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0 Business Environment > Risk Assessment > Flashcards

Risk Assessment Flashcards

1
Q

def risk

A

possible future events and their probabilities

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2
Q

is risk always negative?

A

no, can be positive as well

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3
Q

def internal risks

A

= preventable, undesirable. they arise from the organisation itself.

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4
Q

give 3 examples of an internal risk

A
  1. breakdown in routine operations
  2. unethical behaviour (managers)
  3. counterproductive work behaviour (employees)
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5
Q

def strategy risk

A

voluntary risks that arise from organisation’s pursuit of strategic goals

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6
Q

state 3 sources of strategic risks

A
  1. entrepreneurial orientation
  2. R&D activities
  3. financing growth with debt
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7
Q

def external risks

A

arising from events outside the organisation
uncontrollable
negative

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8
Q

give 3 examples of an external risk

A
  1. natural disaster
  2. policy change
  3. macro-economic shift
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9
Q

what are the 3 sources of external risks?

A
  1. natural and economic disasters - immediate impact
  2. competitive risks - medium term impact
  3. geopolitical and environmental changes - long-term impact
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10
Q

what are the three steps to managing risks?

A
  1. identification
    - id key environmental factors
    - define possible future boundaries
    - account for disruptive innovation
  2. asses their impact (using stress tests, scenario planning, or war-gaming)
  3. mitigate the risks (reduce the impact cost-effectively)
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11
Q

def megatrends

A

Large-scale movements that are typically slow to form but have wide- and long-range impacts

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12
Q

def weak signals

A

Advanced signals of future trends (usually in a form of unstructured, fragmented and „unusual“ bits of information)

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13
Q

def inflexion points

A

Moments when trends shift in direction, for instance turning sharply upwards or downwards

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14
Q

state 6 possible megatrends in the future

A
  1. impactful tech
  2. demographic change
  3. rapid urbanisaiton
  4. amplified individuals
  5. economic power shifts
  6. climate and resource security
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15
Q

def disruptive innovation

A

technology advances that make a radical change in the way business is done

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16
Q

how does disruptive innovation change an industry? (3)

A
  1. creates lower entry barriers
  2. increases buyer power
  3. disintegrates boundaries
17
Q

in what 3 ways does tech have a macro impact

A
  1. future of work
  2. new business models
  3. regulatory changes
18
Q

in which 3 areas is extra technological innovation needed?

A
  1. resource scarcity
  2. global warming
  3. demographic changes
19
Q

def black swan

A

unforseen events that are a surprise and have an extreme impact.

20
Q

is the covid pandemic a black swan?

A

no, bc pandemic are actually expected, just the timing is unknown

21
Q

what is a stress test used for?

A

used to identify vulnerabilities, set risk limits and develop contingency plans for major changes

22
Q

define the stress testing model

A

input: macroeconomic variables and scenarios
calculation: correlation factors
output: losses and capital

23
Q

define the reverse stress testing model

A

input: target capital or tail loss
caluclation: correlation factors
output: macroeconomic variables and scenarios

24
Q

def war-gaming

A

assessment of a firm‘s vulnerability to disruptive technologies, competitive pressures, and stakeholder reactions

25
Q

state and explain the three stages of war-gaming

A
  1. the battleground
    - Collection of all the necessary data on competitors and markets
    - Review of current strategic plan
  2. war simulation
    - Teams role-play key market players (action - reaction - counteraction)
    - In the process they learn to identify key threats and opportunities
  3. evaluation of the results
    - Refinement of the current strategy
    - Development of contingency plans against major threats
26
Q

def scenarios

A

future possible (alternative) environments

27
Q

what are scenarios used for? (4)

A
  • make sense of a complex situation
  • develop a strategy
  • anticipate changes in the environment
  • facilitate learning and adaptability in the organisation
28
Q

state the 4 stages of scenario-making

A
  1. define scope (two dimensions - e.g. cooperation vs confict + weak state vs strong state)
  2. identify key drivers (define each part of the matrix)
  3. develop stories
  4. identify impacts of each story
29
Q

state 4 possible scenarios for 2030.

A
  1. stalled engines (pandemic in Asia)
  2. Fusion (collaboration of China and US, restructuring of EU)
  3. Gini-out-of-the-bottle (bigger inequalities between countries, social tensions)
  4. nonstate world (new tech, non-state actors lead global issues)
30
Q

def risk matrix

A

graphical representation of probability and severity of the risks in the environment

31
Q

what are the possible decisions what to do with risks? (4)

A
  1. avoid (go into new markets)
  2. reduce (invest in R&D)
  3. accept
  4. transfer (insure against)

0 Business Environment (16 decks)

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