Assigniment -1

1.Explain the objectives of risk management

The objectives of risk managemeht can vary depending on the context and
the specihc goals of an.organization, but generaly. they include the
following:
1. Risk Tdentihcation: The hrst. objective ofriskmanagem eht is to identify
all potential risks that could afect the organization's objectives. prajeets.
or operations.
2. Risk Acseccmeht and Analysic: Once risks are identihed the next
objective ic to ascess and analyze theim in terims of their likelihood of
0ccurring and their potentialinpact on the organization.
3. Risk Mitigation and Controk After assessing risks. the focus shifts to
itigating or controllirg them to reduce their inpact or likelihood of
occurrence. This may invoke implemtnting strategies such as risk avoidance.
risk reduction, risk transfer. or risk acceptance depending on the hature of
the risk and the organization's risk appetite.
4Risk Monitoring and Review: Risk managemtnt is an ongoing process. se
ite essential to continuousy monitor and review the effectiveness of risk
mitigatioh measures and to update risk assessmentsasnewinformation
becomes available.
5. Compliance. and Governance: Another objective of risk managemeht ic to.
oblgations.
3. Ciquidity Risk: Liguidity risk arises from the inabilty to meet chort-term
Rnancial obligations due to insufheient cash or easily marketable assets.
4.Operational Risk: Operational risk arises from internalprocesses.
systems. people. or external events that can disrupt business operations or
cause fnancial losses.

4. Compare Business risk and fnancial risk

Meaning.
The risk of insuficient proft, to meet out the expenses is kaown as
Buciness Risk.
FinancialRisk is the risk arising due to the use of debt financing in the
capital structure.

Evaluatioh
Variabittyis EBIT
Leverage Multiplier and Debt toassetratio.

Connected with
Economic environmeht
Use of debt capital

Miniization The risk cannot be miniized.

If the frh does not use debt funds there will be no risk.
 itigation measures..
6. ComnLhication and Reporting: Effective
comnlnicatioh is crucial
throughout the risk managem@ht process to ensure that stakeholders are
informedabout identiied risks mitigation strategies,. and the
organization's overall risk profile..
7. Tntegration with Decision Making: Risk managemtht chould be
integrated into the organiza tion's decisioh-imaking processes at all levels.
8. Contin uOuc Tmprovement: Finaly the risk managemtht process
should be
subject to continuous improveimeht to adapt to changing circumstances.
emerging risks. and lessons learhed fron pastexperiences.

3. What is fnancial risk ohat are its types ?

Financialrisk refers to the possibility of fnancial loss or umcertainty
arising from various factors that can affect the value of anorganization's
assets, iabilties, or. cach flouws. These risks can arise from both interhal
and external cources and can inpact a company'sprohtability. solvency.
and overall fnancial health.
There are several types of fnancial risk each associated with different
aspects of financial managemeht:
1. Market Risk: Market risk also known as systematic risk. arises from
Auctuations in market variables such as interest rates, exchange rates.
cOmimadity, prices, and equity prices. It affects the value of finan Cial
instruments and investmentc held by ah organization.
2. Credit Risk: Credit risk also known as defaultrisk. arises fro the.
possibilty of a borrower failing to repay aloan orfulflfnancial
ensure that the organization complies with relevant laws requlations, and
industry standards pertaining to risk managemeht.

2.Explain the processof risk managcim Eht

The process of risk managem eht typicaly invalves ceveralinterconnected
steps.
1 Risk Tdentihcation: Thisinvolkes systematicaly identifying internal and
external risks across all areas of the organization. Various techniques such
ac brainstorming, checkists, interviews, and historcal data analysis can be
used to identify risks comprehensively.
2 Risk Acsessment: Risk assessmeht involves analyzing each identihed risk
to determine its severity and significance. Qualitative and quantitative
methods can be used to assess risks, such as risk matrices. probability
inpact grids. and scehario analysis.
3. Risk Analysis: Risk eanalysis helps prioritize risks based on their severity
and ikelikood. allowing resources to be allocated effectively. Technigues such
as root cause analysis fault tree analysis. and sensitivity analysis can be
used to analyze risks in greater depth.
4. Risk Mitigation and Contral: This may invoke implementing risk
mitigatiorh meaSures to reduce the likelihood or inmpact of risks, transferring
risks to third parties through insurance or contracts, avoiding certain
activities or exposures altogether, or accepting risks based on the
organization's risk appetite.
5.Risk Monitoring and Revieu: Risk management is an ongoing process. so
its essential to continuously monitor and review the effectiveness of risk
 ensure that the organizatioh complies with relevant laws regulations and
industry standards pertaining to risk managehm eht.

2. Explain the process of risk mahagemtht

The process of risk managemeht typically involves several interconnected
steps.
1Risk Tdentifcation: Thic invales systematicaly identifying internal and
external ricke across all areas of the organization. Various techniques such
as brainstoring, checkists. interviews, and historical data analysis can be
used to identify risks comprehen sively
2. Risk Ascessmeht: Risk assessenent involkes analyzing each identifed risk
to determine itc severity and signihcance. Qualitative and quantitative
methods can be used to assess risks such ac risk matrices probability
inpact grids. and scenario anaycis.
3. Rick Analysis: Risk analysis helps prioritize risks based on their severity
and likelkhood allowing. resources to be allocated effectively. Techniques such
be
as root cause analycis. fault tree analysis. and sensitivity analysic can
used to analze risksin greater depth.
4. Risk Mitigation and ControlA This may invoke inplementing risk
transferring
mitigatioh measures to reduce the likelihood or impact of risks
certain
risks to third parties through insurance or contracts, avoiding
the
activitiesor exposures altogether. or accepting. riske based on
organiza tion's risk appetite.
process. so
5. Risk Monitoring and Review: Risk mnanagement is an ongoing
effectiveness of risk
it's essential to continuously mOhitor and review the
ensure that the organization complies with relevant laws, regulations, and
industry standards pertaining to risk managemtht.

2.Explain the process of risk managemeht.

The process of risk mahagem eht typically invoves severalintercohhected
steps.
1.Risk Tdentihcatian: This invakes systecmatizaly identifying internaland.
external risks across all areas of the. organization. Various techniques suck
ac brainstorming. checklists. interviews, and historical data analycis can
uced toidentify risks comprehensively
2.Risk Assectmtht: Risk assessmtntinvekes analyzing each identifed risk
to determine itr severity and signifcance. Qualitatie and quantitative.
inethods can be used to assess risks such as risk matrices. probability
inpact grids. and scehario analysis.
3. Risk Anaycis: Risk analysis helps prioritize tisks based on their severity
and ikelihood. allowing resources to be allecated effeetively. Technigues such
aS root cause analysis. fault tree analysis and sensitivity anaysis can be
used to analyze riskein greater depth.
4.Risk Mitigation and Contral This may involke implementing rick
nitigation htasures to reduce the ikelihood or impactofrisks. transferring
risks to third parties through insurance or contracts. avoiding certain
activities or exposures altogether. or accepting risks based on the
organization's risk. appetite.
5. Risk Mlonitoring and Review: Risk marnagem Cht is an ongoing process,. se
its essential to continuously monitor and review the effectiveness ofrisk