Page 5 - PowerPoint Presentation
P. 5
RISK MANAGEMENT
Overview of Risk
• Risk can be described as the probability that the actual
outcome will be different from the expected outcome.
• It is inevitable that risks will arise in the pursuit of
value creation because the outcome of events cannot
always be predicted with accuracy and a certain degree
of uncertainty always exists (consumer trends, etc.).
• Risk management entails minimising the possibility
that adverse events will occur as well as minimising
the adverse effects, should the event occur.
• An entity should only take on risk if the degree of risk is
compensated with the expected return.
5
High risk = High expected return !!
