Napolo’s 8 Steps for Managing Financial Risks Assignment Help

There were several steps of Napolo’s model that were followed by Nissan. For instance, step two was followed by Nissan. As per this step, different exposures were also identified. Generally, these exposures were grouped under the transactional, translational and economic exposures. Transactional exposure was related to buying or selling in any   foreign currency (Book Review. 2005). On the other hand our case study assignment help experts says that, translational exposures were related to protecting the value of overseas investments and reported income. At the same time, economic exposures were also identified by Nissan. This exposure was directly related to the most difficult issues that usually arise from foreign competition (Kim, 2001). Along with this, step four was also followed by Nissan. According to this step, risk management policies as well as procedures were also defined. For example, specific actions and responsibilities related to the risks were identified. Additionally, different exposures that presented significant risks to the company were also identified and designated for hedging (Napolo, 2005). Ranges of acceptable hedging activities were also established. In this way, each exposure was systematically addressed (Reamer, 2006). Apart from this, step five was also implemented by Nissan. As per this step, different strategies were also identified by Nissan in order to manage financial risks. For example, derivative strategies were used to manage risks.

Additionally, in order to provide additional flexibility, a range of approved derivatives including forward contracts, purchased options, and forward-equivalent option-combination strategies were followed (Brown, 2007). At the same time, it should also be noted down that there were several steps of Napolo’s model that were not followed by Nissan. For instance, corporate philosophy as well as objectives was not defined by Nissan. It means framework for the risk management policy was not established (Book Review. 2005). Principle business line and long term objectives were not implemented by Nissan. In the same manner, step third was not used by Nissan. For example, exposures related to the quality were not identified (Reamer, 2006).

Sophisticated modeling technique (value-at-risk) was not followed by Nissan in order to measure exposures. Apart from this, derivative strategies were not executed by Nissan.  For example, there were no appropriate internal controls, including independent confirmation of trades. Steps seventh and eighth were also not used. It means exposures and hedge was not monitored by Nissan. Performance was also not measured. So, it is estimated that several steps were not followed by Nissan in order to manage financial risks (Nissan News. 2012). Conclusion From the above discussion, it can be concluded that in today’s fast growing economic business environment, to manage the financial risk is essential for the business organizations. It is because by reducing global financial risks, companies can increase productivity, profitability and level of sales. Additionally, it is also identified that to manage the risk at the global level, several elements and strategies were used by Carlos Ghosn and Nissan. It is also founded that with the proper use of Napolo’s 8 steps model, business organization can effectively manage and reduce global financial risks.