MANAGIN

G RISK
TODAY' 1 W hat's
S Risk?
AGENDA 2 Classifying Business
Risk

3 Risk
M anagement
 W hat's
Risk is theRisk?
possibility of suffering harm or
loss.

Applied to a business, risk translates into

the possibility of losses associated with the
assets and the earnings potential of the
firm.
Risk can be classified into two broad categories:

MARKET RISK pure risk

The uncertainty The uncertainty
associated with associated with a
situation where
an investment
only loss or no loss
decision. can occur.
 Classifying Bussiness Risk

1 Property Risks
In the course of establishing a business, an owner
acquires property that will be necessary to provide the
goods and services of the company. If this property is
damaged or destroyed, the business sustains a loss. In
addition, the temporary loss of use of the property can
add to the negative financial impact on the business.
There are two general types of property:

Real property Personal property

can be defined simply

as any property other
Land and than real property.
anything P ersonal property
physically includes machinery,
attached to the equipment (such as
computers), furniture,
land, such as
fixtures, stock, and
buildings vehicles.
Property Risks PERILS
is defined as a cause of loss. Some perils

"cont" are naturally occurring events, such as

windstorms, floods, earthquakes.
Property can be valued in a number of ways

The replacement value of property: LOSSES

is the cost to replace or recreate the
property at today’s prices. Direct loss:
in which physical damage to property
reduces its value to the property
owner.

The actual cash value (ACV ):

of a property can be very different
from its replacement value; this Indirect loss:
insurance term refers which arises from inability to
to the depreciated value of a property
carry on normal operations due
to a direct loss to property.
 2. LIABILITY RISKS
A STATUTORY
LIABILITY
workers’ compensation legislation:
Laws that obligate the employer to pay employees for injury
or illness related to employment, regardless of fault

most wokers compensation statutes require employers to

provide the following benefits to employees injured at work:
coverage of medical
expenses compensation for
lost wages
Death benefits for
employees'families
 2. LIABILITY RISKS "CONT"

B CONTRACTUAL
LIABILITY
Businesses often enter into contracts with other parties.
These contracts could involve a lease of premises, a sales contract
with a customer, or an agreement with an outsourcing firm.

C TORT LIABILITY
Torts are wrongful acts or omissions for which an injured
party can take legal action against the wrongdoer to seek
monetary damages.
 2. LIABILITY RISKS "CONT"

Four elements must be present for someone to

be found guilty of a negligent act:

1.Existence a legal duty between the parties.

2.failure to provide the appropriate standard of
care. 3C.the presence of injury or damages.
4.Evidence thet the negligent act is the proximate
cause of the loss—that is, proving that the
negligence actually caused the damages sustained.
 2. LIABILITY RISKS "CONT"
Two types of damages may be awarded in a tort action:
1.Compensatory damages:
Economic damages: relate to economic loss, such
as medical expenses, loss of income.
Noneconomic damages: cover such losses as pain and
suffering, mental anguish, and lossof physical
abilities.
C

2.Punitive damages:
A form of punishment that goes beyond
any compensatory damages.
 3 Personnel Risks

are risks that directly affect individual employees

but may have an indirect impact on a business as
well.

The primary risks in this category

include: premature death.
poor health.
insuffi cient retirement income.
 Risk management

Ways of coping with

risk that are designed
to preserve the assets
and earning power of a
firm
The Process of Risk
Management
Step 1: Identify and understand risks:
It is essential that a business owner be aware of the risks the firm
faces on the road to success.
Step 2: Evaluate risks:
Once the various risks have been identified, they must be evaluated in
terms of the potential size of each loss and the probability that it will occur.

Step 3: Select methods to manage risk:

The two approaches used in dealing with risk are risk control and risk
financing.

Step 4: Implement the decision.

Step 5: Evaluate and review.

 Risk Management and the Small
Businessin a small business differs from that in a large fi rm in several
Risk management
ways.

Risk control:
involves minimizing loss through prevention, avoidance, and/or
reduction.
LOss PREVENTION:
Stopping loss from happening
LOss AVOIDANCE:
Avoiding loss by choosing not to engage in hazardous
activities
LOss REDUCTION:
Lessening the frequency, severity, or unpredictability of losses
EXAMPLE
Are You Ready?
 THAN
K
YOU!
MARWA
ASHRAF
OMNIA AHMED
RADWA OSAMA
ABDEKALRHMA
RISK FI
NANCING
INTRODUCTIO
N
The goal of our session is to turn Th om as
chaos into clarity. As facilitators, our
role is to keep the session on track
and to ensure everyone participates
in the discussion. C h lo e
 TEAM
CHECK-
IN
RISK FI NANCING FOCUSES ON MAKING FUNDS
AVAILABLE FOR LOSSES THAT
CANNOT BE ELIMINATED BY RISK CONTROL
 1.existenc e aleg a l b dut

FO etween the partie y

ELEMEN
UR
2 .sA. b o u t
us 3.Val

TS ues
4.C lient
s
5. P r o p o s
LIABILITY
RISKS
Brand Review and
Attributes
P resentations are communication
tools that can be used as
demonstrations, lectures, speeches,
reports, and more. It is mostly
presented before an audience. It
serves a variety of purposes, making
presentations powerful tools for Cia Rodriguez
convincing and teaching. CEO
 Topi
c your topic
Topic 1: Write
here

Topic 2: Write your topic

here
 BRAND
B
Brand Review and
Attributes
P resentations are communication
tools that can be used as
demonstrations, lectures, speeches,
reports, and more. It is mostly
presented before an audience. It
serves a variety of purposes, making
presentations powerful tools for Avery Davis
convincing and teaching. CEO
 BRAND C

Brand Review and

Attributes
P resentations are communication
tools that can be used as
demonstrations, lectures, speeches,
reports, and more. It is mostly
presented before an audience. It
serves a variety of purposes, making
presentations powerful tools for Morgan Maxwell
convincing and teaching. CEO
 BRAND
D
Brand Review and
Attributes
P resentations are communication
tools that can be used as
demonstrations, lectures, speeches,
reports, and more. It is mostly
presented before an audience. It
serves a variety of purposes, making
presentations powerful tools for Kim Chun Hei
convincing and teaching. CEO
 1 W rite action items in the
boxes.

A CTIO
Copy a Copy a Copy a
sticky note, sticky note, sticky note,
then w rite then w rite then w rite
your your your

N
thoughts. thoughts. thoughts.

ITEMS 2
Drag your photo under the
action item you want to
own.
Let's go back to the previous pages
and synthesize what next actions
are appropriate for us to move
forward as a group.
ACTION ITEMS 1
W rite action
items in the
boxes.
2
Drag your photo under the
action item you want to
own.

ACTION ACTION ACTION ACTION 4

1 2 3

Copy a
sticky note,
then w rite
your
thoughts.