The following paper will be focusing on the risk management strategies adopted by a famous automobile company Vaeto.


The company chosen for the completion of the paper is Vaeto Automobile Company.  The firm was founded in the year 2003 in order to provide cars at cheap rates to the people of Australia and presently is a largely grown business in the country. 

The company has defined “risk” as “an event having the potentiality to cause unexpected losses in the operations of the business” and to the damage that have been caused to the group of company’s assets and trusts. The fundamental approach of the company is to recognize as well as consider the various types of risks that might occur while the business is in operation. In order to prohibit such a loss, the firm has ensured safety in terms of management as well as has increased the corporate value by exposing to those risks that are only lying within an appropriate and controlled range. To accomplish the above mentioned criteria of the risks, the company has established the ERM Department. The prime role of the department is to manage the risks of the company and the Vaeto Group (Drauz 2014). 

The Vaeto Group has specified the position and the balance limits for all the transactions that have a chance of being exposed to the risk of fluctuations in the price of the commodities (Louche and Idowu 2017). These include inventory and purchase contracts without having any sales contracts and vice versa and would also maintain and monitor whether these limits can be applied effectively. With respect to the financial instruments that are traded on exchanges and are highly subjected to volatile fluctuations in the price of the materials such as metals, grains and cotton. The company is capable of specifying and managing the limits of the losses as well as positioning of the balance limits. This helps the company in minimizing the risk of occurring of losses. 

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