DEFINITION of 'Corporate Finance'

1) The financial activities related to running a corporation.

2) A division or department that oversees the financial activities of a company. Corporate
finance is primarily concerned with maximizing shareholder value through long-term and
short-term financial planning and the implementation of various strategies. Everything
from capital investment decisions to investment banking falls under the domain of
corporate finance.
Corporate finance
Among the financial activities that a corporate finance department is involved with
are capital investment decisions. Should a proposed investment be made? How
should the company pay for it; with equity or with debt, or combination of both?
Should shareholders be offered dividends on their investment in the company?
These are just some of the questions a corporate financial officer attempts to
answer on a consistent basis. Short-term issues include the management of current
assets and current liabilities, inventory control, investments and other short-term
financial issues. Long-term issues include new capital purchases and investments.
This course provides a brief introduction to the fundamentals of finance,
emphasizing their application to a wide variety of real-world situations spanning
personal finance, corporate decision-making, and financial intermediation. Key
concepts and applications include: time value of money, risk-return tradeoff, cost of
capital, interest rates, retirement savings, mortgage financing, auto leasing, capital
budgeting, asset valuation, discounted cash flow (DCF) analysis, net present value,
internal rate of return, hurdle rate, payback period.

DEFINITION of 'Risk Management'

The process of identification, analysis and either acceptance or mitigation of uncertainty in

investment decision-making. Essentially, risk management occurs anytime an investor or fund
manager analyzes and attempts to quantify the potential for losses in an investment and then
takes the appropriate action (or inaction) given their investment objectives and risk tolerance.
Inadequate risk management can result in severe consequences for companies as well as
individuals.

RISK CLASSIFICATION

Risk is pervasive in any enterprise architecture activity and is present in all phases within the
Architecture Development Method (ADM). From a management perspective, it is useful to
classify the risks so that the mitigation of the risks can be executed as expeditiously as possible.
One common way for risks to be classified is with respect to impact on the organization (as
discussed in 31.4 Initial Risk Assessment), whereby risks with certain impacts have to be
addressed by certain levels of governance.
Risks are normally classified as time (schedule), cost (budget), and scope but they could also
include client transformation relationship risks, contractual risks, technological risks, scope and
complexity risks, environmental (corporate) risks, personnel risks, and client acceptance risks.