**Author details**

Marin Andreica\* *Department of Management, Academy of Economic Studies, Bucharest, Romania* 

Stere Farmache *BSE, Bucharest, Romania* 

<sup>\*</sup> Corresponding Author

#### Madalina Ecaterina Andreica

*Dept. of Economic Informatics and Cybernetics, Academy of Economic Studies, Bucharest, Romania The National Scientific Research Institute of Labour and Social Protection, Bucharest, Romania* 

#### Octavian Stroie

354 Risk Management – Current Issues and Challenges

financial intermediaries.

future development.

**Author details** 

Marin Andreica\*

Stere Farmache

 \*

*BSE, Bucharest, Romania* 

Corresponding Author

costs.

Clearing and settlement services ensure that transfers of financial instruments and financial funds between the parties of an exchange transaction to be performed safely and with low

In order to prevent and to reduce the risks specific to the settlement of financial instruments transactions, direct access to clearing and settlement system is limited to those participants who meet a set of capitalization criteria, operational capacity and professional experience, which means that the settlement of an exchange transaction involves a given number of

Since the highest financial risk throughout the process of finalizing exchange transactions take place in the last stage of the settlement process, an essential role is associated to the way the connection is made between the securities transfer mechanism (obligation to deliver) and the funds transfer mechanism (payment required). By using mechanisms that ensure Delivery Versus Payment (DVP), one eliminates the most important component of all financial risks during the settlement of the financial instruments transactions that is the principal risk. In order to limit the exposure to the risk of default of the intermediaries'

Furthermore, the BSE requires its participants to prioritize the amounts necessary to cover their redundancy payment positions. From the market participants' perspective, the current formula for calculating the transaction limit seems unduly restrictive. Intuitively, calculating the transaction limit based only on the net amounts paid in settlement appears to be a more reasonable assumption and could lead to a much closer relationship between the risks emerging in financial settlements and the guarantee fund. Meanwhile, for the Guarantee Fund to be effective and to achieve its purpose for which it was created it is necessary that the assets within it to have a high degree of liquidity. The transition process and the recent international financial crisis have significantly affected not only the evolution of stock markets in Central and Eastern Europe, but also significantly changed the outlook for their

That is why the stock market management should not only consider short-term measures in order to mitigate the crisis impact, but also to try to ensure the prerequisites for further development. The improvement of stock management in general and of stock market risks in particular, requires a medium to long-term perspective, similar to the opinions and

obligations, a trading limit is set for each intermediate part.

contributions formulated by the authors in this chapter.

*Department of Management, Academy of Economic Studies, Bucharest, Romania* 

*Department of Audit, National Authority for Scientific Research, Bucharest, Romania* 

#### **5. References**

	- [14] Tapking J. (2007) Pricing of Settlement Link Services and Mergers of Central Securities Depositories, European Central Bank, Working Paper Series No. 710, Frankfurt.

**Chapter 16** 

© 2012 Tularam and Attili, licensee InTech. This is an open access chapter distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

© 2012 Tularam and Attili, licensee InTech. This is a paper distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Yet managing risk is rather challenging for the world is mostly unpredictable. The processes are continuously changing and evolving in terms of resources that are available -

**Importance of Risk Analysis and Management –**

Life is full of risks for example risk is involved in simple things like turning on the gas at home or when dealing with life threatening medical emergency decisions. Risk plays an important role in the way we manage our economy, organization or our family. Risk can be rather complex when household money is involved; such as for individuals or families – for example, mums and dads stand to either gain or lose large sums of money. The types of risks involved influence decisions on how to manage or invest money in shares, bonds or property. When faced with risks, the challenge is how well prepared are we to overcome risks. Risk awareness may be limited in which case there is a high likelihood of risk turning into hazard -leading to disastrous outcomes. Successful businesses make constant efforts to change or update their in house administrative polices and frameworks to allow for possible risks in their business requirements. Some decisions that are likely to have been factored into the component of risk are: rigid corporate governance requirement, human resource planning, succession planning, training and development, merger and acquisitions, adapting to different cultures, foregoing or discontinuing some existing products, outsourcing, new market development etc. No matter how important a decision is made, strategic alignment is critical in business decision making. New ideas should be implemented according to the business needs a company. The introducing of novel ideas should involve all personnel particularly during the decision making processes of development and setting of targets. A well-managed business is also well prepared one and thus able to confront challenges of the modern dynamic business

**The Case of Australian Real Estate Market** 

Gurudeo Anand Tularam and Gowri Sameera Attili

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/50669

**1. Introduction** 

environments.
