Poor Management and Insufficient Funding as Roots of Business Failure Assignment

Poor Management and Insufficient Funding as Roots of Business Failure - Assignment Example Risk management is of great significance for hedging financial risks as well as hedging underlying economic activities. It is through proper trade that goods produced in particular places are equitably distributed among users. With the help of trade goods are made available to consumers at the time of their need. It removes the hindrance of persons by bringing together producers and consumers who are widely scattered.Advantages of risk management are outlined below:- It enables the insurers to concentrate on their production activities; otherwise, they would have to go in search of insurance companies for goods they produce.- Trade makes goods available to consumers who can concentrate on their own occupations.   - It results in specialization and large-scale production as the markets are now spread over wide territories. Sale of insured goods from one country and purchase of goods from other countries.- It provides avenues of employment to various persons.It increases the standard of living of people as they can avail of goods of various kinds produces by different producers.  Risk management involves financing. Financing is of two types, equity financing, and debt financing. When you are in need of money or looking for capital, the company’s debt-to-equity-ratio should be considered. It is the relations between the Dollars or Euros that an entrepreneur has borrowed and Dollars or Euros invested in the business. The more the investment by the owners the more they attract the financing.When the equity to debt ratio of the firm is high then debt financing should be taken. If the proportion of the debt to equity ratio of the firm is high then it is advised that the owners should incre ase their equity investment, that way they cannot jeopardize the firm’s survival.