Tulisan Akuntansi Internasional #2

​FINANCIAL RISK MANAGEMENT

The risk is a possibility that is not expected in business, where there are two aspects, they are down side risk and up side risk. In financial risk management, accountants play a role in identifying the market risk vulnerabilities by avoiding risks through consideration of special protected products and competitive currency vulnerability by measuring the level of competition. furthermore, the accountant role is to measure the financial exchange. In managing the risks, there are derivative instruments, they are basketball hedging, convertible option contracts and futures contracts.

The risk which is managed financial risk and market risk. Traditional accounting measure about the vulnerability central foreign exchange based on translation and transaction. The translation vulnerability measure the effect of changes in FX rates against local currency equivalent. While the transaction vulnerability is work by making forward contracts to offset the transaction gains or losses caused by exchange rate fluctuations between the date of the completion and the date of the transaction. Exchange rate caused by 10 factors, they are:

·         Inflation Differential

·         Monetary Policy

·         Balance Of Trade

·         Balance Of Payments

·         International Monetary Reserves and The Ability Of Debt

·         National Budgets

·         Quotations Exchange Front

·         The Unofficial Exchange Rate

·         Currency-Related Behavior

·         The Interest Rate Differential

Reference : F. Zebua. 2008. Akuntansi Internasional. Jakarta: Mitra Wacana Media.