Global Financial Crisis Analysis

Today, economics of the world, companies of the world, and the world in general, is more connected than ever. Effect of events in one country (part) of the world is not only limited to that country (part), but it is reflected in another countries (parts) as well. For instance, the effects of the financial crisis of 2007-2010, which originated in United States of America, where felt throughout the world. In some countries less, in some countries more, but the effects were there. So was the case with many industries. Some of the industries were affected more some were affected less during this crisis. For instance, during financial crises generally people cut back on luxury product and services. So, if your company is in the business of providing luxury goods and services, you might face a drop in demand. However, essential goods and services such as bread, milk, etc. might not get affected too much. Similarly, there can be change in demand and supply due to other macroeconomic factors, such as change in regulations, where a country which is a major supplier of consumer of our products or services. Unfortunately, during these situations forecasting with the help of traditional forecasting methods will not be of much help. As per a study by federal reserve …show more content…
In such a situation, ABN AMRO not only has to confirm with the European laws, but also with the laws in which it provides its services. Any change in laws in any of these countries will mean that there will be changes in normal operating procedures, which might affect supply and demand. For instance, there have been major changes in regulations after the 2007-10 financial crisis, which has led to many operational changes in the clearing industry. This is also one of the reasons why we are doing this forecasting. In short, even AMRO clearing is highly susceptible to macroeconomic factors and thus there is high probability of forecasting error creeping