As per the studies and research done by Ball, The success of a business organization largely depends on the various aspects of economic environment. The rapidness in the increment of the integration of the economy and financials has created a wide range of events of exposures for all the organizations in the arena of the global economy (2014). The exposures have a creation of both risks and opportunities for the corporate and the strategies of the management of the risk have to be shaped to create awareness for the contributions of a potential nature. The relevant and updated information is not easily and readily available for the financial managers which cause the feasibility of constrained strategies for the management of the risk.
The performance procedures of the division of finance and the evaluation of the strategies of the management of the risk give rise to the additional problems of information. The responsibility of the financial managers has been extended towards encompassing the aspects of strategy. The trends in terms of presentation of the policies of finance cannot be separated from the strategies of the corporate which has become apparent in the literature of the management of risk. The approaches of risk management of a “Holistic” nature which include Enterprise risk management considers a wide range of operational, economical and strategic decisions which falls under the instruments of the risk management.
There is a requirement for the effective flow in the information between the top management and the strategic levels, also involving departments and members on the strategic and operational level presented.
It is the responsibility of the financial mangers to guide the organizations to the financial success. The major function of the finance is to make a large amount of contribution for the smooth running of the various departments of the organizations. For making better financial decision in this fast changing economy, the financial managers need fast and reliable information from different sources. The main function of the financial managers is to provide high quality of financial analysis on a quick manner for the purpose of fast decision-making process.
There are a major amount of challenges which are to be faced by the financial managers in the process of setting risk management of the microeconomics structure (Bateman et al., 2013). Some of the major challenges that a financial manager face due to the change in economic environment are discussed below:
The first major challenge that the financial managers face is the change in regulation. For smooth running of an organization, the financial managers have to comply with some major financial rules and regulations. It has been seen that in the changing financial environments, the financial rules and regulations are changed on a fast pace. It is the duty of the financial managers to comply with all those financial regulations and to present them in behalf of the organization. This is an additional complex responsibility of the financial managers. In addition, these financial regulations make the business operations complex. This is how their changes related to their given strategies.
While as per Calel & Dechezlepretre, 2016, the next challenge is the globalization as the Twenty-first century, is the era of business globalization. In this era, the financial managers of the organization must have global experience and perspective to present their organization. They need to understand how their business can operate in complex situation, different cultures, and regions and in different rules and regulations. This process will help them to provide valuable financial input for the smooth running of the organizations. This aspect creates challenges for the financial managers, as they have to learn many complex aspects of finance. The failure of the financial managers is the failure of the finance of the company.
As per Dunning, 2014, the technological advancement is creating continuous challenges for the financial managers. In the process of financial decision-making, the financial managers have to look for various kinds of valuable data and information that needs a moderate amount of time to collect. However, the technological advancement has made the process of collecting data and information easier than before and it takes less time than before. However, to cope up with these continuous technological change is a tough job for the financial managers as they have to continuously update themselves. As per Wu & Olson, 2015, at the time of changing economical environment, the financial risk for the organizations increases. In this regard, it needs to be mentioned that risk management is one of the major roles of the financial managers. At the time of highly volatile economic situation, the financial managers need to be proactive in order to manage the financial risks of the organizations.
This is quite a challenge for the financial managers to manage risks in this volatile economic situation. They need to diverse the risks in the organization for the purpose of safeguarding the assets of the business. On the other hand the financial managers need to ensure that the there is available cash in the organization and the shareholders get their returns. This is not an easy process as to establish the balance between risk and return is not an easy process in economic volatility (Brigham & Ehrhardt, 2013).
For transforming the business, the financial managers need to take into account the complex economic environment and this process requires specific diversified financial skills for the financial managers. There is a moderate amount of risks involved in this process that needs to be managed tactfully by the financial managers. This is a challenge for them as managing risk is not easy (Uhl & Gollenia, 2016).
Apart from controlling all the financial aspects of the organizations, the financial managers have to assist the CEO of the organizations in various ways. One of them is the stakeholder management. The financial managers are the part of the senior management team of the organization and they have to contribute with their financial inputs to take effective strategic decision. In this regard, they need to have proper communication skill as they have to communicate with the banks, financial experts and the clients of the organization. It is not the only duty of the financial manages to achieve financial goals; it is also the responsibility of financial managers to make the annual report of the organization (Cornelissen, 2014).
The Reporting of financial data and information is not an easy task, as the financial managers have to comply with many rules and regulations. Another challenge is the talent and capacity of the financial managers. The financial managers need to acquire knowledge that will help them to understand complex financial functions and others (Council, 2014).
Conclusion
There has been an examination of the requirements of information for macroeconomic management of risk surrounded by a strategy of a comprehensive risk management from a perspective of the financial managers.
The strategies developed are based on the corporate objectives and they are derived from the overall commercial strategies of an organization. The role of the managers of finance has a great role in the setting of the strategy of major risk management and must have reference to the risks of the macroeconomics by consideration of the requirements of the data for the setting up of the strategies. They have a dependability and consistency with the objectiveness of the corporate.
The major argument is that macroeconomic management of risks requires a wider advancement which encompasses the operational, economic and planned considerations. In addition, numerous mutually dependent resources of risk present in the macroeconomic environment require consideration and very well taking into account. Once the interdependence among the elements of macroeconomics like the exchange rates, interest rates and inflation are taken into account, the risk administration can be measured a comparatively self-sufficient characteristic of Integrated Risk Management (IRM) given that, the relevant information is obtainable by the management.
Hence, based on the total study, it is recommended that the financial managers need to translate and analyze the financial data and information in an effective way for the purpose of decision-making. It is recommended that there must be a fluent communication among the finance department and other department. It is needed to have proper communication among all the departments of the organization. This process helps in the taking of effective business decision. The priority of the finance department and the financial managers will be to take effective financial decisions. The effective decision-making process is necessary for making the effective business strategies for the organizations (McKinney, 2015).
References
Ball, M. (2014). Rebuilding Construction (Routledge Revivals): Economic Change in the British Construction Industry. Routledge.
Bateman, I. J., Harwood, A. R., Mace, G. M., Watson, R. T., Abson, D. J., Andrews, B., … & Fezzi, C. (2013). Bringing ecosystem services into economic decision-making: land use in the United Kingdom. science, 341(6141), 45-50.
Brigham, E. F., & Ehrhardt, M. C. (2013). Financial management: Theory & practice. Cengage Learning.
Calel, R., & Dechezlepretre, A. (2016). Environmental policy and directed technological change: evidence from the European carbon market. Review of economics and statistics, 98(1), 173-191.
Cornelissen, J. (2014). Corporate communication: A guide to theory and practice. Sage.
Council, F. R. (2014). True and fair.
Dunning, J. H. (2014). The Globalization of Business (Routledge Revivals): The Challenge of the 1990s. Routledge.
McKinney, J. B. (2015). Effective financial management in public and nonprofit agencies. ABC-CLIO.
Uhl, A., & Gollenia, L. A. (2016). Business Transformation Essentials: Case Studies and Articles. Routledge.
Wu, D. D., & Olson, D. L. (2015). Financial Risk Management. In Enterprise Risk Management in Finance (pp. 15-22). Palgrave Macmillan UK.
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