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HAWASSA UNIVERSIY

RISK MANAGEMENT

GROUP 1

FEB, 2024
DAYE SIDAMA ETHIOPIA
 INTRODUCTION

 Risk management strategic is a process of identifying,

assessing, and prioritizing risks, and then applying
resources to minimize, monitor, and control the
probability or impact of unfortunate events.
 Enterprise diversification and vertical integration are
strategies used by businesses to expand and grow.
 Hedging, leasing, and off-farming employment are risk
management techniques used in agriculture.
 Risk transfer and sharing involve transferring the
financial consequences of a risk to another party.
1. DEFINE CLEAR RISK MANAGEMENT
STRATEGIC.
 Risk management strategy involves the systematic
identification, assessment, and prioritization of potential
risks that could impact an organization's objectives.

 The strategic approach aims to minimize or mitigate

these risks while also capitalizing on opportunities.
HERE ARE KEY ELEMENTS OF RISK
MANAGEMENT STRATEGY:

1. Risk Identification: Identify and understand potential risks

that could affect the organization.

2. Risk Assessment: Evaluate the likelihood and impact of

identified risks.

3. Risk Mitigation: Develop strategies to minimize or

eliminate the impact of identified risks.
4. Monitoring and Review: Continuously monitor the
environment for new risks and assess the effectiveness of
existing risk management measures.

5. Communication and Reporting: Establish clear

communication channels for sharing risk information
within the organization.

6. Integration with Business Strategy: Align the risk

management strategy with the overall business strategy.
7. Training and Awareness: Educate employees at all levels
about the importance of risk management and their role in
identifying and addressing risks.

8.Adaptability: Recognize that the business environment is

dynamic, and risks may evolve over time.

By implementing a comprehensive risk management strategy,

organizations can proactively address uncertainties, protect
their assets, and enhance their ability to achieve strategic
objectives.
2. WHAT IS ENTERPRISE DIVERSIFICATION AND
VERTICAL INTEGRATION?

 Enterprise diversification and vertical integration are two

business strategies that involve expanding a company's
operations in different ways.
1. Enterprise Diversification: It refers to the expansion of a
company into different products, services, or markets that
are unrelated to its current business operations.

The goal is to reduce risk by participating in various industries

or markets.

There are different types of enterprise diversification.

Product Diversification
 Market Diversification:

 Industry Diversification:
2.Vertical Integration: It involves acquiring or controlling
different stages of the production and distribution process
within an industry.

 It can be either backward integration (integrating

suppliers) or forward integration (integrating distributors or
retailers).
 Relationship: - Enterprise diversification involves expanding
into unrelated areas. - Vertical integration involves
expanding within the same industry by controlling different
stages of the value chain.
 Both enterprise diversification and vertical integration are
strategic approaches that companies use to grow, manage
risk, and create competitive advantages in their respective
industries
3. WRITE CLEAR HEDGING LEASING
AND OFF FARMING EMPLOYMENT.
Hedging: Hedging refers to a risk management strategy
used by individuals or businesses to protect themselves
against potential losses.

This is often done by taking an offsetting position in a

related asset or financial instrument
 Leasing: Leasing involves the process of renting or leasing
an asset, such as equipment, property, or vehicles, for a
specified period of time in exchange for regular payments.

 Off-farm employment: Off-farm employment refers to

work or jobs that are outside of the agricultural sector.
4. WHAT IS MANAGEMENT ALTERNATIVE AND
INFORMATION TECHNOLOGY.
 Management alternative refers to the various options
or choices available to managers when making decisions
or implementing strategies within an organization.

 Managers evaluate these alternatives based on factors

such as feasibility, cost, potential risks, and expected
outcomes before making a decision.
 Information technology (IT) refers to the use of computer
systems, networks, and software to store, retrieve, transmit, and
manipulate data for various business processes and operations.

 When considering "management alternative and information

technology" together, it could refer to the use of IT solutions to
support decision-making and management processes within an
organization
 Management alternative in the context of information
technology refers to the various options and approaches
available for managing IT resources, projects, and
operations.

 Some common management alternatives in the field of

information technology include
 Agile Management

 Waterfall Model

 DevOps

 Change Management
5.DEFINE CLEAR WHAT IS RISK
TRANSFER OR SHARING
 Risk transfer and risk sharing are concepts related to the
management of risks in various contexts, such as
business, finance, and insurance.

 Risk Transfer; It involves shifting the burden of a

potential loss from one party to another.
Example Purchasing insurance is a common method
of risk transfer
 Risk transfer does not eliminate the risk itself, but it shifts
the financial consequences to another entity.

 Risk Sharing: It involves distributing the potential losses

among multiple parties.
Example; Mutual insurance arrangements

By sharing risks with other parties, organizations can diversify

their exposure and reduce the overall impact of potential
losses.
6. DISCUSS CLEAR WHAT IS RISK COPING
 Risk coping refers to the actions and strategies that
individuals, organizations, or entities undertake to
manage, mitigate, or respond to risks and uncertainties.

 Risk coping strategies can vary widely depending on the

nature of the risks involved, as well as the specific goals
and resources of the entity managing the risk.
 Successful risk coping requires a comprehensive
understanding of potential risks, proactive planning, and
ongoing monitoring and adaptation as circumstances
evolve.
 CONCLUSION
 Risk management strategic is a process of identifying,
assessing, and prioritizing risks, and then applying
resources to minimize, monitor, and control the
probability or impact of unfortunate events.
 This involves developing a plan to manage potential
risks and uncertainties that could impact an
organization's objectives.