Annual report pursuant to Section 13 and 15(d)

Risk Management

Risk Management
12 Months Ended
Dec. 31, 2012
Notes to Financial Statements  
Note 10. Risk Management

The Company is exposed to financial risks due to the nature of its business and the financial assets it holds. A summary of the Company’s risk exposures as it relates to financial instruments are reflected below:


(a) Market risk


Market risk is the risk that the fair value from a financial instrument will fluctuate because of changes inmarket prices. The Company will be exposed to potential losses if the price of the long-term investment ithold decreases.


(b) Liquidity risk


The Company manages liquidity risk by maintaining sufficient cash balances to meet operation expense requirement in additional to expenses assumed by majority shareholders.


(c) Credit Risk


Credit risk also arises from cash and deposits with banks and financial institutions. To minimize the credit risk the Company places these instruments with a high credit quality financial institution.