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Business > Risk Management [C12] *G11 > Flashcards

Risk Management [C12] *G11 Flashcards

1
Q

Risk management definition *2

A

*process of
analysing the probability of an event taking place
*and then planning to minimise the impact of the even

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2
Q

Risk management objective

A

to ensure a
balance between business opportunities and
threats

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3
Q

Risks can be seen as… *3

A

 A threat (e.g., weather condition)
 An opportunity (e.g., e-learning)
 Just uncertainty (e.g., unstable economy)

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4
Q

Events that pose a risk to the business *6
[edy eats pasta to chew chew]

A

 Economic growth or recession (country)
 Economy on global level
 Political developments
 Technological advancements
 Changes in legislation
 Changes in consumer demand

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5
Q

Legislation definition

A
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6
Q

Explain strategy ^ *6
[vira must visit or go out]

A

Vision
Mission
Value statement
Organisational structure
Goals
Objectives

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7
Q

Explain risk management ^

A

Alignment between business strategy and business operations

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8
Q

Explain business operations ^ *3

A

Implementing policies
Managing processes
Monitoring daily activities

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9
Q

Explain risk profile

A

the degree that the business is willing to accept risks in
pursuit of achieving business goals

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10
Q

Explain risk culture

A

*shared attitudes and practices in the business
*collective attitude to accept risks

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11
Q

Explain risk response

A

– process of determining actions to be taken to reduce threats in the business
(risk-avoidance vs. risk-
acceptance vs. risk-reduction).

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12
Q

Explain risk reporting

A

a way of reporting business risk to internal and external
stakeholders of the business in case of possible risk (compliance,
mishaps).

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13
Q

Name the types of risks *6
[old cats eat fish still raw]

A

Operational
Country
Environmental
Financial
Reputational
Strategic

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14
Q

Explain operational risks

A

The risks associated with the internal operations

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15
Q

Country risks

A

Risks associated with the location of the business in a particular country

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16
Q

Environmental risks > physical environmental

A

*floods
*droughts
*traffic
*crime

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17
Q

Environmental risks > business environmental

A

*technological developments
*competition levels
*unemployment levels

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18
Q

Financial risks

A

Associated with the financial operations of the business
*interest rate increase
*solvency risks
*exchange rates

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19
Q

Reputational risks definition

A

Damage to a business’s reputation as a result of business practice

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20
Q

Examples of Reputational risks *3

A

*Customer complaints on social media
*Causing environmental damage
*Being unethical

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21
Q

Strategic risk definition

A

Risks associated with overall formation

22
Q

Strategic risk examples

A

*poorly formulate vision
*unreaslistic goals

23
Q

Operational risks examples

A

*systems
*people
*data storage and security
*product development
Organisational structures

24
Q

Financial risks examples

A

*credit risk
*exchange rates
*solvency risks
*interest rate increases

25
Q

Country risks examples

A

*political events
*economic conditions
*regulatory stability

26
Q

Risks every entrepreneur must take *3

A
  1. Abandoning the steady paycheck.
  2. Sacrificing personal capital.
  3. Donating personal time (and health
27
Q

What are the risk assessment steps *3

A

*identification of risks
*description of risks
*estimation of risk impact

28
Q

Explain risk identification *2

A

*Ensure all significant activities within business have been identified
*And all risk factors from these activities are identified

29
Q

Name risk identification elements *6

A

Risk workshops
Benchmarking
Auditing
Surveys
Scenario planning
Stakeholder consultations

30
Q

Explain risk workshops

A

Could be internal or external

31
Q

Explain benchmarking

A

Look at “best practice” regarding certain risks

32
Q

Explain auditing *2

A

*internal and external auditor have a responsibility to identify possible risks
*could be an audit to determine if business has dealt with risk effectively

33
Q

Explain surveys

A

Surveys assist the business to identify risks by asking questions to relevant parties

34
Q

Explain scenario planning

A

Looking at possible outcomes then planning how to handle the situation

35
Q

Explain stakeholder consultations

A

Third party has to be in a consultation if they’ve been involved in a situation

36
Q

Explain the description of risks *2

A

*Once the risk factors have been identified, they need to be described in sufficient detail
*to ensure all relevant parties understand

37
Q

Explain risk estimation

A

This helps the business assess the impact of each risk

38
Q

List estimation tools *5

A

Pros/cons chart
Cost/risk benefit analysis
Decision trees
PESTLE
SWOT

39
Q

Explain estimation matrix

A

*LP,LI
*HP,LI
*LP,HI
*HP,HI

40
Q

Explain LP,LI *3

A

*Most likely to ignore
*Chances taking place is low
*If it happens impact won’t be serious

41
Q

Explain HP,LP *3

A

*Not crucial to address
*Likely to happen
*Impact is low

42
Q

Explain LP,HI *2

A

*Not invest a lot, but would become a crisis
*Chances happening low
Impact huge

43
Q

Explain HP,HI *2

A

*Business will try to avoid at all costs
*as it has a big impact on the business

44
Q

Risk management definition

A

How to deal with a risk

44
Q

What to ensure a comprehensive policy *3

A

Drafted
Communicated to all relevant parties
Implemented the business

44
Q

Risk response shows how risks can be… *3

A

Avoided
Reduced
Accepted

44
Q

Explain risk avoidance

A

Action taken to prevent or limit activities that lead to risk
(Not entering a specific market)

44
Q

Explain risk reduction

A

Action taken place to limit the possibility of the risk occurring/mitigate the impact of the risk

44
Q

Explain risk acceptance *w

A

*No action is taken place to stop or limit the impact of the risk
*Simply nothing can be done

44
Q

(Risk) reporting to internal stakeholders

A

Reporting risk management info to people involved in decision making

44
Q

(Risk) reporting to external stakeholders

A

Notifying the public, consumers…

44
Q

Risk management steps *4

A

Assessment
Management policy
Response
Reporting

Business (14 decks)

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