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Dealing with Financial Risk Summary

5 min read ⌚ 

Dealing with Financial Risk SummaryPrepare yourself for a battle just like those highly decorated generals who were fighting for honor.

Risk managers must embrace conflict, which will automatically trigger a defense mechanism.

Who Should Read “Dealing with Financial Risk”? And Why?

The economy has a significant influence on our behavior. As people living on this planet, we’ve experienced hard times which forged us into capable investors and financially orientated professionals. The Great Depression and the oil crisis in the 70s helped us to understand how the economy actually works.

Dealing with Financial Risk” is a book that covers many topics related to the management of finances. The materials for this financial guide were collected from the author’s published articles that he wrote during the 1990s (a period of progress and digital innovation).

We highly recommend this magnificent financial book to financial professionals, potential investors and to the overall audience eager to learn more about handling a financial crisis.

About David Shirreff

David ShirreffDavid Shirreff was born in 1947 shortly after the end of WW2. During his career, he spread the financial knowledge to other people unselfishly. Currently, he has a responsible role as a Frankfurt correspondent covering business and finance topics.

Back in the days, David worked as the capital markets editor of The Economist located in London. He wrote the book Euromoney, and in 1987 co-founded the Risk magazine.

“Dealing with Financial Risk Summary”

At the beginning of the 70s, the Yom Kippur War which engulfed the region made a mess of the world. The Arab countries took advantage of the situation as devoted members of the Organization of Petroleum Exporting Countries (OPEC) and embargoed oil supplies to other nations which led to a massive petroleum-boom (referring to the price).

According to experts, the middle east has planned this operation in order to inflict new policies on the Westerners including both the U.S. and Great Britain. After the Great Depression that demoralized the world in the early 30s, a new crisis set foot in different place affecting everyone.

Companies could no longer afford the privilege of importing oil, because of the price which was continually rising. The all-around effect was devastating; the world economy was seconds from a total collapse. The rising cost of oil produced new prices for other products and services that most of the people could not afford.

To make matters worse, the oil producers’ bank deposits had a tremendous effect on the world development. These banks had money but lacked investors interested in bank loans. Something had to be done; the capital was trapped between rich oil-producers and the difficulty of finding a profitable business in the new crisis.

Bankruptcy was out of the question, many companies refused to sign these papers and postponed the inevitable end. Banks started one dangerous strategy, the worst nightmare for every creditor. Operating on the belief that third-world countries mostly from Eastern Europe and Latin America would manage to avoid going bankrupt.

As a consequence of the new philosophy, money was not lent to creditworthy investors or countries – putting the oil-producers’ capital at high risk. In the early 80s, the U.S. and Great Britain attempted to confront the inflationary spiral by raising the interest rates to previously mind-boggling levels.

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