1Chapter 5 Understanding Your Financial Statements and Ratios for Risk Management

We discussed financial analysis and introduced a condensed set of financial statements to help learn the concepts of financial analysis in Chapter 5. Other chapters covered use of risk management tools to reduce or eliminate the five basic types of risk. Each of these tools requires a clear understanding of how the tool helps control a particular risk and how each tool is implemented, but the results of implementing a particular risk management strategy will usually have some type of financial implication. We will continue to explore financial analysis concepts and the impact of implementing some of the risk management strategies discussed in this chapter.