This document provides an overview of risk management and controlling. It defines risk and uncertainty, and describes different types of uncertainties. It then discusses risk management, focusing on the ISO 31000 standard for risk management. ISO 31000 provides principles and guidelines for managing risk effectively. The document also covers risk identification, analysis, evaluation, and treatment. It provides a business example of controlling risks in equipment delivery. Finally, it discusses financial risk and strategies for controlling market, credit, liquidity, and operational financial risks.

1. RISK MANAGEMENT & CONTROLLING
CORPORATE FINANCE & INTERNATIONAL CONTROLLING
HOCHSCHULE FUR TECHNIK UND WIRTSCHAFT BERLIN
MASTER OF BUSINESS ADMINISTRATION & ENGINEERING
Presented by: Sairam Reddy (s0567511)
Suyash Rewale (s0565581)
Guided by: Prof. Dr.-Ing. Katarina Adam

2. Table of Content
1. What is Risk
2. Risk Management
3. ISO31000
4. Risk Controlling
5. Financial Risk
6. References

3. Table of Content
1. What is Risk
2. Risk Management
3. ISO31000
4. Risk Controlling
5. Financial Risk
6. References

4. What is Risk?
As per ISO 31000, “effect of uncertainty on objectives”
The lack of complete certainty—that is, the existence of more than one
possibility. The “true” outcome/ state/result/value is not known.
What is Uncertainty ?
What is Risk ?
Is Risk Good or Bad?
Good – Opportunity Bad – Threat
Source: Douglas W. Hubbard, The Failure of Risk Management : Why its broken and how to fix it. John wiley and sons, inc 3

5. Types of uncertainties
What are the different types of Uncertainties
Stochastic
Aleatoric
Epistemic
Ontological/Black
Swans
Either the event happens or not
Arises from imperfect knowledge creating uncertainty about what might happen
There is uncertainty about some key characteristics of a planned event or activity
or decision
These arise from limitations in our conceptual frameworks
4

6. Table of Content
1. What is Risk
2. Risk Management
3. ISO31000
4. Risk Controlling
5. Financial Risk
6. References
5

7. Risk Management
Why to Manage Risk?
We need to manage risks to minimize their threat and Maximize their Potential
Risk management involves understanding, analyzing and addressing risk to make sure organizations achieve
their objectives.
Source: Online : https://www.theirm.org/the-risk-profession/risk-management.aspx
Genesis of ISO-31000
Ten years ago, the boardrooms of banks and financial institutions around the world were rattled to hear the
news of the collapse of prestigious and highly respected names, such as Lehman Brothers, Bear Stearns etc.
The global financial crisis resulted from the failure of boards and executive management to effectively manage
risk.
How to
?
Manage
Prepare
Benefit
Learn
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8. Table of Content
1. What is Risk
2. Risk Management
3. ISO31000
4. Risk Controlling
5. Financial Risk
6. References

9. ISO-31000
Benefits of ISO-31000
Helps organizations develop a risk management strategy to effectively identify and mitigate risks, thereby
enhancing the likelihood of achieving their objectives and increasing the protection of their assets.
It can be an active component in improving an organization’s governance and,
ultimately its performance.
Principles are not industry specific, not activity specific and nature of risk.
7

10. ISO:31000- Guiding Principles
Guiding
Principles
It creates and protects value.
It is an integral part of all organizational processes.
It is part of decision making.
It explicitly addresses uncertainty.
It is systematic and structured.
It is based on the best available information.
It is tailored.
It takes human and cultural factors into account.
It is transparent and inclusive.
It is dynamic, iterative and responsive to change.
It facilitates continual improvement of the organization.
8

11. ISO:31000- Framework
Mandate and Commitment
Design of framework for managing risk
Understanding the organization and its context
Establishing Risk management policy
Accountability
Integration into organizational policy
Resources
Establishing internal communication and reporting mechanisms
Establishing external communication and reporting mechanisms
Continual improvement of
framework
Implementing Risk management
Implementing the framework for managing risk
Implementing the risk management process
Monitoring and Review of Framework
9

12. ISO:31000- Process
Establishing the context
Risk Identification
Risk Analysis
Risk Evaluation
Risk Treatment
Monitoring and
Review
Communication and
Consultation
Risk Assessment
10

13. Turning Risks into Opportunities
Risks can be turned into opportunities.
As technology emerges it poses a new set of risks, from robotics, artificial intelligence and machine learning, to the
Internet of Things. The response to challenges has led to innovative solutions.
Example:
• Block chain technology allows crypto currencies to be traded electronically. Despite concerns about the digital
currency’s volatile nature and fraud fears, banks are now exploiting the technology to speed up back-office
settlement systems.
• In Japan, the constant threat of earthquakes and typhoons has led to the development of one of the world’s
most sophisticated emergency management systems. This system has been repurposed for missile defence.
Officials can now send messages to every mobile phone in the country as well as interrupting TV and radio
broadcasts.
11

14. Table of Content
1. What is Risk
2. Risk Management
3. ISO31000
4. Risk Controlling
5. Financial Risk
6. References

15. • Accepting a certain level of planned risk rewards
success
• Lowering prices
• Increasing production
Risk Controlling
Road Crossing
• The risk is existed in everyday life & in every activity
Driving
Assignment
HIGH
Earthquake
LOW
Eating
Breathing
• Running a Business
involves many risks.
• Loss
• Fraud
• Delay
Image Sources: pininterest.com, clipart.com
12

16. 1. Avoid: The best thing to do that avoid, but maybe this is not an option to complete the task
Job: Standing on a edge of cliff
Risk Controlling : Methods
1. Avoid 2. Mitigate 3. Transfer 4. Accept
2. Mitigate: If a risk is unavoidable then you can take some actions that will make less suffer for a task
3. Transfer: This is a most effective way to deal with the risk; just pay someone to do a task
4. Accept: When above things are not possible then may this method used
Task
Source: Watt, A., 2014. Project Management
13

17. 4. Monitor: Monitoring implemented strategies
1. Risk identification: The potential factors to cause to harm
2. Risk analysis & evaluation: Analyze and evaluate the risk associated with
the cause
3. Risk mitigation: Determination of ways to eliminate or
control/mitigate risk
Risk Controlling
Sources: Canadian Centre for Occupational Health & Safety. 2018. 14

18. Business example – Equipment delivery
Risk Controlling
Business: Company A
• Product – (Three part)
• Part outsourcing from vendor
• Part Assembly in-house
• Final product
Company A Vendor X
Risk Identification
• The project team founds late delivery of part from vendor increases the cost of the Product
• Increasing cost of the product lowers the profit
• Late delivery of the equipment from vendor leads to late delivery of the final product
• Late delivery of the product lowers the value of the company
15

19. Business example – Equipment delivery
Risk Controlling: Methods
Vendor Y
1. Avoid 2. Mitigate/Limitation
3. Transfer 4. Accept
Company A
Vendor X
Vendor Z
Company A
Vendor Y
Vendor X
Vendor Z
?
Company A
Vendor B
Store
Company A
Vendor X
Source: Michael Herrera. 2013 16

20. Business example – Equipment delivery
Risk Controlling: Methods
Company A
Vendor X
Contingency plan
• A contingency plan and a mitigation plan are often used interchangeably but they are, in fact, different types of risk
planning strategies.
• A contingency plan is what you do after something happens; it's like a plan B.
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21. Table of Content
1. What is Risk
2. Risk Management
3. ISO31000
4. Risk Controlling
5. Financial Risk
6. References

22. Definition - “The risk that the cash flow of an issuer will not be adequate to meet its financial obligations.
Also referred to as the additional risk that a firm's stockholder bears when the firm uses debt and equity.”
(Nasdaq.com. 2018)
Financial Risk
Financial risk is simply losing money.
Some possible cause for the financial risk:
• Financial market instability: Markets ups and down
• Economic factors: Changing supply and demand
• External parties’ actions and decisions: Vendors, suppliers, competitors, and even customers
• Internal actions: Failures in the company’s internal processes, systems and workforce
• Legal interventions. Governments come up with new laws
Source: https://www.cleverism.com/financial-risk-management-guide/. 18

23. Financial Risk Controlling
Step1: Identification Step 2: Measuring Step 3: Implementation
The most common types of financial risk
• Market risk
• Credit risk
• Liquidity risk
• Operational risk
• Find Period over which the
financial risk is expected to take
place
• Cost-benefit analysis may show
that certain costs are greater than
the benefits derived
• The volatility of economic and
financial environment
• Confidence levels of managers
• Strategies for high impact potential risk
• Different type of strategies use for different
type of risks
19

24. Financial Risk Controlling: Identification
Market Risk
• The movement in prices of product
• Directional risk: change in stock price, interest rates and
more.
• Non-Directional: method of trading is not consistently
followed by the trader.
Credit Risk
• Default risk
• People who borrow money and become unable to pay
• Sovereign risk: Difficult foreign exchange policies
• Settlement risk: One party makes the payment while the
other party fails to fulfill the obligations
Liquidity Risk
• Securities and assets that cannot be purchased or sold
quickly enough to cut losses in a volatile market
• Inability to execute transactions
• Asset Liquidity risk: insufficient buyers or insufficient sellers
against sell orders and buys orders respectively
Operational Risk
• Operational failures: mismanagement or technical failures.
• Fraud risk arises due to the lack of controls.
• This includes lawsuits, fraud risk, personal problems
• Business model risk, which is the risk that a company's
models of marketing and growth plans may prove to be
inaccurate or inadequate
Financial Risk types
Source: JAMES CHEN. 2018. 20

25. Financial Risk Controlling: Strategies
Market Risk
Strategies:
• Forecasting the market
• Keeping information & analysis (customer trends & behavior,
Competitor)
• Monitoring market movements using market studies,
business, and economic news and using the feedback
mechanism
Credit Risk
Strategies:
• The background and credit checks on customers for credit
sell
• Implementing credit policies and terms (in writing, to be
signed)
• Monitoring records of the debtor customers
• Monitoring customer purchase and payment histories, so any
irregularity and a warning, spurring the company to act
Liquidity Risk
Strategies:
• Forecasting techniques for identification of periods of slow
and low cash inflows
• Close monitoring of cash flow (e.g. daily, weekly, bi-monthly
or monthly)
• Due debtor-customers accounts that are already past due
and take the necessary action to collect them
• Sending due amount reminders
• Strong relationship with financial institutions, banks and
other lenders that the business has obligations
Operational Risk
Strategies:
• The right people are given the right job, and the possibilities
of fraud and internal theft are reduced
• Monitoring budget implementation, to ensure that the
company is not spending excessively or, in opposite to that,
underspending and lowering the quality of output.
Source: JAMES CHEN. 2018. 21

26. Financial Risk Controlling
Step1:
Identification
Step 2:
Measuring
Step 3:
Implementation
22

27. Take Away
• All Projects have Risk in them and We need to manage Risks
• Risk managers has to think ahead proactively and shall focus on Risks that really matters
• Risk managers shall communicate properly and precisely
• One has to be aware of organization’s key objectives – this will help you clarify the targets and requirements of your
risk management system
• One has to Assess current governance structure – this will ensure in allocating the right roles, responsibilities and
reporting procedures when it comes to risk
• Define level of commitment – what resources will you be able to allocate to implementing or maintaining a risk
management system
• Implement ISO 31000 for better risk management
• Risk is every where in everyday life
• Companies need to understand the potential of risk
• Understanding risk help to mitigate from it
• Business is full of risks and some risk comes with awards
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28. Table of Content
1. What is Risk
2. Risk Management
3. ISO31000
4. Risk Controlling
5. Financial Risk
6. References

29. References
Ann Brady, 8 November 2017, The Arsenal of risk management
Canadian Centre for Occupational Health & Safety. 2018. Risk Assessment. [ONLINE] Available at: https://www.ccohs.ca/oshanswers/hsprograms/risk_assessment.html. [Accessed 15
December 2018].
Douglas W. Hubbard, 2007.The Failure of Risk Management: Why its broken and how to fix it. [Pdf], Hoboken, New Jersey: John Wiley & sons Inc. Available at: semanticscholar
<https://pdfs.semanticscholar.org> [Accessed 6 December 2018].
Dr David Hillson, 2014. How to manage the risks you didn’t know you were taking. [pdf], Phoenix, Arizona, USA, PMI. Available at: risk-doctor <http://risk-doctor.com> [Accessed 26
October 2018]
Helliar, C. et al. (2005). Interest rate risk management: an investigation into the management of interest rate risk in UK companies. Research Executive Summary Series, Volume 2,
Number 4, London: CIMA.
How to Utilize Financial Risk Management for Your Business. 2018. Anastasia. [ONLINE] Available at: https://www.cleverism.com/financial-risk-management-guide/. [Accessed 15
December 2018].
International standards office, 2009. ISO 31000 Risk management — Principles and guidelines.[online] Available through < http://ehss.moe.gov.ir> [Accessed 26 October 2018].
JAMES CHEN. 2018. What is Default. [ONLINE] Available at: https://www.investopedia.com/terms/d/default2.asp. [Accessed 15 December 2018].
JIRÁSKOVÁ, S, 2017. FINANCIAL RISK MANAGEMENT. Land Forces Academy Review, Vol. XXII, No 4(88), 2.
Michael Herrera. 2013. Four Types of Risk Mitigation and BCM Governance, Risk and Compliance. [ONLINE] Available at: https://www.mha-it.com/2013/05/17/four-types-of-risk-
mitigation/. [Accessed 15 December 2018].
Nasdaq.com. 2018. Financial risk. [ONLINE] Available at: https://www.nasdaq.com/investing/glossary/f/financial-risk. [Accessed 15 December 2018].
The Institute of Risk Management, 2002. A Risk Management standard. [Pdf] The institute of Risk Management. Available at : <
https://www.theirm.org/media/886059/ARMS_2002_IRM.pdf> [Accessed 26 October 2018]
Watt, A., 2014. Project Management (16. Risk Management Planning). 1st ed. online:https://opentextbc.ca/projectmanagement/: Open Book Publishing.
WILL KENTON. 2018. Risk Control. [ONLINE] Available at: https://www.investopedia.com/terms/r/risk-control.asp. [Accessed 15 December 2018].

30. Thank You
Risk Management and Controlling
Corporate Finance and International Controlling