NAME -: AMLAN PANDA

ROLL NO. -: 21MBAOPE033

PRN NO. -: 1062211074
SUBJECT -: IBM ASSIGNMENT (ESSAY ON GEOPOLITICAL RISKS)

GEOPOLITICAL RISKS

Basic:-
The most important global company risk is geopolitical risk. It is posing significant management
issues on a global scale, notably at the board level.
Increased volatility in previously stable regions, as well as the uncertainties that accompany
political transition, are significant geopolitical drivers of both known and new hazards. Rising
inequality and the likelihood of violence, climate change politics and their consequences, and a
decline in commitment to the international rule of law are all posing problems. In today's
evolving global and interconnected world, the impact of a single incident or policy shift on an
organization can be amplified by a complex web of interconnected risks and themes. Physical
location of facilities, complicated supply chains, regionally movable workforces, and cyber
connectedness have all resulted in increased risk exposure.

WHAT IS RISK ANALYSIS -:

The process of determining the chance of a negative occurrence occurring in the commercial,
political, or ecological sectors is known as risk analysis. Risk analysis refers to the uncertainty of
predicted cash flow streams, the variance of portfolio or stock returns, the probability of a
project's success or failure, and possible future economic situations.

Risk analysts frequently collaborate with forecasting experts to reduce the likelihood of future
unfavorable consequences. All businesses and individuals are exposed to some level of risk;
without risk, benefits are less likely. The issue is that taking too much risk can result in failure.
Risk analysis allows you to strike a balance between taking risks and minimizing them.
TYPES OF RISK -:
Broadly speaking, there are two main categories of risk: systematic and unsystematic. Systematic
risk is the market uncertainty of an investment, meaning that it represents external factors that
impact all (or many) companies in an industry or group. Unsystematic risk represents the asset-
specific uncertainties that can affect the performance of an investment.
Below is a list of the most important types of risk for a financial analyst to consider when
evaluating investment opportunities:
Systematic Risk – The overall impact of the market
Unsystematic Risk – Asset-specific or company-specific uncertainty
Political/Regulatory Risk – The impact of political decisions and changes in regulation
Financial Risk – The capital structure of a company (degree of financial leverage or debt
burden)
Interest Rate Risk – The impact of changing interest rates
Country Risk – Uncertainties that are specific to a country
Social Risk – The impact of changes in social norms, movements, and unrest
Environmental Risk – Uncertainty about environmental liabilities or the impact of changes in
the environment
Operational Risk – Uncertainty about a company’s operations, including its supply chain and
the delivery of its products or services
Management Risk – The impact that the decisions of a management team have on a company
Legal Risk – Uncertainty related to lawsuits or the freedom to operate
Competition – The degree of competition in an industry and the impact choices of competitors
will have on a company.

TYPES OF RISK ANALYSIS: -

Now the risks are a part of any business endeavour. This analysis should be done on the basis of
its recurring manner and should be updated depending upon the arrival of any new kind of
possible threats.
Often the strategy helps in minimizing the future risk probability as well as the damages that may
happen. Now the risk analyses generally can be classified into two different categories.
Quantitative and Qualitative Risk Analysis
1) Quantitative risks assessment
In this type, with the help of the simulation process, a risk model is built. Also, deterministic
statistics can also be used so that the numerical values are assigned to the risk.
Now the inputs are generally the random variables that are fed into the risk model. After this, the
model will generate a range of output with respect to the range of corresponding input.
For instance, the ‘Monte Carlo simulation’ can be used to generate a possible set of outcomes or
inputs.  After this, graphs and various scenario analysis is used for the analysis of the model. On
the basis of this, the decision is made. Also, there are many other risk management tools with
the help of which the outcomes can be generated.
2) Qualitative overview
Now unlike the previous one, this is an analytical method of risk analysis.  In this, the risks are
not identified on the basis of numerical or quantitative ratings. In the qualitative analysis, a
written definite of the various uncertainties are required.
After this, the evaluation of the extent to which the risk will impact is done. And in the case of
occurrence of the negative events countermeasure plans are evaluated. Almost all of the business
requires to do an analysis to some extent.

STEPS IN RISK ANALYSIS PROCESS -:

The risk analysis process usually follows these basic steps:

1. Conduct a risk assessment survey: This first step, getting input from management and
department heads, is critical to the risk assessment process. The risk assessment survey is a
way to begin documenting specific risks or threats within each department.

2. Identify the risks: The reason for performing risk assessment is to evaluate an IT system or
other aspect of the organization and then ask: What are the risks to the software, hardware,
data and IT employees? What are the possible adverse events that could occur, such as
human error, fire, flooding or earthquakes? What is the potential that the integrity of the
system will be compromised or that it won't be available?

3. Analyze the risks: Once the risks are identified, the risk analysis process should determine
the likelihood that each risk will occur, as well as the consequences linked to each risk and
how they might affect the objectives of a project.

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4. Develop a risk management plan: Based on an analysis of which assets are valuable and
which threats will probably affect those assets negatively, the risk analysis should produce
control recommendations that can be used to mitigate, transfer, accept or avoid the risk.

5. Implement the risk management plan: The ultimate goal of risk assessment is to

implement measures to remove or reduce the risks. Starting with the highest-priority risk,
resolve or at least mitigate each risk so it's no longer a threat.

6. Monitor the risks: The ongoing process of identifying, treating and managing risks should
be an important part of any risk analysis process.