Module 4. How risks can be evaluated?

Question 1

refers to the risk inherent in the whole market or part of the market. And also called the undiversifiable risk, market risk, or volatility. It affects not just a particular stock or industry, but the overall market.

Answer 1

Systematic risks

Question 2

Two broad risk classfication

Answer 2

1. Systematic risk
2. Unsystematic risks

Question 3

Examples of systematic risks

Answer 3

1. Market risk
2. Interest rate risk
3. Purchasing power risk

Question 4

Is the risk that the value of an investment will decrease due to the movements in market.

Answer 4

Market risks

Question 5

is the possibility of an unexpected change in
interest rates prevailing in the market, which affects the value of an investment adversely

Answer 5

Interest rate risk

Question 6

It refers to the risk of reduction in purchasing power of expected returns due to high rate of inflation.

Answer 6

Puchasing power risk

Question 7

the risk that is unique to a specific company
or industry. It’s also known as nonsystematic
risk, specific risk, diversifiable risk, or
residual risk

Answer 7

Unsystematic risks

Question 8

those that originate from within the company and can typically be controlled or mitigated through management decisions and practices

Answer 8

Internal business risk

Question 9

those that come from outside the company and are beyond its direct control. These risks require companies to adapt to changing environments

Answer 9

External business risks

Question 10

is broadly related to the ways a company manages its finances, particularly its debt, capital structure, and market operations. Poor financial management can lead to an inability to meet obligations, resulting in financial distress or even bankruptcy.

Answer 10

Financial risks

Question 11

are classifications or groupings of risks based on common characteristics, sources, or impacts.
They help organize and understand different risks within an organization or project

Answer 11

Risk categories

Question 12

Why do we use risk categories?

Answer 12

1. Comprehensive risk identification
2. Efficient risk assessment
3. Prioritization
4. Actionable insights
5. Traceability
6. Practicality

Question 13

Five common risks categies

Answer 13

1. Strategic risks
2. Operational risks
3. Financial risks
4. Compliance risks
5. Reputational risks

Question 14

RISKS RELATED TO ACHIEVING
ORGANIZATIONALGOALS AND OBJECTIVES.

Answer 14

Strategic risks

Question 15

RISKS RELATED TOTHE DAY-TO-DAY
OPERATIONSOF AN ORGANIZATION.

Answer 15

Operational risks

Question 16

RISKS ASSOCIATED WITH AN ORGANIZATION’S FINANCIALPERFORMANCE AND STABILITY

Answer 16

Financial risks

Question 17

RISKS ARISING FROM NONCOMPLIANCE WITH LAWS, REGULATIONS,OR INDUSTRYSTANDARDS.

Answer 17

Compliance risks

Question 18

is the potential harm to a company’s or individual’s reputation caused by negative publicity, loss of trust, or damage to brand image

Answer 18

Reputational risks

Question 19

occur due to sudden orcomplete change concerning technology or even the installation of new technology

Answer 19

Technology risks

Question 20

refers to the potential negative
impacts on an organization arising
from its workforce, human capital, or
HR practices

Answer 20

Human resource risks

Question 21

any potential threat, condition, or process
that can have a negative impact on the
environment.

Answer 21

Environmental risks

Question 22

Risks that could negatively impact an
individual’s physical or mental wellbeing

Answer 22

Health risks

Question 23

Risks that could negatively impact
an individual’s emotional state or well-being

Answer 23

Emotional risks

Question 24

Risks associated with legal consequences, such as fines, penalties, or imprisonment.

Answer 24

Legal risks

Question 25

is defined as probability multiplied by potential impact. A risk matrix breaks these out into separate scales and assigns numeric values to
each level of probability and impact

Answer 25

Risk matrix

Question 26

Techniques to evaluate and prioritize risks

Answer 26

1. Decision tree
2. Failure mode and effects analysis (FMEA)
3. Bowties model

Question 27

It presents a series of questions or
choices that branch out into a variety
of outcomes. For example, quality
professionals in the food industry
might use a decision tree to
determine when a hazard requires a
Critical Control Point (CCP)

Answer 27

Decision tree

Question 28

chart places the process
step or design in question on
individual rows, with vertical
columns allowing you to map out
each potential failure and its cause
and also its effect on higher levels
in the process, assembly or system.

Answer 28

Failure modes and effect analysis

Question 29

The center of the_________ diagram is
the hazard or loss of control event
under evaluation. On the left side are
preventive controls, and on the right
side are recovery controls that would
mitigate the impact if it did happen

Answer 29

Bowties mode;