If we see sweetbread on a restaurant menu and order it without doing any research, thinking we just ordered some kind of yummy dessert item, we’re going to be in for a big shock when someone plops a plate of lamb pancreas down in front of us.
“Sweetbread” is one of those words that just doesn’t mean what it sounds like it should mean. But that’s not the case with the term “risk control,” which is exactly what it sounds like. “Risk control” is the method an organization uses to control its risk. Mind = blown, right?
Now...what risk control specifically looks like is going to vary from one company to the next, so let’s just talk about what they all tend to have in common. Companies usually try to figure out where they’re vulnerable by conducting risk assessments. Once they find a potential weakness—maybe their data protection software is out of date, or maybe they have a subsidiary in the middle of a potentially bankrupting lawsuit—they can devise strategies to address those risks. For the most part, a company’s risk control measures are going to do three things: 1) analyze the likelihood and potential impact of the risk, 2) put processes in place to either prevent the risk or reduce its effects, and 3) conduct in-depth analyses of risks that do materialize, so they can figure out how and why they happened.
What might those processes look like? They might look like more stringent accounting principles, or increased safety training requirements. They might look like a diversification of resources and assets, so that one risk event doesn’t take the company under. They might involve hiring an in-house legal staff, copyrighting and patenting proprietary information, or setting up backup servers for our backup servers. If we own a restaurant, they might even involve putting a disclaimer on our menu so we don’t get sued the next time someone orders sweetbread expecting chocolate cake.
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Finance: What is a Risk Profile?0 Views
Finance allah shmoop what is a risk profile Hello You
know that song Hello By adele You know you've heard
it like eight thousand times Hello How are you Yeah
So think of the you today wondering whether you should
loan money to the you of ten years ago Hello
with you How much And on what terms What details
would you have wanted to glean before you wrote the
check for your hard earned money to risk being fully
lost on the flaky you of ten years ago Okay
so dialing it back here the key vocab words you
must know the key components to a bond The principle
it's the base amount of a bond loan that dollar
amount that is loaned before interest and fees or commissions
or taxes or anything else in the world of corporate
bonds and most government bonds The base amount is usually
in multiples of a thousand bucks And for larger accounts
it's five thousand bucks And these air called bond denominations
of thousand dollars Five thousand dollars Ten thousand a hundred
thousand All denominations you know like a denomination for best
bond in a short film category goes to the t
bill the principal in a mortgage style bond is the
amount the bank is loaning Use you khun by your
three bedroom picket fence quarter acre house with you know
basement dungeon dream home fifty shades of home If you
put one hundred grand down and borrowed four hundred thousand
dollars is your mortgage from the bank to pay five
hundred thousand dollars for the dream home of your life
Your loan principal is yes four hundred thousand dollars Well
in most bond scenarios the principle can be and is
bought in sold just like any other security So in
the case of the you loaning money teo you let's
say the older you realize is that you take too
much risk in life You followed your dreams Try to
become a rock star rather than listening to your nightmares
Age forty homeless and broke That's how you ended up
trying to say so The older you cells that bond
to someone else who doesn't mind your maniacal focus on
head banging metal band practice or at least unlike the
older you doesn't view that as a fundamental risk in
them Paying back the money they borrowed Well bonjour typically
issued in these thousand dollars base units or their par
value or face value but they're quoted in units of
one hundred go figure that is a bond Units selling
for one thousand twenty five dollars would be quoted as
one oh two and a half and when you buy
the bond you pay one hundred three cents on the
dollar The cellar of a bond gets one oh two
and a half cents on the dollar in the fifty
cents goes to the agent there Got it And i
get really technical Bonds are usually quoted as a spread
like this like a play bond issue Here's mr november
That is one oh two and a half by one
of three which means that if you're the buyer of
the bond you pay one hundred three cents on the
dollar And if you're the seller of the bond you
get one hundred two and a half cents on the
dollar That's spread which pays the person making the market
in the bonds or the broker is one Oh three
Oh minus one o two Five equals yet five bucks
so when you do buy a bond you'll buy it
in one of two ways Well in the olden days
there were a lot of bearer bonds meaning the bearer
or the person who had the bond in their possession
like in their wallet owned it like a bill like
a paper bill Basically back then you could carry around
bonds just like they were cash and there was no
trail in the same way There's really no trail on
a twenty dollar bill you just downloaded from aversa teller
a tm nonunion robot But because barry bonds are really
not the best thing to be carrying around folded in
your wallet the trend quickly became to issue new bonds
as registered mainly so that they could be held elektronik
lee and save the murder of millions of trees and
or sheep Today most bonds don't even carry a p
paper attributes Rather the buyer gets an email more or
less with a bond registration number and those bonds are
usually held inside of the buyers mutual fund or hedge
fund Or if it's a consumer buying the bond and
number just shows up in their fidelity Schwab betrayed or
other online brokerage account So today bonds don't get a
certificate there issued in book entry form Well the transfer
agents just keep elektronik records of the bonds and their
little scriven er's ledgers The names and addresses and data
of the buyer and seller are copiously stored but there's
no subsequent paper paperwork that goes along with it And
all of this is really cool to now be elektronik
But back in the day bonds were actually printed and
some of the artwork was actually pretty cool Note that
it's par value is ten thousand bucks and it has
really pretty borders Ok next big element of a bond
is the nominal rate nominal It means in name So
on the face of the bond certificate there will be
a named interest rate Take a look at this bond
right here jonathan do Well here's the nominal or face
amount and it says four percent So this piece paper
backed by the company solar city now owned by tesla's
pays four percent interest Let's pretend the bonds a thousand
dollars unit well That means the registered owner of this
bond is due to be paid twenty bucks twice a
year or forty dollars a year as interest payment on
that thousand dollars they're renting So the quick summary you
buy a bond for twenty five thousand dollars that pays
eight percent a year and see how we're changing this
up on you to make life difficult The principal's twenty
five grand The interest payment is two grand a year
or a thousand dollars every six months because that's how
bond's role They pay interest twice a year The nominal
rate of the bond maybe eight percent But if you
had to pay a premium of say thirty grand instead
of twenty five grand for that quote eight percent paper
unquote Well then you won't actually be getting an eight
percent return on the thirty grand you invested You'll still
get the two grand a year which is to over
thirty or about a six point seven percent return If
you really want to feel connected with dead bad grandpa
well you can try to find barry bonds which are
like hold ten thousand dollar bills But you'll have a
whole lot more luck finding a wide selection of funds
in the registered isle of the bond grocery storage Schwab's
good stuff Get the sauce
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