Every area of your organisation is exposed to risk in one way or another. A good understanding of risk is essential, together with the analysis and problem-solving techniques necessary to identify the ways in which it may be avoided, mitigated, and managed.
The variety and levels of risk are expanding on a daily basis and the resultant business problems have an increasingly significant impact on your organisation’s performance. You cannot assume that dealing with risk should be left to the risk management department. In today’s fast-moving global economy, business professionals in every role and at every management level need to ensure that their business skills toolbox includes an understanding of risk, and how to apply the techniques and actions to minimise its impact.
Risks are many and various, and include social risk, political risk, economic risk and crucially, the two elements of systematic risk:
Business Risk and Financial Risk
Systematic (or market) risk relates to how financial returns are affected by business cycles, trade tariffs, and the possibilities of war, etc. It is inherent risk that cannot be diversified away and its level is dependent on which industry or type of project, and accounts for about 30% of risk.
Unsystematic risk relates to specific businesses or projects. It is the risk of a project performing badly, or a busines failing or going into liquidation. It is estimated to account for approximately 70% of risk. The spread of this risk over a wide portfolio of investments in new projects or securities diversifies it to a more acceptable level – the wider the diversification, the lower the potential impact.
Your organisation faces business risk due to the variability of your operating profits or cash flows, dependent on the line of business and industry in which you are operating.
Your organisation faces financial risk primarily from the impact that interest payments have on your profit and cash flow, and because interest must always be paid, a drop in business activity may result in financial distress. Increases in borrowing and therefore interest, and increases in the interest rate itself, may both result in lower profit and an inability to pay dividends to shareholders.
Financial risk levels are indicated by gearing, the ratio of your debt (borrowings) to your total capital (equity plus debt). Other types of financial risk include: credit risk; currency risk, and liquidity (or funding) risk.
It is necessary to have a clear understanding of the tools and techniques of risk analysis, risk management and problem-solving to identify and resolve the problems and manage the business risk and financial risk that have such a significant impact on organisational and personal performance.
You can acquire the risk awareness skillset to deal with these real-life practical problems faced by us all on a daily basis, and give you the self-confidence to communicate effectively with financial professionals and risk managers, by attending a seminar that is an absolute ‘must’ for every manager.
Financial Risk, Root Cause Analysis & Problem-Solving is a stimulating and thought-provoking seminar presented by global world class training providers Glomacs (based in the UAE) and Oxford Management (based in the UK) who provide public and in-house training courses for financial and non-financial personnel at every level. The very user-friendly approach used throughout this seminar enables participants to identify various forms of financial and business risk, use root cause analysis to determine the sources of resultant business problems, and use the tools and techniques of the problem-solving process.