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Risk Management
Department of Management Faculty of Economics Universitas Katolik Parahyangan Bandung 2011
Learning Objectives
Topic 1 : Uncertainty and Risk
What is uncertainty? What is risk? How do we define risk? How do we deal with uncertainty and risk?
Topic 2 : Risk Universe
Learning Objectives
Topic 1 : Uncertainty and Risk
What is uncertainty? What is risk? How do we define risk? How do we deal with uncertainty and risk?
Topic 2 : Risk Universe
Group Discussion 1
What is Uncertainty ?
What is Risk ?
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Uncertainty is
Current condition
Current condition
Current condition
Objective
Current Condition
RISK
Objective
Risk is
A condition in which there is a possibility of an adverse deviation from a desired outcome that is expected or hoped for
or
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Questions :
1. Which point should be taken? 2. How to compare between two investment alternatives? 3. Is it possible to get high return with lower risk?
Return
Risk
slide by Antonius Alijoyo
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Zone 1
Zone 2
Zone 3
Excessive Risk Taking
Risk-Adjusted Return
Return
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Learning Objectives
Topic 1 : Uncertainty and Risk
What is uncertainty? What is risk? How do we define risk? How do we deal with uncertainty and risk?
Topic 2 : Risk Universe
Category of Risk
Based on Basic Characteristics Based on Impacts
Pure Risk
Speculative Risk
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Category of Risk
Loss is only possible outcome, can be quantified physically The event beyond risk takers control
Pure Risk
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Category of Risk
Loss is only possible outcome, can be quantified physically The event beyond risk takers control
Gain or loss can be possible as an outcome The event under risk takers control
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Category of Risk
Down-Side Risk
Refers to bad things happen The bad things could reduce/destroy shareholder value or fail to the objectives Directly affected
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Category of Risk
Refers to bad things happen The bad things could reduce/destroy shareholder value or fail to the objectives Directly affected Refers to good things not happen The good things could add shareholder value objectives or help to achieve the objectives Indirectly affected
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Group Discussion 2
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Inherent Risk
Activities
Residual Risk
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Controlled Risk
Controlled Risk
Activities
Residual Risk
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Residual Risk
Activities
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Inherent Risk
Scope of Risk
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Scope of Risk
scope of business
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Scope of Risk
scale of business
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Examples of Risk
Market Risk Credit Risk Operational Risk Strategic Risk Reputational Risk
Basel II Accord Market Risk Credit Risk Operational Risk Strategic Risk Reputational Risk Financial Risk Technical Risk et cetera
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Home Assignment 2 :
Submission date Hard copy Saturday / September 17th 2011
GROUP 1. Define your own risk as a student (around 5 risks). 2. Describe the definitions of risk that listed in page 25 (in this slide) 3. Find 5 types of risk and its definition that different with risks in page 25 (in this slide) (each group should not have same type of risk) 4. Find 3 definitions of Risk Management and its definition (each group should not have same type of risk)
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