1. Identify and categorize the business risks that are present in the project. You should provide clear and well-documented identification of the sources of business risks in the ship finance transaction.
Your report should be structured into the following sections, for each party separately:
1. Identify and categorize the business risks that are present in the project. You should
provide clear and well-documented identification of the sources of business risks in the ship
finance transaction. You may also provide support from both the academic and business
literature to support your arguments, as well as from the latest advances within the industry.
2. Provide a hierarchy of risk exposures in terms of importance (significance of risk
exposure) about the project, with proper justification. You should be able to provide a
numerical representation for each risk exposure identified in the previous step, and provide
a rationale and a scenario analysis (good, average, worst).
3. Provide all the available hedging methods (both “traditional” and financial) for each
source of risk identified in the project. You should first provide an application of all available
“traditional” risk management methods and comment on their possible limitation(s) with
respect to the specific ship finance project. Then you should present and thoroughly analyze
all available alternative derivatives products for hedging each source of risk, and for each
4. Select, for each risk, the best available hedging product, according to your justified
opinion, and provide a numerical application using the appropriate figures from the project
and derivatives prices from the market. All calculations must be analytical and in-depth.
5. You should write a clear and concise list of recommendations supported by appropriate
arguments based on the previous risk management analysis in the report.
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