Determining Risk and Opportunities

…… Effect of uncertainty
… Effect of uncertainty is always associated
with various business operations
 Strategic Risk
Financial Risks
Marketing Risk
Operational & Quality Risks
Information Technology Risk
HR Risks
Legal & Compliance Risk
Natural Calamities or Unpredictable Risks
 Strategic Risks

1. Corporate Governance Risk - Insiders (employees)

won't act in the best interests of organization and the
stakeholders.

2. Competitive Risk - The general risk that you'll lose

out to the competition.

3. Innovation Risk - Innovations in terms of advance

products phase out your business from the market.

4. Intellectual Risk - Intellectual property (key factor)

leaks to competitors (like Design, Project USPs).
 Strategic Risks

5. Economic Risk - The economy will go into

recession. But in some cases, recessions benefit a
business.

6. Technological Change - Technology investments

will become obsolete.  New technology introduced.

7. Change Management Risk - Organization fail to

adopt changes that are necessary for improvements.

8. Ethical Risk - Unforeseen circumstances forced to

compromise with ethics and guiding principles.
 Strategic Risks

9. Reputational Risk - Damage to your corporate

image. Reputational risk can reduce trust in business
and lead to destruction of value (Brand Image) (e.g.
Maggie Noodles).

10. Sustainability Risk - Organization fail to meet

sustainability objectives and targets (e.g. Premier
Padmini Car).
 Financial Risks

1. Profit Risk - During certain phase of business,

management may not enjoy (planned) profit.

2. Capital Availability - Top management not able to

provide necessary fund to business (resulting
temporary stagnancy in growth).

3. Asset Risk - Asset prices depreciated cause of

market conditions (e.g. real estate, land, machine dep).

4. Currency Risk - Negative change in exchange rates

against your favour. (e.g. Dollar strong Rs. weak).
 Financial Risks

5. Credit Risk - Borrower default on a debt.

6. Fraud Risk - Unforeseen frauds resulting in losses.

7. Accounting Risk - Accounting errors.

 Sales and Marketing Risks

1. Revenue Shortfall Risk - Low or no recovery from

customers.

2. Demand Risk - Lower demand of product than

projected during business planning.

3. Market Competition Risk - Price war with

competitors resulting into collection of low revenue.

4. Customer Relationship Risk - Damaged relations.

5. Dependability Risk - Loss of major customer.

 Operational & Quality Risks

1. Infrastructure Risk - Inadequate infrastructure to

meet supply w.r.t. market demand.

2. Product Risk - Legal liability related to product or

service.

3. Maintenance Risk - Machines or equipments not fit

for performing value addition operations

4. Product Failure Risk - Product itself fail to perform

5. Life Cycle Risk- Product get vanished from market

 Information Technology Risks

1. Technology Quality Risk - Software and hardware

quality problem

2. Information Security Risk - Illegal attack (hacking)

on sensitive data. Theft.

3. Technology Gap Risk - Use of previous software

version leading to blockages of some functions
 Legal and Compliance Risks

1. Financial Risk - Hefty fines levied cause of non

compliances w.r.t. the requirements

2. Mandatory Reporting Risk - Regulatory info. not

submitted to the authority.

3. Tax or Dues Liability Risk - Possibility of lawsuit.

4. Safety Compromise Risk - Severe penalties, in

some cases punishment / jail or both together.
Intolerable Risks (Includes Natural Calamities)

1. Major fire

2. Earthquake / flood resulting damage to building.

3. Loss of Corporate image ( e.g. loyalty and dignity)

4. Damage to property during riots

5. Public outrage (anti business movement)

6. War and Act of Terrorism

 What do you hear / see / observe ?
 
Fact or inference

Bhargav, a buyer with ABC Company, was scheduled for a 10 O’clock meeting in
Saxena’s office to discuss the terms of a large order. On the way to that office the
buyer slipped on a freshly waxed floor, and as a result received a badly bruised
leg. By the time Saxena was notified about the accident, Bhargav was on the way
to the hospital for X-ray. Saxena called up at the hospital to enquire and no one
there seemed to know anything about Bhargav. It’s possible that Saxena called the
wrong hospital.
 
Having read the above paragraph. Please classify each of the following statements
as “Fact” or “Inference”. Use the following as definitions:
 
Fact (F) : A statement that can be easily verified by checking its
sources.
 
Inference ( I ) : A statement about the unknown, based on what is known.
­1. Mr. Bhargav is a buyer. F /I
2.Bhargav was supposed to meet Mr. Saxena. F /I
3.Bhargav was scheduled for a 10 O’clock meeting. F /I
4.The accident occurred at the ABC company. F /I
5.Bhargav was taken to the hospital for X- rays. F /I
6.No one at the hospital, where Saxena called, seemed to know anything
about Bhargav. F /I
7.Saxena called the wrong hospital. F /I