Answer question Essay Example | Topics and Well Written Essays - 1000 words - 4

Answer question - Essay Example y, orders used to circulate from the customers to the hands of brokers to went to the floor desk to the order desk to the executing broker to the runner and then back again, and therefore errors used to be common(Sykes, 1983). In reality, this errors cannot have an impact on the capital today. The moment an error is discovered, and as well the market is still open, it is just the role of the order desk to get out the error and finally, need to determine the fault. However, determining fault is usually easy. Perhaps, double-checks in the system should be there, primarily composed of the telephone recordings as well as duplicate orders that will tell the story. In addition, it should not have absolutely impact on capital because the moment it was determined that the broker-agent, or customer, or even the floor broker was the one at fault, they could ate the error. Also, incase the error happened at any other place in the process, and then the clearing firm needed to swallow the loss (Jackwerth& Rubinstein, 1996). The function that insurance can perform in reducing the capital impact of operational loss of a firm is highly significant. Transferring a certain risk to an insurance firm can lead to a better performance hence covering diverse losses and prevent critical situation. It has been approved that insurance can be applied as a mechanism to minimize the impact of operational losses for firms like banks, and this means that a specific insurance against risks can result to a low level of minimum capital that is allocated to a given risk category (MacMinn & Richard, 2005). In hard economic moment, organization tend not be affected as such. With the financial crisis, it has been reported on ways firms employ strategies in order to cope up with the difficulties that inevitably follow crisis in economic (Douglas& Browne, 2011 ). Scenario analysis is a strategise tool in making decision. However, it has been applied for most decades in different disciplines, that