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

5. FINANCIAL 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)

11. Thank
you !!