Flashcards in Session 5 Deck (24):
What is risk?
take a chance
What is the meaning of risk?
deviation from the expectation
What is the goal of the objective of a risk management system?
to narrow the expectation curve significantly, i.e., to reduce the expected deviation
What are the dimensions of risk management?
- legal requirements
- market environment
- requirements due to new rules and regulations (spill-over effect)
- new hedging options/management options
Which objects of the legal framework changed after the KonTraG?
- established a monitoring system to identify any risks threatening the company's existence at an early stage
- revision of the risk management system by the auditor
Which risk management levels exist?
What is the goal of the risk management levels?
integrated risk management system
Which dimensions does the integrated risk management influence?
How does the risk management along the value chain expire?
1. research and development
5. after sales services
7. support functions (controlling, finance, human resources)
How does the corporate target system and strategies expire?
- risk identification
- risk analysis & evaluation
- risk management
- risk controlling & documentation
What are corporate strategies?
- choice between markets, products, customer groups
- long-term orientation
- basis for corporate objectives and their implementation in measurable variables (operational and strategic)
What are risk strategies?
- to take risks is the basic idea of the entrepeneurship
- different tolerance levels (risk-neutral, risk-averse, risk-seeking)
- definition of a risk strategy according to the corporate philosophy
- definition of appropriate rules
What is the aim of risk identification?
to perform a structured, detailed, complete, timely and continuous recording of all significant risks
Which risk categories exist?
- market risk
- financial risk
- operational risk
- environmental risk
What does the sensitivity analysis show?
shows the effect of changes of influence factors on the outcome
What does the scenario analysis show?
- exploratory forecasting methods
- estimation of possible future situations with extremes and plausible trends in between
What is the risk measurement with volatilities?
- volatility is a statistical figure which indicates the value change of a market price within a specific period
- volatility is the time normalized standard deviation
What is the Value-at-Risk (VaR)?
maximal loss with a given probability and within a given period
Which risk solving strategies exist?
- risk avoidance
- risk reduction
- risk diversification
- risk transfer
- risk bearing
What is risk controlling and reporting?
- feedback control
- monitoring of specific limits
- to demonstrate the risk development and the effects of risk management methods
- transparency and awareness of employees
Which key purposes does documentation fulfill?
What is the early warning system?
information system that indicates dangerous developments
What is controlling?
development of planning-, control- and information systems and their implementation