Exchange Rate Risk

The uncertainty of returns for investors that acquire foreign investments and wish to convert them back to their home currency. This is particularly important for investors that have a large amount of over-seas investment and wish to sell and convert their profit to their home currency. If exchange rate risk is high - even though a substantial profit may have been made overseas, the value of the home currency may be less than the overseas currency and may erode a significant amount of the investments earnings. That is, the more volatile an exchange rate between the home and investment currency, the greater the risk of differing currency value eroding the investments value.

Market Risk

The price fluctuations or volatility increases and decreases in the day-to-day market. This type of risk mainly applies to both stocks and options and tends to perform well in a bull (increasing) market and poorly in a bear (decreasing) market. Generally with stock market risks, the more volatility within the market, the more probability there is that your investment will increase or decrease.

Country Risk

This is also termed political risk, because it is the risk of investing funds in another country whereby a major change in the political or economic environment could occur. This could devalue your investment and reduce its overall return. This type of risk is usually restricted to emerging or developing countries that do not have stable economic or political arenas.

Financial Risk

Financial risk is the risk borne by equity holders (refer Shares section) due to a firms use of debt. If the company raises capital by borrowing money, it must pay back this money at some future date plus the financing charges (interest etc charged for borrowing the money). This increases the degree of uncertainty about the company because it must have enough income to pay back this amount at some time in the future.

Liquidity Risk

The uncertainty introduced by the secondary market for a company to meet its future short term financial obligations. When an investor purchases a security, they expect that at some future period they will be able to sell this security at a profit and redeem this value as cash for consumption - this is the liquidity of an investment, its ability to be redeemable for cash at a future date. Generally, as we move up the asset allocation table - the liquidity risk of an investment increases.

Business Risk

The uncertainty of income caused by the nature of a companies business measured by a ratio of operating earnings (income flows of the firm). This means that the less certain you are about the income flows of a firm, the less certain the income will flow back to you as an investor. The sources of business risk mainly arises from a companies products/services, ownership support, industry environment, market position, management quality etc. An example of business risk could include a rubbish company that typically would experience stable income and growth over time and would have a low business risk compared to a steel company whereby sales and earnings fluctuate according to need for steel products and typically would have a higher business risk.

How to Merge Audit Files From the Audit Trail

By merging all audit files in all the audit directories, you can analyze the contents of the entire audit trail. The auditreduce command merges all the records from its input files into a single output file. The input files can then be deleted. When the output file is placed in a directory that is named /etc/security/auditserver-name/files, the auditreduce command can find the output file without your specifying the full path.
Assume a role that includes the Audit Review profile, or become superuser.
The System Administrator role includes the Audit Review profile. You can also create a separate role that includes the Audit Review profile. To create a role and assign the role to a user, see Configuring RBAC (Task Map).

Create a directory for storing merged audit files.
# mkdir audit-trail-directory
Limit access to the directory.
# chmod 700 audit-trail-directory
# ls -la audit-trail-directory
drwx------ 3 root sys 512 May 12 11:47 .
drwxr-xr-x 4 root sys 1024 May 12 12:47 ..
Merge the audit records in the audit trail.
Change directories to the audit-trail-directory and merge the audit records into a file with a named suffix. All directories that are listed in the dir lines of the audit_control file on the local system are merged.

# cd audit-trail-directory
# auditreduce -Uppercase-option -O suffix
The uppercase options to the auditreduce command manipulate files in the audit trail. The uppercase options include the following:

Managing Audit Records

By managing the audit trail, you can monitor the actions of users on your network. Auditing can generate large amounts of data. The following tasks show you how to work with all this data.

How to Display Audit Record Formats

To write scripts that can find the audit data that you want, you need to know the order of tokens in an audit event. The bsmrecord command displays the audit event number, audit class, selection mask, and record format of an audit event.

Put the format of all audit event records in an HTML file.
The -a option lists all audit event record formats. The -h option puts the list in HTML format that can be displayed in a browser.

% bsmrecord -a -h > audit.events.html
When you display the *html file in a browser, use the browser's Find tool to find specific records.

The Objectives, Extent, and Scope of Audit Procedures

Audit procedures are called audit programs by examiners, and they merely serve as guidelines and checklists of actions to perform during audit engagements. To provide an example, we focused on the details of the audit procedures for accounts receivables (AR), which we present in the succeeding sections.

In actual practice, audit techniques or styles in performing these procedures, developed by examiners through their skills and expertise, contribute largely to achieving the best audit results within a specified time frame.

The objectives, the extent, and the scope by which these procedures are performed may vary according to the role of the examiner, as internal or external auditor. These roles and objectives are discussed in full in a separate article entitled Financial Statement Audit vs. Forensic Accounting.

The term “extent” refers to the percentage of documents test-checked for completeness or for accuracy of computations involved. An AR audit program may also include the tracing of transactions from the selling point, to payment activities, up to its final disposition as a paid-account, a past due account, a doubtful account, or as a bad debt, as they are verified via random sampling of substantial balances or material amounts.

The term “scope” refers to the period covered based on cut-off dates established by the internal or external financial auditors. To fraud examiners or forensic accountants, the scope refers to the specific account(s) under suspicions of fraud--where dates could go as far back as necessary.