5 Key Strategies FRMs can think to overcome Ru-Ukraine Tensions

The core task of a financial risk manager is identifying and analyzing threats to the company’s assets and earning capacity. Not just that, it also involves predicting success rate. Alongside predicting market trends, it is also the FRM's role to develop strategies to restrain the effects of potential business risks.

Now, the conflict between Russia and Ukraine has adversely affected the world economy. According to the stats, Ukraine and Russia together accounted for up to 30% of the global exports for wheat and hence, food prices too, have abruptly changed. As a result, the IMF added, “the entire global economy would feel the effects with slower growth and faster inflation.”

A few countries have already introduced increasingly widespread sanctions, targeting individuals, banks, businesses and major state-owned enterprises, and exports.The Russia-Ukraine crisis has escalated and forced governments of various countries to implement sanctions within a matter of a few days. This changing environment and economy require advanced monitoring systems and the ability of financial bodies to react quickly. The role of an FRM is immense here. As an FRM you will have to be wiser than ever in such a volatile situation and build strategies such as the following: 

• Cost analysis - As a financial risk manager of an organization, you would primarily have to make a cost analysis. It is important to understand the impact of such sanctions on cost return and cost recovery.

• Relation with financial bodies - Identify the direct relation with financial institutions, banks, and insurance companies. Review the insurance policies and determine whether any potential losses should be covered. As an FRM, conduct a risk analysis of them. Any manipulation has to be tracked and checked with immediate effect. 

• Relationship with stakeholders - It is also important to run an analysis of the relationship between the key stakeholders, direct and indirect suppliers, and someone who is directly connected with the organization. 

• Eye on the Government policies - Along with the above analysis and measures, as an FRM, you would also be responsible to have a keen observation of the Russian Government's policies. Such observation would benefit the organization in the long run.

• Relationship with other countries - Finally, you would have to strategize your relationship with other countries. It is important to have an observation of the impact of the sanctions on other countries. This would help to retain and maintain a strong relationship with such countries.

The failure to ensure business standards and controls may lead to the downfall of such organizations. And this is the reason why it is important to maintain super strategies by the FRMs. Developing the right strategies is the core role of an FRM. You would have to analyze the financial markets and the global environment to rightly predict the market trends.

Now, last but not the least: What is the connection of Miles Education in this context? Well, we at Miles believe in nurturing the World’s best FRMs. In collaboration with Kaplan Schweser, Miles is now offering the best FRM program study package. Be future-ready with Miles and see yourself as a Financial Risk Manager.