This document contains summaries made from " Consumo business studies textbook" which summarizes: risk management; identification of risk; managing risk; risk management in practice; the interrelationship between business strategy, risk management and business operations.
Chapter 12
• Risk management:
- The world of business does not offer a lot of guarantees that specific outcomes will be achieved,
because there is a high degree of uncertainty linked to:
➢ The economy of the country.
➢ The economy on a global level.
➢ Political development.
➢ Technological advancements.
➢ Changes in legislation.
➢ Changes in consumers demands.
- Taking risks is a natural part of any business venture, the manager or entrepreneur should be aware
and actively plan for the variety of risks that exists as part of the everyday business operation.
- Risk management: defied as analyzing the probability of an event – taking place and then proactive
planning to minimize the possible negative impact of the event on the business.
➢ Risk can thus be seen in a number of ways:
• Risk as a mere uncertainty.
• Risk as a threat.
• Risk as an opportunity.
Risk and strategic management:
• Strategic planning: refers to the formulating of the business’ vision, mission and value statement,
organizational structure, as well as the goals and objectives of the business.
• The business operations include aspects such as implementing policies, managing processes,
monitoring and controlling daily activities and satisfying the needs of customers to ensure profitability.
➢ Risk management: implemented to ensure the strategic plan and business operations are aligned.
, The interrelationship between business strategy, risk management and business operations:
Strategy:
Vision, mission, value statement, goals &
objectives
Risk management:
Alignment between business strategy & business
operations.
Risk management in practice:
- The way a business views risk is influenced by a business risk profile and risk culture.
• Risk profile:
➢ The risk profile of the business refers to the degree that a business is willing to accept
risks in pursuit of creating value or to achieve the businesses goals.
➢ The risk profile is directly related to the strategy of the business.
➢ Any business should try to achieve a balance between business growth, possible
returns and risks.
• Risk culture:
➢ Business culture can be described as shared attitudes and practices in the business.
➢ Risk culture of the business refers to the collective attitude in the business towards
accepting risks.
➢ Risk culture is the result of the businesses practices such as rewards for risk-taking or
risk – avoiding behaviour.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller kayleevandyk. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R83,00. You're not tied to anything after your purchase.
