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: Mohiuddin Asad,
BY
What is Risk?
Chance or situation involving exposure to the possibility of loss, injury, or other adverse or unwelcome circumstances. In quantitative terms; Probability x Impact
Risk Management is not about, Not taking risk at all, rather it is a conscious, planned and calculated way of taking risks. The process of identifying, assessing, prioritizing and deciding how to best handle risks.
Main Categories
Compliance Risk
Examples :
Licenses , Permits, Copyrights, Patents etc expired. Employees working without work permit. Labor, Health, Safety or Environmental Laws breached. Accounting standards not followed. Software licenses breach Quality standards not followed
Operational Risk
Examples :
Sales drop; New competitor Dependency on few customers Loss of Franchise Service complaints; Lack of service staff Parts not available Stock out Warranty disputes Reputation risk Economic recession Inventory damage / short during transfers System Down Flood / Fire disturbed business
Financial Risk
Examples :
Funds shortage Collection problems / write offs Currency risk Risky but profitable credit deal Duplicate payment Interest rate risk Investment risk Fraud Fire / Flood damages Theft / shortage Penalties / fines
Assessment of Risk
High High / Low High / High
PROBABILITY
Assessment of Risk
High High / Low
Parts shortage Warranty disputes
High / High
Loss of Franchise Risky Credit Deal
PROBABILITY
Environ law breach Accounting standards Stock Out CR Expired
Risk Prioritization
+ +
Whichever technique or a combination of techniques to be chosen, remember the underlying universal business assumption; Benefits
>
Cost
Risk Monitoring
Regular review Corrective actions Remember it s a cycle
Risk Management
Thank You