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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 event

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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

Name the points of strategic planning *6 ^

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 *2

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
State if internal or external

A

INTERNAL
Operational
Financial
Strategic
EXTERNAL
Country
Environmental
Reputational

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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 *3

A

*floods + droughts
*traffic
*location - crime

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17
Q

Environmental risks > business environmental *3

A

*technological developments
*competition levels
*socio economic factors - unemployment levels

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18
Q

Financial risks

A

Associated with the financial operations of the business

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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

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22
Q

Strategic risk examples *2

A

*poorly formulate vision
*unreaslistic goals

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23
Q

Operational risks examples *5

A

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

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24
Q

Financial risks examples *4

A

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

25
Q

Country risks examples *3

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 impact 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

*IGNORE - Most likely to ignore
*NOT LIKELY - Chances event taking place is low
*LOW IMPACT - If it happens impact won’t be serious

41
Q

Explain HP,LI *3

A

*IGNORE - Not crucial to address
*LIKELY - Likely to happen
*LOW IMPACT - Impact is low

42
Q

Explain LP,HI *3

A

*Not invest a lot
*NOT LIKELY - Chances happening low
*Impact huge

43
Q

Explain HP,HI *3

A

*ATTENTION - Business will try to avoid at all costs
*LIKELY
*HIGH IMPACT

44
Q

Risk management definition

A

How to deal with a risk

44
Q

Risk management policy - What to ensure a comprehensive policy *3

A

Drafted (developed in writing)
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 *2

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/performance reviews

44
Q

(Risk) reporting to external stakeholders

A

Reporting risk management information to external stakeholders (Notifying the public, consumers)

44
Q

Risk management steps *4

A

Assessment
Management policy
Response
Reporting

45
Q

Uncertainties examples *6
(PETCLE)

A

*economy of country
*economy on global level
*political developments
*tech advances
*legislation changes
*consumer demand changes

46
Q

Financial risk examples *5

A

*credit risk - debtor doesn’t pay
*exchange rate fluctuations
*interest rate increasing
*solvency risks- liabilities&raquo_space;> assets
*liquidity risks- cash flow

47
Q

Managing risks *2

A

*important that risk management is seen as holistic business practice across different management levels and departments
*important risk impact is determined to understand impact

48
Q

Strategies are developed after impact had been determined by *3

A

*capitalising on strengths
*addressing internal weaknesses
*exploiting competitors weaknesses

49
Q

The 4 elements of risk management

A

*risk assessment
*risk management policy
*risk response
*risk reporting

50
Q

Risk reporting

A

Reporting risk management information to all relevant stakeholders

51
Q

Importance of risk management has emphasis on

A

Outcomes like preventing stuff

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