Here your group should identify what you would consider to be the top two risks faced by TPW,...

Question

Here your group should identify what you would consider to be the top two risks faced by TPW, excluding economic disruption related to Covid-19. Then, starting with your base case valuation, your second valuation should assume that these risks materialise in 2024. Assess the financial outcomes for TPW and any actions that management might be able to take to preserve its financial position during this year. Assess if there are any initiatives that the management team of TPW could put in place now to mitigate the financial impact of this scenario.

Rochak · Accepted Answer

Business Risk is an exposure that the company or organization has that may lead to lower profits or other financial impacts on the organization. Firms often look to mitigate the business risk which arises, but because there is no instrument to fully mitigate the risks, the firms often reduce the risk by taking buying/selling different financial instruments to reduce the exposure and the risk.
The two major risks that the organization, i.e., “Temple and Webster” will face because of its operation and business are:
· Market Risk: According to Ozkan (2020), market risk is the risk that is a measure of all the factors about its operations and finance which will have an impact on the firm’s performance 
· Liquidity Risk: Liquidity risk is the risk that arises because of the firm’s inability to meet the payment obligation which the firm must make to be in the market and operations (Huang 2018)
Market Risk
The major factor which gives rise to the market risk for the group is that the group engages in foreign currency transactions, which exposes the firm to foreign currency risk because of fluctuating foreign exchange rates. The risk is a result of the transaction which the firm must undertake with suppliers, customers, and other stakeholders denominated in foreign currency, and because the exchange rate which is a volatile measure that changes every second gives rise to a vulnerable risk for the group in terms of foreign currency risk. The factor that determines the foreign currency exposure that the group has is as a result of the business model, which says that approximately 80% of Temple & Webster's product is marketed as the dropship, with goods delivered straight from the source to the final customer. The remaining 20% is mainly sourced from over 100 factories in Vietnam and China,

Here your group should identify what you would consider to be the top two risks faced by TPW, excluding economic disruption related to Covid-19. Then, starting with your base case valuation, your...

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