks. Another big factor was the USs lack of an energy policy. They just dont have one. When things like corn-to-ethanol were done, problems were naturally bound to rise since they didnt have a base in economics or technology. Not only did this contribute to a rising food price problem, with increased demand on grains, it also teed up problems for the automobile industry. General Motors was the slowest to respond to the market trends and thus demand shifts hit hard (Terlep, Neil King Jr. and Sharon).

The Financial Meltdown
Predictions placed the annual sales for 2009 of General Motors at less than 10 million. This is the lowest figure in over a decade, dropping dramatically from an average of 15  16 million annual sales. The drop largely derives from the lack of availability of credit. The company doesnt have the credit available to squeeze out of its crunch and customers have a reduced demand due to the low credit availability. The auto industry lives on credit as do its customers, so when access to car loans or leases is limited, sales fall off a cliff.
Legacy Costs
Every car GM makes carries legacy coststhe costs of providing healthcare and pensions to scores of retired workers. For every GM worker, there are about 10 dependents, which are defined as retired workers and their families. When the international car companies came to the U.S., the move stuck the domestics with a very large disadvantage related to legacy costs. And thats 2000 a car. That two grand must be built into the sticker price of any new GM car and truck. And thats money on top of developing, producing and marketing a carcosts that Honda, Toyota and others dont have. It makes competing difficult for the domestic automakers, like playing basketball with a bowling ball, according to the Chairman of the Center for Automotive Research, David Cole. GMs per-hour labor rate for car assembly is about 75 per hour, compared to 40 to 45 for other car companies. That particular disadvantage will be gone when a new labor agreement goes into effect (Ramsey, Jeff Green and Mike).

Sub-Par Quality and Lackluster Cars
Back in the early 1980s, while GM president Roger Smith fell in love with the idea of automating workers out of car factories, Toyota and others focused on refining their production techniques and produced much higher quality cars. Customers left GMs brands en masse. The companys market share has fallen from a high of just over 50 percent in 1962 to around 23 percent in 2007. In recent times, the quality gap has narrowed considerably but perception trails reality. Getting those customers back would require a herculean effort. Vehicles like GMs very first attempt at a crossoverthe sub-par 2001 Aztecdidnt help. Cars like that left customers will little incentive to return (CNN).

Global Slowdown
GM operates in 34 countries, and if its U.S. operation has been in decades of decline, other markets have been growing, particularly in Asia. But the financial shock has spread across the globe and sales are down everywhere. In effect, GM is bleeding from several wounds. As the largest of the Big Three, GM has been the focus of the media spotlight. But Ford and Chrysler are facing similar problems. And of course, thanks to many of the same factors, even healthy car companies are feeling the pain. The domestic auto companies werent the only ones that capitalized on the U.S.s thirst for light trucks. Half of Toyotas offerings are trucks and minivans. The difference is that Toyota doesnt come into this tough period already weakened by past mistakes. General Motors is particularly hard hit by the slow down because of the above five reasons, particularly its legacy costs and its lack of innovation (Oberois, Peter).

Chapter 11 Reorganization

The U.S. government and the Canadian government are providing 30 billion to the company to continue operating while in Chapter 11.
A proposal to form new entity that would be owned 60 by the U.S. government, 12 by the Canadian government, 17.5 by the United Automobile Workers union, and 10 by G.M. bondholder has been presented to the court for approval.
The U.S. government is backing GM vehicle warranties during the Chapter 11 process. The new GM is expected to assume responsibility for product liability, lemon law violations and workers compensation claims.
The company plans to sell its Hummer and Saturn brands, and discontinue the Pontiac brand.
Unable to sell the medium-duty truck production, and will discontinue operations at the end of July
Received court approval to borrow 33.3 billion from the U.S., Canadian and Ontario governments
The new GM company will launch a new stock IPO in early 2010
U.S. bankruptcy court approves GMs bankruptcy sale, leaving its most profitable assets intact and under government ownership on July 6, 2009
Emerged from bankruptcy protection on July 10, 2009 as a new company, which is majority owned by the U.S. Treasury

Analysis
With a new life, GM has the opportunity to correct several of its previous mistakes. Above all, the blame for its current meltdown falls on the company itself. Other automobile industries have suffered from the economic crisis and demand shifts just the same as General Motors but GMs massive legacy costs (GMs oldest former member is 110 years old and is still receiving retirement pensions), lack of innovation, and high priced vehicles make it impossible to compete in todays market (Motors, General). 

Financial Overview and Personal Goals
The fact that the Simpsons have started thinking about their financial well-being, begun to budget their cash inflows and outflows and are trying to make up a savings plan for their various goals is a good start and the first step to financial management. However, their cash flow statement (See Appendix A), tracking their cash inflows, and their various cash outflows, shows that the Simpsons expenses are exceeding their income by around 35 a month. This is contributing to their debt, and eating away into their meagre assets, as shown in the Assets and Liabilities columns in Appendix A, not taking into account the savings that the Simpsons wish to make in order to pay for a new car and their son Harpers education. As the Simpsons are currently exceeding their monthly income, unless they make some changes to either their income or expenses, they will not be able to save for their financial goals.

The Simpsons have a current annual income of 30,000. They have expressed three types of financial goals  short-term, intermediate and long-term ones. Their short-term goal is to save 3,000 with the aim to put a down payment on a new car for Mary. In order to be able to afford this, the Simpsons hope to save 250 per month, so that in a years time, they can replace Marys current well-worn car. As an intermediate term aim, within 10-12 years, the Simpsons want to save enough for their son Harpers education to support him through college. For this reason, they hope to save 150 per month. Assuming an interest rate of 8 annually, they will be saving 27,442 over 10 years (see Appendix B). In the long term, the Simpsons plan to save for their retirement. However, since they do not have any spare cash and are already planning to save 400 a month for their short and intermediate term goals, they have decided to postpone saving for retirement until later.
In order to evaluate these goals, it is important to know the actual amounts that are needed for each of the short, intermediate and long term goals. Assuming, for instance, that 3000 is enough for a down payment on a car, the Simpsons have not explained how they plan to include the payments for the new car within their already constricted monthly budget. As for the goal of saving for Harpers education, the actual cost of college expenses is not provided, so it is assumed that saving 27,442 is sufficient. This goal is realistic, if the Simpsons are able to save the 150 each month at the assumed interest rate, or are able to secure a higher rate of return on their investment.

The Simpsons have set a long-term goal of saving for retirement, but have not expressed a realistic timeline concerning when they can start saving for it, and how much they plan to put aside. Most financial planners like Burton Malkiel suggest starting to save for retirement as early as possible, as less money saved over time can add up quite quickly. In Appendix B, I have demonstrated the amount that the Simpsons can have at the age of 65 if they invest 50 a month starting today. The amount is a staggering 114,694. By contrast, if they save the same amount over a 15 year period, they only put away 17,301 for retirement. Financial experts typically suggest that you should hope to retire at the age of 65 with 80 of your pre-retirement income. Thus, if the Simpsons are serious about saving for retirement, they need to start thinking about it now.
Cash Flow Statements and Balance Sheet
The Simpsons current monthly income is 2,600, and their total expenses are 2,635 (Appendix A). Thus their cash outflows exceed their inflows by 35, which they are probably making up from their current account or charging to their credit card. They also have assets totalling 77,900 and liabilities totalling 61,500.

Net Worth

Their current net worth, their total assets, is less than the scope of their total liabilities. The Simpsons current net worth is 16,400 (see Appendix A). If the Simpsons pay off their credit card debt from the current account, their liabilities will reduce by 1,500, but so will their assets, leaving the net worth unchanged. If they are able to save 400 a month, their assets will go up, by at approximately 30,000 (see Appendix B).

Revised Cash Flow Statements
Their current income and expenses do not have enough room for the savings that the Simpsons are currently contemplating, let alone for saving for retirement. Whilst their goals to save are admirable, in order to make them a reality, they would need to make some changes to their cash flow statement. Assuming that their income is fixed in the short term, the changes would thus be needed on the expense side. Without knowing the details of the details of some of the Simpsons expenses, it is difficult to make recommendations for instance, I would need to know how the 600 spent on recreation and programmes for Harper is distributed, and whether some of it can be cut back. I would recommend however, that the Simpsons look closely at their expense column, and attempt to cut back on their expenses by approximately 435, which would mean that they would not be spending more than they currently earn, and they would be able to save 400 a month. They should consider cutting back on are the recreation, clothing, cable and gym expenses. Additionally, depending on the rate of interest that they are paying on their credit card balance, they could consider paying off the credit card debt with the money they have in their current account. They are not earning any interest on their current account, and they could save a lot of money on interest by paying off this debt. In case of emergencies in the future, they could charge any unforeseen payments by the credit card. In Appendix D, I have created an alternate budget for the Simpsons, which is simply one way to reallocate their income and ensure that there is still some savings, in this case, 385. Depending on what expenses are essential and what can be curtailed, the Simpsons can allocate their income in some other fashion.

Another way to achieve their financial goals would be to re-evaluate the time lines for them. If they cannot cut back on their expenses quite that much, they might consider postponing buying a car by a few more months and putting aside less every month for the car. Besides, the Simpsons could save less than 150 monthly for their sons education, or start with a smaller amount now and increase it if their income goes up in a few years.

Liquidity

If the Simpsons alter their budget as recommended, they can cover their current expenses as well as a large part of their planned monthly savings. This does not take into account any future increases in income. According to the statement in Appendix D, the Simpsons can save 385 monthly. In addition to this, the Simpsons have assets of 77,900. To determine their liquidity, we can use two financial ratios to see if they have adequate cash for emergency situations.

Their current ratio is 1.2733, which is the ratio of their assets to their liabilities (see Appendix D). Their quick ratio on the other hand 0.016667, which is the ratio of the assets that are easily liquidated to the liabilities.

Savings Options

There are various saving options available for the Simpsons. It is a good idea to shop around for different rates, before deciding on a savings option. A good website, such as Bankrate.com or Moneysupermarket.com, can provide details on different options such as fixed term bonds or individual savings accounts (ISAs). Appendix E has two short-term saving options, and compares the rates between Barclays and HSBC. As is evidenced, the rates can be very different, and vary depending on the length and amount of the investment. Whilst here Barclays is obviously the superior choice, it is possible that the Simpsons prefer a savings option that is for a shorter or longer term.

Identity Theft Precautions

The Simpsons should separate their mail, and any mail that does not have any personal information like date of birth, bank account details etc, can be disposed of in the trash. Mail that has sensitive identifier information should be shredded and disposed of safely. If in doubt, shred it anyway. It is also a good precaution to check bank and credit card statements to ensure that all the charges on it are genuine.

Paying Off Credit Card Balance
The Simpsons have a current credit card debt of 1,500, on which they are simply making the minimum payments, which does not reduce the principal amount of the debt. They would be better-off using the money that they have on their savings account to pay off the debt, even though they would lose the 5 interest it brings in. In Appendix C, I show that the 5 rate brings in 75 annually on an equivalent sum of 1,500. In contrast, by paying 18 interest on their debt, they are spending 270 in interest. It is clearly in the Simpsons interest to pay off the debt with the funds in the savings account. This shows that credit card decisions, which typically carry much higher interest rates, have a very strong impact on individuals budget decisions and their financial health.

The financial sector is one of the most important industries of the world. Not just because it involves large funds and astronomical figures, but, it is this industry which drives the entire world. The financial sector is more globalised than ever and every transaction of it impacts a large population in some way or the other.
The financial sector is largely dependent on the consumer and customer service forms an integral part of it. Be it any financial organization, banks, stock broking companies, insurance providers or any investment firms, every transaction revolves around customers and their requirements.
The customer base may vary from individual to corporate however, the end result involves customer service. This is one of the reasons why most top banks have an extremely good customer services department to help in any enquiry and attend to a customer requirement.
However, customer services are not just restricted to handling out information and selling products. Customer service also involves safekeeping of funds and providing a safety net to them, in any situation. In order to provide this safe shield and ensure customer satisfaction, most financial institutions are today, bound by certain contract laws which clearly list out the responsibilities to be undertaken by them. These laws and understandings are essential for customers to invest and work in a safe environment with the security of the law.
The incorporation of these laws happened over a period of time and this changed the face of the financial sector. The details, developments, advantages and also its disadvantages is what we shall discuss in the given report.
Disputes in the Financial Sector
In any industry around the globe, problems are aplenty. There is no such industry or sector which is not plagued by problems. The financial sector being no different also has a number of issues and disputes.
These issues vary from one customer to another. The likely disputes in the financial sector are that of irregular interest rates, terms of investments, unprecedented stock price rise, unfulfilled returns promise and fund keeping. The issues of stocks failing without warning or funds being guzzled by the financial heads is a common tale. Just a couple of days back the VP Finance of a leading public listed company of the USA was arrested for frauds in the companys accounts.
The failure of huge industry houses such as Lehmann Brothers, Meryl Lynch came as a big shock to the entire world. This type of environment and risks associated with financial sectors make the customers vary of making any financial commitments. This is when the need to develop laws to safeguard the investor and his interest becomes relevant.
The need to protect every person involved in any transaction with any financial organization, be it banks or stock broking companies, is what was felt to be most essential so as to allow this industry to prosper. According to the International Monetary Fund, a resilient, well-regulated financial system is essential for macroeconomic and financial stability in a world of increased capital flows. In a world plagued with crises after crises, the stability and safeguarding of investors is of utmost importance so as to promote the finance sector and protect it from any potent dangers.

Laws for Financial Disputes
The legal infrastructure plays a pivotal role in the operation of financial markets, as well as in the efficient intermediation of capital flows and domestic savings. Banks and other financial institutions hold claims on borrowers, the value of which depends on the certainty of legal rights and the predictability and speed of their fair and impartial enforcement.
The legal framework that empowers and governs the regulator and the rules for
The regulation of the various markets forms the cornerstone of the orderly existence and development of the financial markets. In this respect, the key laws are (a) the law governing the formation and operation of the central bank and (b) the law regulating banking and financial institutions and markets.
These laws have played a very important role in safeguarding the interest of customers, whether individual or corporate, in delivering justice and providing a safe net to investors. The original laws which were formulated were based on contract laws. The basis of contract law is mutual trust and understanding. In contract law a mistake is an erroneous belief, at contracting, that certain facts are true. It may be used as grounds to invalidate the agreement. This is the foundation for the laws governing the financial sector, which is known as Finance Companies Act. The coverage of this law is very large and covers banks, insurance companies, stock broking firms and investment firms.
A lot of cases have been very historic under this act and led to landmark judgments. Some of these cases can be cited as
 Roswell State Bank v. Lawrence Walker Cotton Co.
This case made a landmark judgment by declaring that a bank, title company, document processing firm, or the like is not liable for false information provided to it, any more than a bank was liable for false information from a trusted customer turned embezzler who drew an unauthorized cashiers check.
This judgment proved to be a vital decision in a number of cases to follow.
Union Bank  Trust Co.v. Girard Trust Co.
As a judgment in this case, firm processing information in order to transfer title using information provided by customers lacked the intent to commit illegal or improper acts when the information furnished to it was wrong. It was not part of its job description to know better, and it did not know better, and charged only a nominal fee for the clerical work, clearly not including any investigation. Further, it could not be in a conspiracy with another party or several parties who knew the information was wrong but failed to inform the title firm. The title firm could not unknowingly become part of a conspiracy of which it was never informed, and from which it could derive no benefit. The attempt to enhance liability or shift blame by filtering data through an innocent party has been tried before, but where the conduit providing document preparation does not know more than its informants, and was not hired or paid to investigate, it is not liable in their place for using their bad facts without guilty knowledge. This came as a very important decision with respect to the banks knowledge about its customers and its related information.
These cases are just an example of the sort of security cover available in the framework of the law. The basic idea of these laws is to protect parties, the investor as well as the company from any mishaps and wrong doings.
As part of the new regulations a number of companies and institutions are now bound by these laws for their own as well as their customer protection.
Organizations adopting corporate laws
As a mark of quality control and assurance to its customers, a number of firms have very strong dispute resolution teams aimed at providing complete customer satisfaction and ensuring its own reputation. One such firm which is very much involved is one of the global leaders in financial auditing, Deloitte. The professional services firm has assembled a multi-national team with deep knowledge of the approaches that tax authorities in key jurisdictions are likely to take in the transfer pricing of financial services transactions.
Based on their experiences of the financial markets, one of its top executives commented that the financial service companies have struggled to develop transfer pricing policies that can be globally applied. The rules and guidance covering these sorts of transactions have not always been clear or consistent across countries. This is one of the major reasons for involving a dispute resolution team so as to be able to sort out localized as well as international affairs.
Transfer pricing is one of the most significant tax and FIN 48 compliance risks for multinational groups. Tax authorities around the world are investing heavily in developing new ways to challenge transfer pricing with more effective risk assessments, audits and litigation success. For multinationals, strong systems, up to date pricing models, access to experts and a global approach are at the heart of the best defenses in this environment. This thought process has led Delloite in appointing a large group of professionally qualified executives to resolve any issues related to financial transactions.
Apart from companies, the major regulatory board is involved in the case of stock markets. Stock markets of today are highly regulated under various bodies for its smooth functioning and to allow everyone to carry out trading activities based on actual merits of any share and not on the monopoly of stock brokers. Regulatory bodies such as the US Securities and Exchange commission defines the regulations for carrying out business in the New York and NASDAQ stock exchanges have their own well defined regulations so as to protect companies and their investors from any frauds. These regulatory boards define every step involved in carrying out transactions and have well defined rules for them. Every company that wishes to carry out trading in the secondary market needs to comply with these regulations in order to function else, it would get black listed from the index.
The international monetary fund is another organization which looks into the regulations of funds transferred on a country level and ensures that the money reaches the correct target. The IMF makes certain rules for carrying out funds transfers and they must be complied with in order to carry out a transaction. The duty of the IMF is to act as an auditor to ensure that the funds which are sanctioned are not for any private profit but for the benefit of any country or institution. In times of extreme crisis and weak financial institutions, the IMF regulations are a framework within which all the money given to a country or company must be used. Any infringement of the regulations of the IMF can lead to serious consequences and punishment.

Advantages of Dispute Resolution
Now that we have seen the functioning of the financial sector, its associated disputes and also a detailed assessment of the contract laws involved, the issue in contention is that why do we need these contract laws Is there any use of having these laws and has there been any advantage of this The answer to this question is yes. The formulation and implementation of contract laws have seen a large number of benefits vetted out to both the investors as well as financial institutions. These laws have given a well defined framework for companies to work and implement its policies. The presence of these laws has not just made the customer more aware but has also given them a support to fall back on, in case of any fallout with their respective company.
A good example of the implementation of these laws was the conviction of the top management of the top power company Enron for embezzling huge funds from a public listed company. This conviction was only due to the existence of the company finance act which enable justice to be delivered to all those found guilty. This conviction wouldnt have been possible but for these laws which provided a security net for those investors who trusted the company.
This is one of the many cases where the corporate governance and laws played a pivotal role in delivering justice to the investors and customers of the company. The success of these cases instilled a sense of confidence in the investors and customers of financial organizations, thereby, increasing the demand for more such laws for mutual benefits.
Development of Financial Dispute Resolution Laws
With the financial markets struggling against the backdrop of huge crises and more and more globalized economy, the need for more regulations and detailed provisions of dispute resolution laws are required. This is the reason for the development of Dispute resolution laws in the UK, Japan, Singapore and other economies. With the increase in the number of financial institutions and investors and with globalization, the need for protective laws is much more. Right from contracts to trading to transfer of funds, every aspect of finance can get into severe complications. These can result from location issues, country regulations or taxation problems. In all cases there is immense need for better and stronger dispute resolution acts.
Even institutions such as IMF have come up with stringent regulations for money that is sent out to different countries for development purposes. The role of the IMF is very important because a sound financial system is therefore essential for supporting economic growth. Problems in financial systems can reduce the effectiveness of monetary policy, deepen or prolong economic downturns, and, in case of large scale problems, trigger capital flight or create large fiscal costs related to rescuing troubled financial institutions. Moreover, ample international financial and trade links imply that financial weaknesses in one country can rapidly spill over across national borders. Hence the soundness of a countrys financial system is important both for the domestic economy, as well as for its trading partners and countries with which it has financial linkages. This responsibility can only be carried out by an international regulatory committee.
Even the regulatory committees like the Securities and Exchange board, governing the NASDAQ regulations has been requested to provide more detailed laws for protection of investors.

Disadvantages of corporate laws
The corporate laws are like any other thing in this world, with both pros and cons. However much we would find it beneficial for both companies as well as investors, yet there are certain drawbacks of this.
One of the main issues is the inconsistent nature of dispute resolution laws. Every country has its own financial laws and their terms and conditions vary. This can be an arduous task for any committee which tries such a case in an international market. A law which governs financial transactions in USA may vary greatly with the laws of the UK. In such a case there is need for an attorney to understand both legalities and also understand which country to file the case so as to ensure justice is delivered to the complainant.
Also, in some cases the parties tend to take advantage of the loopholes in various contract laws, which can lead to injustice being done to either party. In order to prevent this it is important for the regulatory committee to maintain a strict vigilance and ensure justice is delivered.
There are no straight disadvantages of having corporate laws, but it is essential to be careful while accepting any such contract because sometimes things can be implied but not clearly mentioned which may lead to misunderstanding on both sides. This is one of the main errors which need to be avoided while getting into any contract law in financial transactions.

Personal Opinion
In accordance with the requirement of this report, I would like to include a point of view of my own on this issue of corporate laws in the financial sector.
As an individual investor I certainly feel very safe when I enter into any transaction which has a legal backing and also when I know that I can approach the justice system in case my trust is betrayed. There is no better security for me than a legal aid especially when money and financial matters are involved.
I feel it is one of the best things to happen to the financial world. Making a company commit to its promises legally ensures proper discharge of duties. This instills a sense of confidence and security in the investor and helps the industry to grow exponentially.
Even from the point of view of a financial institution, a legal contract ensures the customers and investors stick to their promises and this helps in developing a mutual relationship. This legal contract definitely ensures a smooth functioning of the financial sector and removes possibilities of any frauds.
However, there is a possibility of either the investor or the company taking advantage of these contracts by implying a number of conditions not explicitly explained. This is one case which one needs to be wary and decide accordingly. It is essential to be able to communicate well with the institution or investor before entering into any contract. Also, the other drawback is that companies can sometimes be falsely implicated by investors even though they are innocent. This is where the law and its implementers have to be very vigilant and judicious in their decision, to decide who is right and not.

When companies undertake global business, they take a risk since their business operations and investments are likely to be adversely effected by alterations in the exchange rates for dissimilar currencies. This type of risk is referred to as exchange rate risk. Increasingly, a number of business companies are scrambling for a share of international market, especially in third world countries, and putting funds in foreign stocks. However, all economies including the most developed, experience downturns once in a while. In the case of third world countries, currencies and economies may be moderately volatile due to factors, such as political turmoil as well as oil prices, thereby creating unstable environment for global market. These factors can greatly affect the cash flow, earnings, and balance sheet of several multinational companies in such developing nations. This report presents a wide definition and major types of exchange rate risk, discusses the measurement approaches used to measure the risk. It concludes by identifying that economic or operating exposure is likely to be most important in the long run.
Exchange rate risk refers to a risk which a firms performance will be affected due to exchange rate engagements. For instance, an international firm incurs direct and indirect loss when the host countrys exchange rate depreciates. Alternatively, this firm is able to do profit when the host countrys exchange rate appreciates. International companies need to intimately monitor their monetary operations as away of determining how they are exposed to the different types of exchange rate risk. Thus, financial managers ought to comprehend how to measure and manage their companys exposure to fluctuations in the exchange rate. This will assist them to determine whether or how to shield their multinational companies from a particular exposure. Firms could avoid exchange rate risk by exclusively doing business in their home countries, though for enormous businesses this stands out to be a difficult pragmatic proposition. Another realistic and practical alternative is to persist on utilizing ones own currency for each and every transaction. However, requesting or asking every customer to use Euro (for instance) is quite inflexible, a tall order, and forces the customers to take all the business risks, which may not go down well. A more logical, pragmatic, and rational way is for multinational companies managers to understand the basics of exchange rate risk in an attempt to reduce its adverse effect. Its a complicated issue, but its worth for companys management personnel to learn about the issue in order to act prudently on advice.
The major indicators of exchange rate risk are the relationships between inflation, exchange rates, and interest rates. The most substantial relationships are described as follows Purchasing power parity, in this particular concept it is assumed that in a stable market place, the relationships between exchange rates of dissimilar nations ought to be in similar ratio as the price of a fixed services and goods.  This implies that there is existing parity between exchange rates and the currencies purchasing power. There are several ways of expressing this concept, but most frequently  is that disparity in the rate of inflation is equivalent to the rate of alteration of exchange rate. Furthermore, the theory of international fisher effect suggests that disparities in interest rates between nations are anticipated to be offset by prospect alterations in exchange rates. For instance, if an investor earns an elevated interest rate in another nation, any benefits are offset by adverse exchange rate and this relationship is expressed as the interest rate differential is equivalent to the anticipated rate of alteration of exchange rate. Besides, unbiased forward rate theory proposes that forward exchange rate remains the most precise, accurate, and correct measure of anticipated prospect exchange rates. This is expressed in trouble-free terms as the forward exchange rate being equivalent to the anticipated exchange rate.
These exchange rate risk indicators aside, shielding a multinational company against exchange rate risk largely relies on vigilant monitoring. Factors, such as inflation, politics, consumer confidence, capital flow, and state of export and import markets together with several other social-economic conditions affect currency exchange rates. Furthermore, individual states or governments frequently take action in controlling the instability of currencies. These factors lead in exposure to 3 major exchange rate risk of transaction, translation, and economic. Translation risk (exposure) is a risk where changes in exchange rate will weaken a firms assets, income, liability, and equity. Therefore denomination of this risk is substantial, though experts suppose that actual assets are not easily affected by currency movement in any way. To protect the company against this risk, firm managers ought to undertake hedging technique in order to keep a close watch on any significant change on exchange rate. This sophisticated technique as well assists the fund managers in diversification of a firms holdings in dissimilar currencies.
Transaction exposure is another exchange rate risk, and refers to cash flows changes which emanates from accessible contractual obligations. This particular exchange rate risk in concerned with prospect cash flows following a contract agreement is a problem that often experienced by multinational firms in the international markets. Its not typically rational or logical to insist on advance payment from consumers and thus a technique referred to as factoring is normally utilized to reduce transaction risk. The technique comprises selling off firms international accounts receivable to a factoring value that then assumes on the responsibility for collections and credits. Factoring houses usually buy foreign accounts receivable at 90 to 95 percent of their original value, though the discount may be more than anticipated. Multinational companies frequently recover their losses via product price adjustment.
Apart from translation and transaction risks, there is economic risk (operating risk) that companies experience when dealing with international business and investments. It is a type of risk to unpredictable exchange rates that adversely impacts on a firms cash flow, foreign investments, and earnings. The degree to how a multinational firm is affected by economic risk is highly reliant on business and the nature of the firm. However, a number of companies frequently hedge against this type of exchange rate risk via foreign exchange market. Additionally, in economic exposure, international firms profits or gains will be wrinkled by changes in exchange rate as result of escalating costs. Many companies are much narrowed in actions to take in protecting themselves in this kind of circumstance. This risk is normally practical to the present value of prospect cash flow operations of a companys parent firm as well as overseas affiliates. Recognition of different kinds of exchange rate risk, together with their measurement, is imperative to strategic development and management of risks in a multinational company.
Measurement of Exchange Rate Risk
After definition of various kinds of exchange rate risk which multinational companies are exposed to, a critical aspect of these firms remains how to measure these risks. The process is quite complicated and may perhaps prove difficult, especially with regards to economic and translation risk. Currently, the most utilized risk measurement method is the model of Value at Risk (VaR). Generally, VaR is referred to as the utmost loss for a specified risk over a specified time scope with z percent confidence. The Value at Risk calculation can be utilized in measuring a range of risks and thus assisting companies in risk management. However, this particular risk measuring model never defines what transpires to the exposure for (100-z) percent point of confidence, for instance in the worst case situation. Since the methodology never defines the utmost loss with 100 percent confidence. Thus, companies are frequently forced to come up with operational limits like stop loss orders or nominal amounts to complement VaR limits. In so doing firms are capable of reaching the highest probable risk measurement coverage.
Value at Risk calculation is mainly used by companies in estimation of foreign exchange riskiness resulting from a companys activities. This comprises foreign exchange position of companys assets, over a specified period of time under usual conditions. The calculation or measurement of risk by VaR model largely depends on three major parameters Holding period, which is the period of time over which the position of foreign exchange is planned to be held. The normal holding period is one day. The next parameter which Value at Risk rely on is the confidence level at which the anticipated estimation is planned to be made. The typical confidence levels range between 95 and 99 percent. The final parameter is the currency unit to be utilized for the purpose of Value at Risk denomination. Assuming a confidence level of x percent and a holding period of y days, the Value at Risk measures what will be at utmost loss (for instance, a market value decrease of a foreign exchange position) over y-days. If y days time period are not one of (100-x)  y-days, then these periods are the worst under usual conditions. Therefore, when a foreign exchange position contains one day Value at Risk of US20 million at 99 percent confidence level, the company ought to anticipate that, with a likelihood of 99 percent, the value of this position is likely to diminish by no more than US20 million in one day, given that normal conditions will exist during that one day. This implies that, a firm must anticipate that its foreign exchange rate position value will diminish by no more than US20 million of 99 confidence level out of 100 normal trading days.
To calculate Value at Risk, there exists a range of models. Among these models, the widely used ones include historian simulation which suggests that currency returns on a companys foreign exchange position will encompass the similar distribution as they had in the earlier period. Variance- covariance is yet another model that is widely used in VaR calculation. This mode suggests that currency returns on a companys foreign exchange position are always normally distributed and that the alteration in foreign exchange position value is linearly reliant on each and every current return of the company. Monte Carlo simulation being among the widely used model suggests or proposes that prospect currency returns will be distributed randomly.
Historical simulation is known to be the simplest Value at Risk model of calculation. This model comprises running the companys foreign exchange position across a set past, historical, or chronological exchange rate changes in order to capitulate loss distribution in foreign exchange position value. The significant benefit or advantage of this model is that it never suppose a normal distribution of firms currency returns, as it is properly documented that these currency returns are not typical but rather leptokurtic. The major setback historical simulation model is that Value at Risk calculation needs a huge database and thus computationally intensive. On other hand, a variance covariance model supposes that the change in firms foreign exchange position value is a linear amalgamation of every change in the values of foreign exchange positions. This therefore, implies that the entire currency return is linearly reliant on the individual currency returns. Another assumption of this VaR calculation model is that total currency returns are jointly normally distributed and thus for a 99 percent confidence interval, the value at risk can be measured or calculate as VaR (2.33 SP  MP) VP.
Where VP is the original value of the firms foreign exchange position. MP is an average of currency return on the companys total foreign exchange position that is a weighted mean of foreign exchange positions. SP is a standard deviation of currency return on the companys entire foreign exchange position, is a standard deviation of weighted change of variance covariance matrix of foreign exchange positions.
While variance covariance model permits a quick calculation of value at risk, its setbacks comprise restrictive postulations of a normal distribution of currency returns as well as a linear amalgamation of the total foreign exchange position. It should be noted, however, that this normality postulation could be relaxed.  Use of non normal distribution in place of normal distribution would increase the computational cost as a result of confidence interval estimation for any loss beyond the VaR. Monte Carlo simulation model normally shares the principal components with variance covariance calculation model along with random simulation components. Its main benefit is the capacity to handle all underlying distributions and more precisely evaluate the Value at Risk when non linear currency factors exist in firms foreign exchange position. Its serious disadvantage is the computationally rigorous process.
Economic Exposure Measurement
In measuring this risk an individual requires a workable and logical approach. Thus some of the practical approaches used in economic exposure measurement include regression analysis and regression equation. In regression analysis independent and dependent variable are involved in measuring the risk. Independent variable comprises of transformation in parent firms cash flow whereas dependent variable comprises mean nominal exchange rate change. Alternatively, regression equation approach of measurement is based on operational definition of economic risk and other risks experienced by a parent firm or its affiliates. For instance, a multinational company experiences exchange rate risk to an extent that variations in dollar value of cash flow unit is correlated with variations in nominal exchange rate.
CFt  a EXCHt  t. Where CFt is equal to CFt -CFt-1, and is the value of dollar of entire or total parent firm (affiliate) cash flow in t period. EXCHt  EXCHt - EXCHt-1, and is equal to the mean nominal exchange rate throughout period t,  stands for a random error term.
The output of this regression equation measure in that  coefficient measures the correlation of transformations in cash flows to changes in exchange rates. Therefore, a higher beta value indicates that there is greater economic exposure, since there is a higher  transformation of cash flow to exchange rate changes.
The concentration of most fund managers or accounting professions on the balance sheet impact of currency transformations has resulted into ignoring the imperative effect on prospect cash flows. International firms experiencing costs as well as selling products in overseas countries, their net impact of currency alterations may be less substantial in the long run. Finally, in order to measure the exchange rate risk appropriately, an individual ought to concentrate on inflation adjusted exchange rates rather than nominal exchange rates. The type of exposure that is likely to be most important in the long run is the operating exposure. Its also referred to as economic exposure and is mainly associated with the latent effect of exchange rate changes on the prospect firms cash flow.