RISK MANAGEMENT

DEPARTMENT OF AGROINDUSTRIAL TECHNOLOGY

FACULTY OF AGRICULTURE TECHNOLOGY
UNIVERSITAS BRAWIJAYA
Lecturers

 Dr. Ir. Imam Santoso, MP

 Dr. Retno Astuti, STP, MT
 Dhita Morita Ikasari, STP, MP
 Riska Septifani, STP, MP
Risk Management Syllabus
2 credits
Risk Management is a discipline that deals with
processes to manage risk in order to achieve the
maximization of the value of a business entity, in
order to improve the welfare of its shareholders
through risk management under conditions of
uncertainty.
COURSE LEARNING OUTCOME

After taking this course, students are expected to

be able to apply the principles and concepts of
risk management in identifying and designing
solutions of agro-industry problems.
 Topics
Basic concept of risk and risk management
Risk Identification
Risk Assessment
Risk Profilling
Risk response
Operational Risk
Mid Test
REFERENCES

 FUNDAMENTAL OF RISK MANAGEMENT

Understanding, Evaluating, and Implementing Effective Risk
Management
Paul Hopkins

 ENTERPRISE AND INDIVIDUAL RISK MANAGEMENT

Etti Baranoff, Patrick L. Brockett, Yehuda Kahane,
 COURSE CONTRACT

 Credits 2/0  Coordinator???

 Assessment 
50% Midtest; 30% task; 20% quiz?
PART 1
“BASIC CONCEPTS OF RISK AND RISK MANAGEMENT”

CONSUMTIVE PROFIT
PEOPLE ORIENTED
• PRODUCT VARIANCE- • FINANCIAL RISK
> TREND PLANNING MANAGEMENT
• MARKET PENETRATION • DECISION
 RISK???
a state of uncertainty about a situation that will
occur later with decisions taken based on various
considerations at this time
The uncertainty can be caused by the
following factors:

 economic uncertainly caused

 nature uncertainly caused
 human uncertainly caused
DEFINITIONS

 The circumstances that lead to a set of special results,

where the results can be obtained with the possibilities
already known by the decision maker

 Variations in profits, sales, or other financial variables

Possible financial problems that affect the performance
of a company's operations or financial position, such as
economic risk, political uncertainty, and industry issues
BENEFITS OF RISK MANAGEMENT

 Decision making
 Providing direction for the company to see the impact
that may arise both in the short and long term
 Encourage managers to make decisions to always
avoid risks and avoid the effect of loss occurring
especially from the financial aspect / facilitate the
estimated cost
 Risk mitigation
BENEFITS OF RISK MANAGEMENT

 With the concept of risk management that has been

designed detail, then it means the company has built
the direction and mechanism in a sustainable manner
 Increased productivity and profitability
 Forms of social and environmental responsibility (to
consumers, employees, shareholders / investors),
environment)
Risk management stages

1. Risk Identification
2. Risk Type Identification
3. Determining Risk Measures
4. Determining the Alternatives
5. Deciding on an Alternative
6. Implementing Selected Alternatives
7. Controlling the Selected Alternatives
8. Evaluating the Path of Selected Alternatives
Type of Risk

PURE RISK
• Physical risk
• Labor risk
• Legal risk

SPECULATIVE RISK
• Market risk
• Credit risk
• Liquidity risk
• Operational risk
Type of Risk

Risk based on whether it can be transferred or not

•Transferable risk
•Non-transferable risk
Risk based on its origin

•Internal risk
•Eksternal risk
Type of Risk

Risk based on the extent of uncertainty changes

as time changes
• Static risk
• Dinamic risk

Risk based on point of view

• Subjective risk
• Objective risk
5 alternative strategies to deal with risk

 Avoid risk
 Prevents risk and reduces losses
 Risk retention
 Transferring risk
 Insurance
1. Avoid Risk

 By avoiding risk, the contractor can know that

his company will not suffer losses due to
predicted risks. On the other hand, the
contractor will also lose an opportunity to gain
the benefits that may be derived from the
assumption of the risk.
2. Prevent Risk and Reduce Losses

 For example:
 installation of an alarm or anti-theft device on
the equipment in the project, will reduce the
likelihood of theft.
 A building equipped with a sprinkler system, will
reduce the financial impact, if the building is
experiencing a fire.
3. Risk Retention

 Risk retention is an internal estimate, either intact

or in part, of the financial impact of a risk to be
experienced by the company.
 In adopting this risk retention strategy, it is
necessary to distinguish between two different
types of retention, ie planned and unplanned
risk retention.
4. Risk Transfer
 risk transfers can be made, through negotiations, whenever
contractors undergo contractual planning with many parties such
as owners, subcontractors or suppliers of materials and equipment.
 Risk transfer is done through terms or clauses in the contract such
as: hold - harmless agreement and clause of warranty or
contractual adjustment.
 For example: an adjustment to the bid price, where extra
compensation will be given to the contractor in case of different
ground conditions in a project.
5. Insurance
 Insurance is an important part of a risk management program, either for an
organization or for individuals.
 Insurance is also included in the risk transfer strategy, whereby the insurer
agrees to accept the financial burden arising from the loss.
 Formally, insurance can be defined as an agreement contract between
two related parties, namely: insured and insurer.
 With this agreement, the insurer agrees to indemnify the loss (as set out in
the contract) by reply, the insured must pay the “premi” per period
Type of business man related to risk

1. Risk Taker (optimistic)

2. Risk Neutral (Neutral)
3. Risk Avoider (Pesimistic)