Professional Documents
Culture Documents
Introduction to Entrepreneurship
BIT 3nd Year
Semester 6
Section 8:
How to Manage the Risk of a Business
(2 Hrs)
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Lecture Outline
1. Types of business risks
2. Types of risk attitudes of an entrepreneur
3. Basic concepts of risk management
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Learning Outcome
After successful completion of this course students will be able to:
Define and explain the nature of risks face by an
entrepreneur
Identify types of risk attitudes of an entrepreneur
Explain the strategies in minimizing the risk
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i. Strategic Risk
Strategic risks result directly from operating within a specific
industry at a specific time.
So shifts in consumer preferences or emerging technologies that
make your product-line obsolete, anyone--or other drastic market
forces can put your company in danger.
To ou tera t strategi risks, oull eed to put easures i pla e
to constantly solicit feedback so changes will be detected early.
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Financial risks also take into account interest rates and if you do
international business, foreign exchange rates.
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v. Reputational Risk
Loss of a o pa s reputation or community standing might result
from product failures, lawsuits or negative publicity.
Reputations take time to build but can be lost in a day. In this era of
social networking, a negative Twitter posting by a customer can
reduce earnings overnight.
According to Matt McGee, a search engine optimization consultant,
O e negative blog post or product review can spread online in a
flash and change the direction of a company.
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Risk averse
Averse means opposing.
A risk averse person or organization is not comfortable with digesting
risks. They are not very creative or supportive towards risks.
They usually try to avoid risks unless the reward to take on the risks is
high enough to outweigh the aversion of the risk
ii.
Risk taker/seeker
Seeker means loving.
A risk seeking or risk taking person or organization likes to seek risks if
they see any opportunity.
They enjoy and find it challenging to deal with risks; however,
sometimes this excessive optimism can cause losses.
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3.
i.
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teps of risk
II. Analyse and prioritize - Risk analysis transforms the estimates or data about
specific risks that developed during risk identification into a consistent form
that can be used to make decisions around prioritization. Risk prioritization
enables operations to commit resources to manage the most important risks.
III. Plan and schedule - Risk planning takes the information obtained from risk
analysis and uses it to formulate strategies, plans, change requests, and
actions. Risk scheduling ensures that these plans are approved and then
incorporated into the standard day-to-day processes and infrastructure.
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teps of risk
IV. Track and report - Risk tracking monitors the status of specific risks and
the progress in their respective action plans. Risk tracking also includes
monitoring the probability, impact, exposure, and other measures of risk
for changes that could alter priority or risk plans and ultimately the
availability of the service. Risk reporting ensures that the operations staff,
service manager, and other stakeholders are aware of the status of top
risks and the plans to manage them.
V. Control - Risk control is the process of executing risk action plans and
their associated status reporting. Risk control also includes initiating
change control requests when changes in risk status or risk plans could
affect the availability of the service or service level agreement (SLA).
VI. Learn - Risk learning formalizes the lessons learned and uses tools to
capture, categorize, and index that knowledge in a reusable form that can
be shared with others.
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i i izi g risk o t
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