626595
Description
Mind Map by pntalarico, updated more than 1 year ago
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Created by pntalarico
over 10 years ago
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Types of Risk
- Financial
risks
- Risks associated with
the financial position of
the firm and generally
result from the concept
of leverage
- Leverage
- The degree to
which the
business uses
non-equity capital
compared to
equity capital
- Leverage = (non-equity capital) / (equity
capital)
- Financial risk
(both positive and
negative) to a
business
increases with the
use of non-equity
capital
- The degree to
which the
business uses
non-equity capital
compared to
equity capital
- Risks associated with
the financial position of
the firm and generally
result from the concept
of leverage
- Business risks
- Risks associated with
production and
marketing components
of the business
- Market or
price risks
Annotations:
- Relates to the uncertainty in markets and prices for both inputs (purchased for the production process), and outputs (products and services for sale by the firm)
- Production
risk
Annotations:
- Is the variability inherent in the firm's production process
- Technology
risks
Annotations:
- These relate to the uncertainty caused by rapid technological change
- Human
risks
Annotations:
- Humans are a key source of risk. Humans are prone to mistakes, misinterpretation, and health problems
- The fact that humans tend to change their goals and objectives often adds to the uncertainties facing the firm
- Legal and
social
risks
- Government
policy risk
Annotations:
- In addition to the monetary, fiscal and trade policies, Commonwealth and State governments have various policies - both general and industry specific
- Risks associated with
production and
marketing components
of the business
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