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Business risk and financial risk

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himanshujaiswal
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BUSINESS RISK AND FINANCIAL RISK
• UNEXPECTED • MOSTLY NEGATIVE • ACTUALS DIFFERENT THAN EXPECTED • LOSING SOME OR ALL ORIGINAL INVESTMENT
TYPES OF RISK BUSINESS RISK NON BUSINESS RISK FINANCIAL RISK
BUSINESS RISK 1. •STRATEGIC RISK 2. •FINANCIAL RISK 3. •OPERATIONAL RISK 4. •COMPLIANCE RISK
FINANCIAL RISK
CORRELATION BETWEEN BUSINESS RISK & FINANCIAL RISK Well Balanced Group A Dangerous Group Conservative Group Well Balanced Group B B U S I N E S S R I S K H I G H LOW HIGH F I N A N C I A L R I S K L O W
RISK MANAGEMENT RISK IDENTIFICATION ASSESSING VULNERABILITY PRIORITISATION
STRATEGIES RISK AVOIDANCE RISK REDUCTION RISK TRANSFER RISK RETENTION
TECHNIQUES • Payback • Risk Adjusted Discount Rate( Risk free rate + Risk premium • Sensitivity Analysis • Scenario Analysis • Sequential Investment Decisions
Other Methods • Reduction in Fixed cost(operating leverage) • Pricing Strategy • Financial leverage(because of debt) • Insurance • Strategic Alliance • Derivatives(hedging, speculation)
Thank you !!

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Business risk and financial risk

  • 1. BUSINESS RISK AND FINANCIAL RISK
  • 2. • UNEXPECTED • MOSTLY NEGATIVE • ACTUALS DIFFERENT THAN EXPECTED • LOSING SOME OR ALL ORIGINAL INVESTMENT
  • 3. TYPES OF RISK BUSINESS RISK NON BUSINESS RISK FINANCIAL RISK
  • 4. BUSINESS RISK 1. •STRATEGIC RISK 2. •FINANCIAL RISK 3. •OPERATIONAL RISK 4. •COMPLIANCE RISK
  • 6. CORRELATION BETWEEN BUSINESS RISK & FINANCIAL RISK Well Balanced Group A Dangerous Group Conservative Group Well Balanced Group B B U S I N E S S R I S K H I G H LOW HIGH F I N A N C I A L R I S K L O W
  • 7. RISK MANAGEMENT RISK IDENTIFICATION ASSESSING VULNERABILITY PRIORITISATION
  • 8. STRATEGIES RISK AVOIDANCE RISK REDUCTION RISK TRANSFER RISK RETENTION
  • 9. TECHNIQUES • Payback • Risk Adjusted Discount Rate( Risk free rate + Risk premium • Sensitivity Analysis • Scenario Analysis • Sequential Investment Decisions
  • 10. Other Methods • Reduction in Fixed cost(operating leverage) • Pricing Strategy • Financial leverage(because of debt) • Insurance • Strategic Alliance • Derivatives(hedging, speculation)