What is it?
A systematic approach in identifying analyzing and controlling areas or events with a potential for causing unwanted change.
Risk Management
Give two risks associated with investments.
Risk avoidance means not entering a business to avoid risk of loss and possibility of earning profits.
True
The three process of risk management in order are:
1. risk assessment
2. identification of potential risks
3. establishing the context
establishing the context
identification of potential risks
risk assessment
It is the risk associated with ineffective, destructive, or underperforming management.
Management Risk
It is the risk related to the probability that some or all of the initial investment will not be returned.
Default Risk
Give at least two risks associated with market risks.
product risk
competitor risk
Tax is an example of a share risk with others so that all can enjoy police, fire, and military protection.
True
Identification of Potential Risks is deciding on the scope of the activity and identifying your stockholders.
Establishing the Context
True or False: Liquidity risk is associated with the certainty created by the inability to sell the investment quickly for cash.
False because of the word certainty
It is the risk which represents a loss of value due to inflation.
Purchasing Power Risk
What are the three steps in the process of risk management?
1. Establishing the context.
2. Identification of potential risks.
3. Risk Assessment
Financial Risk refers to the chance that an investor’s holdings will be negatively affected by the management activities of its directors.
False
In a regulatory risk, if a bankruptcy occurs, creditors, including bondholders have a claim on assets prior to the claim of ordinary equity shareholders.
Default risk
Payback time! Choose one team where you have to get their 200 points and one team to get their 100 points.
Say sorry! then say Thank You!
Say it's fine! then say You're welcome!
Optimizing the severity of the loss or the likelihood of the loss from occurring.
Risk Reduction
Congratulations, this is a bonus point!
Good choice!
Rising interest rates cause bond prices to rise and declining interest rates causes bond prices to decline.
False
Congratulations, you did well in choosing me.
Well done!
It is the risk which has something to do with the firms capital structure or sources of financing which will determine the financial risk.
Financial risks
It is the risk associated with trading which includes political risk, regulatory and legal isks.
Business Risk
Choose 3. Which of the following are examples of risk sharing?
a. auto insurance
b. taxes
c. retirement funds
d. outsourcing
e. non-availment of insurances
a. auto insurance
b. taxes
c. retirement funds
Oooopppsss, whatever is in your mind, you thought differently. Choose two teams who will be receiving 200 points each and one team for 100 points
Recipients, say THANK YOU
Share your blessings, 200 points for you and 100 points each for the other teams.
Recipients, say Thank You!
When a company chooses to take responsibility of a shoplifting loss instead of purchasing or claiming on the crime insurance policy is an example of what risk technique?
Risk Retention