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Ppt business risk
 

Ppt business risk

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    Ppt business risk Ppt business risk Presentation Transcript

    • Business Risk
      May 3, 2010
    • What is Risk?
      Risk – the possibility of loss or injury
      Business Risk – risk of loss that is naturally incurred by owning or operating a business
    • Risk Management
      the systematic process of managing risk to achieve your business objectives
      Risk cannot be totally eliminated, but it can be reduced and managed.
    • Types of Risk
      Insurable vs. Uninsurable
      Controllable vs. Uncontrollable
    • Insurance
      Insurable Risk
      Uninsurable Risk
      Meets an insurance company’s criteria for coverage
      Examples:
      property insurance
      vehicle insurance
      renter’s insurance
      Unacceptable to insurance carriers because the likelihood of loss is too high
      Example: Store owners of shops in flood zones might have difficulty finding insurance.
    • Out of Control?
      Controllable Risk
      Uncontrollable Risk
      Occurs when conditions can be controlled to minimize the chance of harm
      Example:
      Environmental damage can often be prevented.
      Cannot be reduced or prevented
      Example:
      The risks of doing business in a global marketplace cannot be controlled.
    • Other Types of Risk
      • Pure Risk
      • Economic Risk
      • Human Risk
      • Natural Risk
    • Pure Risk
      Threat of loss with no opportunity for gain
      Examples include:
      Employee theft
      Burglary
      Bad checks
      Accidents involving customers or employees
    • Economic Risk
      Occurs when there is likelihood of financial loss
      May result from changes in overall business conditions
      Example: If a competitor offers more features, other businesses need to change their product or face losses.
      Other Economic Risks
      Personal Risk
      Property Risk
      Liability Risk
    • Human Risk
      Risk of harm caused by human mistakes, dishonesty, or other factors attributed to people.
      Customer Dishonesty
      theft, fraudulent payment, non payment
      Employee Risk
      incompetence, shoplifting, accidents, fraud, computer-related crimes
    • Natural Risk
      The possibility of a catastrophe caused by natural elements that can cause damage or loss of property.
      Examples include floods, tornados, hurricanes, fires, lightning, droughts, earthquakes, etc.
      Other examples might include power outages, oil spills, arson, and terrorism.
    • Think about human risk. What are the biggest concerns a business like your training station might have? How does your training station handle it?
      Think about it!
    • Planning Risk Management
    • GAME TIME!
      Divide into three groups (4 to 6 students per group). You will be taking risks in either The Game of Life or Monopoly!
      Your daily participation grade for today will be based on your participation in the game. Have some fun! 
      The winner in each group will receive 10 points of extra credit… yay!
    • Handling Risk
      There are 4 ways to handle risk. Most businesses use a combination of these methods.
    • Risk Avoidance
      Involves thinking about the consequences of decisions
      Businesses avoid risk by not engaging in hazardous activities.
      Example: Market research can lead a business to conclude that investment in a product or service is not worth the economic risk.
    • Risk Reduction
      Retail stores place electronic tags on expensive merchandise to discourage theft.
      Business owners reduce risk by designing work areas to lower the chances of accidents or fires.
      Managers educate their employees about the safe use of equipment.
    • Reducing Hiring Risk
      How do businesses reduce risk from employee carelessness and incompetence?
      Hiring sometimes involves:
      Employee screening
      Employee orientation / training
      Background checks
      Drug testing
    • Risk Retention
      Bearing financial responsibility for the consequences of loss
      Certain types of risk are impossible to avoid.
      Example: Businesses retain the risk that customer tastes will change and merchandise will not sell. They might underestimate the risk and end up stocking too much merchandise.
    • Risk Transfer
      Insurance provides a way to transfer a risk of loss to an insurance company.
      Divides possible loss among large numbers of people or companies
      Each company pays a fee for protection