Risk Assessment Flashcards
(31 cards)
def risk
possible future events and their probabilities
is risk always negative?
no, can be positive as well
def internal risks
= preventable, undesirable. they arise from the organisation itself.
give 3 examples of an internal risk
- breakdown in routine operations
- unethical behaviour (managers)
- counterproductive work behaviour (employees)
def strategy risk
voluntary risks that arise from organisation’s pursuit of strategic goals
state 3 sources of strategic risks
- entrepreneurial orientation
- R&D activities
- financing growth with debt
def external risks
arising from events outside the organisation
uncontrollable
negative
give 3 examples of an external risk
- natural disaster
- policy change
- macro-economic shift
what are the 3 sources of external risks?
- natural and economic disasters - immediate impact
- competitive risks - medium term impact
- geopolitical and environmental changes - long-term impact
what are the three steps to managing risks?
- identification
- id key environmental factors
- define possible future boundaries
- account for disruptive innovation - asses their impact (using stress tests, scenario planning, or war-gaming)
- mitigate the risks (reduce the impact cost-effectively)
def megatrends
Large-scale movements that are typically slow to form but have wide- and long-range impacts
def weak signals
Advanced signals of future trends (usually in a form of unstructured, fragmented and „unusual“ bits of information)
def inflexion points
Moments when trends shift in direction, for instance turning sharply upwards or downwards
state 6 possible megatrends in the future
- impactful tech
- demographic change
- rapid urbanisaiton
- amplified individuals
- economic power shifts
- climate and resource security
def disruptive innovation
technology advances that make a radical change in the way business is done
how does disruptive innovation change an industry? (3)
- creates lower entry barriers
- increases buyer power
- disintegrates boundaries
in what 3 ways does tech have a macro impact
- future of work
- new business models
- regulatory changes
in which 3 areas is extra technological innovation needed?
- resource scarcity
- global warming
- demographic changes
def black swan
unforseen events that are a surprise and have an extreme impact.
is the covid pandemic a black swan?
no, bc pandemic are actually expected, just the timing is unknown
what is a stress test used for?
used to identify vulnerabilities, set risk limits and develop contingency plans for major changes
define the stress testing model
input: macroeconomic variables and scenarios
calculation: correlation factors
output: losses and capital
define the reverse stress testing model
input: target capital or tail loss
caluclation: correlation factors
output: macroeconomic variables and scenarios
def war-gaming
assessment of a firm‘s vulnerability to disruptive technologies, competitive pressures, and stakeholder reactions
