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RISK MANAGEMENT

RISK MANAGEMENT. RISK THE POSSIBILITY OF FINANCIAL GAIN OR LOSS OR PERSONAL INJURY. WHAT WOULD BE AN EXAMPLE OF FINANCIAL LOSS? CATEGORIES OF RISK NATURAL

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Page 1: RISK MANAGEMENT. RISK THE POSSIBILITY OF FINANCIAL GAIN OR LOSS OR PERSONAL INJURY. WHAT WOULD BE AN EXAMPLE OF FINANCIAL LOSS? CATEGORIES OF RISK NATURAL

RISK MANAGEMENT

Page 2: RISK MANAGEMENT. RISK THE POSSIBILITY OF FINANCIAL GAIN OR LOSS OR PERSONAL INJURY. WHAT WOULD BE AN EXAMPLE OF FINANCIAL LOSS? CATEGORIES OF RISK NATURAL

RISK

• THE POSSIBILITY OF FINANCIAL GAIN OR LOSS OR PERSONAL INJURY. • WHAT WOULD BE AN EXAMPLE OF FINANCIAL LOSS?

• CATEGORIES OF RISK• NATURAL RISK

• WEATHER CONDITIONS THAT CANNOT BE AVOIDED

• HUMAN RISK• DISHONESTY (AND INCOMPETENCE) OF THOSE

INVOLVED: CUSTOMER, EMPLOYEE, ETC.

• ECONOMIC RISK• CHANGES IN THE BUSINESS ENVIRONMENT: ECONOMY

Page 3: RISK MANAGEMENT. RISK THE POSSIBILITY OF FINANCIAL GAIN OR LOSS OR PERSONAL INJURY. WHAT WOULD BE AN EXAMPLE OF FINANCIAL LOSS? CATEGORIES OF RISK NATURAL

CLASSIFICATION OF RISK

• GAIN OR LOSS RISK• DO YOU KNOW YOU WILL MAKE MONEY?

• SPECULATIVE RISK: WHAT INVESTORS ENDURE WHEN INVESTING IN A NEW COMPANY

• PURE RISK: OCCURRENCES WHERE THERE IS NO POSSIBILITY OF MONETARY GAIN

• CONTROLLABLE RISK• LOSS THAT CAN BE PREVENTED OR MINIMIZED

• INSURABLE RISK• PREDICTABLE LOSS AND CAN BE ESTIMATED

Page 4: RISK MANAGEMENT. RISK THE POSSIBILITY OF FINANCIAL GAIN OR LOSS OR PERSONAL INJURY. WHAT WOULD BE AN EXAMPLE OF FINANCIAL LOSS? CATEGORIES OF RISK NATURAL

RISK MANAGEMENT

• PREVENTING, REDUCING OR LESSENING THE NEGATIVE IMPACTS OF RISK• MARKETERS MUST DEVELOP RISK

MANAGEMENT STRATEGIES TO ENSURE ALL POSSIBLE RISKS ARE ADDRESSED. • HOW CAN CHOOSING THE WRONG PLAYER BE

COSTLY FOR A TEAM?

• NFL COMBINE: 3 DAY JOB INTERVIEW PROCESS WHERE PLAYERS ARE OBSERVED, PHYSICALLY TESTED, DRUG TESTED, AND PERSONALLY INTERVIEWED BY OWNERS, MANAGERS, AND COACHES.

Page 5: RISK MANAGEMENT. RISK THE POSSIBILITY OF FINANCIAL GAIN OR LOSS OR PERSONAL INJURY. WHAT WOULD BE AN EXAMPLE OF FINANCIAL LOSS? CATEGORIES OF RISK NATURAL

RISK MANAGEMENTAKA: STRATEGIES FOR MANAGING

RISK• RISK AVOIDANCE• LOOK AT ALL POSSIBLE SITUATIONS AND FIND

WAYS TO MINIMIZE AND IF POSSIBLE, AVOID ALL RISK• LIABLE

• THE BUSINESS IS LEGALLY RESPONSIBLE FOR DAMAGES AND MIGHT HAVE TO PAY FOR THE MEDICAL COSTS AND OTHER LOSSES SUFFERED BY AN INJURED PERSON

• RISK INSURANCE• CONTRACT WITH INSURANCE COMPANIES AND

OTHER FINANCIAL INSTITUTIONS TO COVER RISK OF FINANCIAL LOSS• EG. LOSS FROM A FIRE, INJURY, THEFT

Page 6: RISK MANAGEMENT. RISK THE POSSIBILITY OF FINANCIAL GAIN OR LOSS OR PERSONAL INJURY. WHAT WOULD BE AN EXAMPLE OF FINANCIAL LOSS? CATEGORIES OF RISK NATURAL

RISK MANAGEMENT CONTINUED

• RISK TRANSFER• TRANSFERRING THE RISK TO ANOTHER

COMPANY OR TO THE CUSTOMER• EXAMPLES?• EXCEPTIONS?

• RISK RETENTION• UNINSURABLE RISKS THAT THE BUSINESS

OWNER MAY/WILL HAVE TO ENDURE• EXAMPLES?

Page 7: RISK MANAGEMENT. RISK THE POSSIBILITY OF FINANCIAL GAIN OR LOSS OR PERSONAL INJURY. WHAT WOULD BE AN EXAMPLE OF FINANCIAL LOSS? CATEGORIES OF RISK NATURAL

SOMETHING TO PONDER…• SHOULD PROFESSIONAL ATHLETES BE

RESPONSIBLE FOR THEIR OWN SAFETY OR IS IT THE JOB OF THE TEAM TO PROTECT THEM FROM INJURY?

• WHAT TYPES OF RISK ARE INVOLVED?• HUMAN RISK• LOSS RISK• CONTROLLABLE AND (DEPENDING ON THE

CIRCUMSTANCE) UNCONTROLLABLE RISK• HOW CAN YOU MINIMIZE THE RISK?

• RISK AVOIDANCE• RISK TRANSFER• RISK RETENTION

Page 8: RISK MANAGEMENT. RISK THE POSSIBILITY OF FINANCIAL GAIN OR LOSS OR PERSONAL INJURY. WHAT WOULD BE AN EXAMPLE OF FINANCIAL LOSS? CATEGORIES OF RISK NATURAL

REVIEW• WHAT IS CONTROLLABLE RISK?

• A RISK THAT CAN BE PREVENTED OR ITS LIKELIHOOD OF THE RISK OCCURRING IS REDUCED

• WHAT IS AN EXAMPLE OF HUMAN RISK?• EMPLOYEE/CUSTOMER DISHONESTY, CHECK

WRITTEN WITHOUT FUNDS, UNSKILLED LABORERS• THREE CLASSIFICATIONS OF RISK?

• GAIN/LOSS RISK, INSURABLE RISK AND CONTROLLABLE RISK

• WHAT ARE THE 4 STRATEGIES OF MANAGING RISK?• RISK AVOIDANCE, RISK INSURANCE, RISK

TRANSFER, RISK RETENTION