Research for the Financial Risk Management Problems of Small and Literature review

Research for the Financial Risk Management Problems of Small and Medium-sized Enterprise in China - Literature review Example Similarly, Allen warns that investors who fail to adopt the correct strategies in handling the identified risks always face severe consequences. To support his ideology, he says that the economic depletion of 2008 came out because of the then major financial firms failing to adopt the correct strategies of managing loose credit. Mulz 2011 (pg. 7) defines financial risk management as the aspect of evaluating and managing current or possible financial risks within the firm. He says that even though financial risk management practices cannot always prevent firms from all possible risks, they are beneficial in a way as they decrease the level at which firms are exposed to the risk. According to (pg. 9), risk management has some similarity to financial risk management. The similarity arises from the fact that in both cases, investors and firm managers are required to identify potential risks, evaluate possible remedies that they can embrace, and finally implement the most appropriate strategies in such a way that the objectives of the business are handled satisfactorily. Historically, various economies of the world have different mechanisms of controlling their markets. This is to mean that a strategy can be ideal for implementation in the United States but not in China, Brazil, Australia or South Africa for that matter. This essay aims to provide more insight on both risk management and financial risk management, but by comparing the most applicable strategies in China with those in Western nations notably, the United States of America. Similarly, this essay aims to discuss how differently bigger companies as well as small and medium-sized enterprises in China manage risks. On the same note, the essay briefly covers some of the financial risk problems that SME’s face in their attempt to compete with the already established corporates. Chance 2010 (pg. 47) argues that the