1.Business Risk Assessment 2.Financial Risk management Khawar Shahzad Jaffar ACCA, CPA
Business Risk Assessment
Business Risk Assessment refers to the assessment of risks and opportunities affecting the achievement of the organisation’s goals and objectives. Risk is assessed at three levels:
Strategic: Used to guide the organization over a time period of five to ten years. This assessment is usually performed by the senior management team.
Project/Program/Process: Used to develop and manage the current period of organizational activity. The project/program/process manager is the person usually responsible for the initial assessment. He or she may also be responsible for monitoring project risk, or that may be shared with a project oversight committee.
Business Risk Assessment ďƒ˜
Operational: Used in everyday operations, largely a health and safety issue. This assessment is usually performed at the supervisory level or by individuals or work teams tasked with a particular assignment.
Strategic Risk Assessment
The process of strategic risk assessment includes these six steps:
1. Gain an understanding of the organization’s overall goals and objectives. 2. Choose the strategic risks that are likely to be of greatest importance to the organization:
Operational Risk
Fiscal Risk
Reputation Risk
Other strategic risks such as Policy Risk, Regulatory Risk, etc.
Strategic Risk Assessment 3. Define the various environments that are important to the organisation, such as:
Political/Government
Technology
Legal and Regulatory
Physical etc.
5. Create a series of matrices, with Strategic Risk Areas put at the top axis, and Environments along the side axis. 6. Using various creative processes such as brain storming, imagine scenarios of possible threats and opportunities for each cell on the matrix. 7. Combine the risk assessment for various goals and objectives for each of the three time horizons to get a composite strategic risk assessment.
Project Risk Assessment
Project risk assessment uses a different method to identify risk and opportunity. Project risk identification uses one or more of the following methods:
Exposure Analysis: Risk from the perspective of the assets involved.
Environmental Analysis: Risk from the perspective of the changes in environments. This method is the same as that used in strategic risk assessment.
Threat Scenarios: Risk explored from various narrative scenarios of what might happen under a number of conditions. This is helpful for exploring catastrophic events and frauds.
Project Risk Assessment 
Procedure of Project Risk Assessment: A. Identify Risk B. Measure Risk/Develop Alternatives C. Control Design D. Risk Management
Operational Risk Management
Operational risk is the day-to-day mitigation of safety and health risks of employees performing their jobs. Operational risk also covers visitors and temporary workers in the work place and risks to the general public due to operations. The focus of operational risk is on risk management. Risk assessment is usually done by a specialist involved in workplace risks such as:
Health risks
Safety risks
Environmental/physical risks
Financial Risk 
Financial risk arises through countless transactions of a financial nature, including sales and purchases, investments and loans, and various other business activities. It can arise as a result of legal transactions, new projects, mergers and acquisitions, debt financing, the energy component of costs, or through the activities of management, stakeholders, competitors, foreign governments, or weather.
Types of Financial Risk
Financial risk can be categorized into four major categories; Credit
Risk
Market
Risk
Liquidity
Risk
Operational
Risk
Credit Risk 
Credit risk, also called default risk, is the risk associated with a borrower going into default (not making payments as promised).
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Investor losses include lost principal and interest, decreased cash flow, and increased collection costs.
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Credit risk borrower may lead the investor into investment risk.
Credit Risk Investment
risk has been shown to be particularly large and particularly damaging for very large, one-off investment projects, so-called "megaprojects". This is because such projects are especially prone to end up in what has been called the "debt trap," i.e., a situation where – due to cost overruns, schedule delays, etc. – the costs of servicing debt becomes larger than the revenues available to pay interest on and bring down the debt.
Market Risk 
This is the risk that the value of a portfolio, either an investment portfolio or a trading portfolio, will decrease due to the change in value of the market risk factors. The four standard market risk factors are stock prices, interest rates, foreign exchange rates, and commodity prices;
Market Risk 
Equity risk is the risk that stock prices and/or the implied volatility will change.
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Interest rate risk is the risk that interest rates and/or the implied volatility will change.
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Currency risk is the risk that foreign exchange rates and/or the implied volatility will change, which affects, for example, the value of an asset held in that currency.
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Commodity risk is the risk that commodity prices (e.g. corn, copper, crude oil) and/or implied volatility will change.
Liquidity Risk
This is the risk that a given security or asset cannot be traded quickly enough in the market to prevent a loss (or make the required profit). There are two types of liquidity risk:
Asset liquidity - An asset cannot be sold due to lack of liquidity in the market - essentially a sub-set of market risk.
Funding liquidity - Risk that liabilities:
Cannot be met when they fall due
Can only be met at an uneconomic price
Operational Risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events.
Operational risk can be classified into three types; Reputational Legal IT
risk
risk
risk
Financial Risk Management 
Financial risk management is the process of detecting, assessing and managing financial risk.
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Financial risk management is a process to deal with the uncertainties resulting from financial transactions. It involves assessing the financial risks facing an organization and developing management strategies consistent with internal priorities and policies.
Financial Risk Management 
Addressing financial risks proactively may provide an organization with a competitive advantage. It also ensures that management, operational staff, stakeholders, and the board of directors are in agreement on key issues of risk.
Financial Risk Management 
There are different techniques to manage financial risk, some of which are as follows;  Diversification
means reducing risk by investing in a variety of assets. If the asset values do not move up and down in perfect synchrony, a diversified portfolio will have less risk than the weighted average risk of its constituent assets, and often less risk than the most risky of its constituents.
Financial Risk Management  Hedging
means an investment position intended to offset potential losses that may be incurred by a companion investment.
 Insurance
is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment.