Page 9 - PowerPoint Presentation
P. 9
RISK MANAGEMENT
Risk and the business environment
• The taking of risks allows the entity to be more
competitive and to generate higher returns, e.g.
launching a new technologically advanced product even
though there is uncertainty whether customers will buy
the new product.
• Benefits could be both financial, in the form of higher returns
or reduced cost, and intangible, such as gaining more
valuable client information to be used for future products.
• Risk-taking could also result in losses. However, greater
risk should be balanced by a greater expected reward.
It is thus important for every entity to follow a strategic
risk-management process.
• Here, value could be added by controlling the probability of
occurrence, the potential impact of unfortunate events, and
finally, by maximising the realisation of opportunities.
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