Financial Risks in the Telecom Industry - Essay Example

THE MANAGEMENT OF FINANCIAL RISKS IN THE TELECOM INDUSTRY The telecom industry is of utmost importance in today's globalised world and the purpose of this dissertation proposal is to study financial risk management in the telecom industry. Far from popular belief, the telecommunication industry also suffers from a number of problems such as market saturation1, financial recession, growing consumer prospects and so on. In addition, new technologies such as broadband and internet have transformed the techniques by which telecommunications companies conduct business in view of the fact that they now need substantial finances in terms of accreditations and infrastructure. Moreover, certain external factors such as natural disasters and terrorist attacks, cross-border transactions, development of new markets and so on have added to the existing risks in all industries paving the way for greater financial risk management. To study the financial risks of telecom industries, we will also introduce information regarding telecom sectors from countries such as India, China, and Philippines and so on to give an enhanced overview of existing practices. In this dissertation proposal, we will adequately sum up the reasons for this research, why it is significant, what methodology needs to be adopted, how information will be obtained and so on. Introduction and relation to previous research As mentioned in the abstract, the purpose of this dissertation proposal is to study financial risk management in the existing telecom industry. Today, telecommunication is widespread and devices such as telephones, radios, internet, instant messaging and so on facilitate the process of communication. By definition, financial risk management means the process of identifying, evaluating and reducing financial risks. The telecommunication industry suffers from a number of problems such as market saturation2, financial recession, growing consumer prospects and so on. In addition, new technologies such as broadband and internet have transformed the techniques by which telecommunications companies conduct business in view of the fact that they now need substantial finances in terms of accreditations and infrastructure. Moreover, certain external factors such as natural disasters and terrorist attacks, cross-border transactions, development of new markets and so on have added to the existing risks in the telecommunication industry paving the way for greater financial risk management. To gain a better perspective of financial risk management, let us consider some theories. Financial risk management3 becomes essential when an organisation desires an increase in its shareholders value by taking on a viable project. However, organisations alone, cannot hedge a risk correctly when the cost of the services or product is similar in the existing market and the market where the organisation desires expansion. For this purpose, these organisations require outside help in terms of financial risk management. Derivatives4 are commonly used in financial risk management as tools through which specific risks can be gauged effectively and accurately. Some of these derivativesi include swaps or forward contracts that tend to be costly; while others include trade on future exchanges that tend to be cost efficient but leave certain risks. Proposed methods As stated earlier, the purpose of this dissertation proposal is to study financial risk management in the existing telecom industry. In order to complete an efficient study of the project, the research will comprise of the following stages; a detailed literary search, anthology of a bibliography, drafting the literary review, designing the research instrument, revising, planning and organising the research, making a glossary of the bibliography, scheduling, conducting a research, collating and analysing the data generated by different agencies on a regular basis, writing the results and analysis, writing the full draft, proofreading and final submission of the research. The most time consuming of these stages will include the collecting of data that will require time, finances and researchers and other professionals including field level workers, writing up the results and analysis after a the data has been channelized to the resource centre detailed review of the data collected and of course drafting the literature review. Providing an accurate list of citations and annotations for the research in itself will be a lengthy and time-consuming procedure. Let us take for instance a few telecommunication industries and examine the prospects. In India5, now has its own undersea cable that has also significantly improved the international bandwidth situation. In addition, the telecommunications industry has now been privatised leading to a significant drop in telecom rates. It is being predicted that the introduction of new players in the industry will result in a further drop in telecom prices, thus making India a low-risk country for expansion of telecom industry. Comparatively, a third world country such as Philippines is now offering a serious challenge to countries such as India with regards to the telecommunication industry. The country already has a large pool of information technology professionals and can offer cost-competitive infrastructure6. Unfortunately, in China, the telecommunications industry is monopolised by state-run businesses. As a result, Chinese customers still pay large sums of money for products and services and receive lower quality services. However, introduction of foreign operators are slowly being allowed access to the market. The risk factor though, great might result in great business opportunities Reflections A few details must be kept in mind while collating data for the research and publication. One such ethical issue that may occur would be confidentiality of information. Collecting sensitive data from companies in the form of documents and financial records that when exposed to rival companies will cause great harm to the companies being researched, therefore confidentiality of information must be provided and in lieu of accidental mishaps or theft of such information, a penalty clause must be included to reimburse the companies in question. In addition, another factor that needs to be explored is the possibility of generating a hypothesis that may cause great harm to the company in question by exposing reduction of income as a direct result of some actions on behalf of either the company, its personnel or the research. Moreover, it is not uncommon practice for sensitive data such as addresses, phone numbers, credit card numbers and social security numbers and so on to be sold or stolen for misuse or for marketing purposes by other companies. In such cases, organisations will need to be assured that susceptible data will be properly protected against misuse and will not under any circumstances be sold to competing companies for marketing or other purposes. Access to such sensitive knowledge database can pose an ethical dilemma as this information could easily be misused thereby causing the company great harm. All steps must be taken in such cases to protect the information as released by the company in question by enforcing stringent confidentiality practices on part of the researchers and analysts. The most important ethical consideration might be that the information the research aims at collecting and analysing is unacceptable by respondents or organisations. In such cases, it is essential that the aims and objectives of the research or proposed study be clarified and that guarantees or written contracts are provided that will reassure the organization or respondent of where and how the information is being used and in addition, that the information will remain confidential under all circumstances. Another important factor during comprehensive research is the role of technology, the issue of innovation leading to possible plagiarism, responsiveness and so on. These ethical issues must be kept in mind primarily during collation of data through either surveys, interviews, research over the internet or other sources such as books and publications. Ethical and moral codes of conduct must therefore be strictly adhered to by researchers to avoid damages or penalties caused by legal action as a direct result of their methodology involving knowledge activities. In conclusion, before the research commences, a series of debates and agreements will be required that will cover all basic moral and ethical issues as discussed above, and steps to minimise penalties, damages and inconvenience imposed. Stringent rules regarding confidentiality of information must be enforced to ensure that companies are comfortable releasing sensitive information to researchers in order for researchers to gain all the fundamental knowledge and in depth information regarding methods, practices and means of production of companies, and in doing so making the research complete and the hypothesis as accurate as possible for publication purposes exacerbated by the need to accomplish the goal; understanding and defining motivators to enhance productivity in a given environment. Conclusion From the above discussion, we can clearly see that there is invariably a risk in any industry, and that this risk is growing with the possibility of greater and fiercer natural disasters, market financial situation, customer expectancies, and foreign interests and so on. These reasons call for greater financial risk management in today's globalised world where foreign investors aspire at investing in an industry in countries such as India, China, and Europe and so on. In order to correctly assess this risk in the telecommunication industry, an in-depth research needs to be conducted that will shed better light to the existing circumstances and practices in various countries. In order to complete an efficient study of the project, the research will comprise of the following stages; a detailed literary search, anthology of a bibliography, drafting the literary review, designing the research instrument, revising, planning and organising the research and so on. In addition, while conducting the research one must keep in mind the various ethical situations that may arise and plan ahead to avoid potentially precarious situations and irreversible losses whether financial or otherwise to companies immersed into the research. Timetable The initial dialogues for the study will be accomplished during the meetings to be held in enter date. This consultation will permit physically interviewing of a number of subjects. Based on these initial conferences, the mechanism may be customized for enhanced statistics arrangement. Once modifications have been made, supplementary discussions will take place by telephone, electronic mail, and so on during enter date. Transcription interviews, will take place in enter date. Coding and examinations of the discussions will be done in enter date, and the suppositions will be developed and written in enter date. I anticipate submitting the earliest drafts of the dissertation to the commission in enter date, with the objective of making improvements and tendering a final adaptation in enter date. References Alexander, Carol and Sheedy, Elizabeth (2004). The Professional Risk Managers' Handbook: A Comprehensive Guide to Current Theory and Best Practices (1st ed.). Wilmington, DE: PRMIA Publications. Alexander, Carol and Sheedy, Elizabeth (2004). The Professional Risk Managers' Handbook: Volume I: Finance Theory, Financial Instruments, Markets (1st ed.). Wilmington, DE: PRMIA Publications. Alexander, Carol and Sheedy, Elizabeth (2004). The Professional Risk Managers' Handbook: Volume II: Mathematical Foundations of Risk Measurement (1st ed.). Wilmington, DE: PRMIA Publications. Alexander, Carol and Sheedy, Elizabeth (2004). The Professional Risk Managers' Handbook: Volume III: Risk Management Practices (1st ed.). Wilmington, DE: PRMIA Publications. Mirza, Adeel. "Managing Risk in Financial Sector." EzineArticles 25 July 2006. 16 August 2006 . Mirza, Adeel. "Managing Risk in Financial Sector." EzineArticles 25 July 2006. 16 August 2006 . Pepito, Winston. "Philippines Catching up with India in the Outsourcing Industry." EzineArticles 24 March 2005. 16 August 2006 . Pepito, Winston. "Philippines Catching up with India in the Outsourcing Industry." EzineArticles 24 March 2005. 16 August 2006 . Stulz, Ren M. (2003). Risk Management & Derivatives (1st ed.). Mason, Ohio: Thomson South-Western. ISBN 0-538-86101-0. Wang, C. Werker, Telecommunications Equipment Market in China Stat-USA Market Research Reports. 2004 Read More