Entrepreneurship Management

Risk Management
Prof Bharat Nadkarni

Entrepreneurship Management
Risk Management
1. What are the worst things that could happen to your enterprise ?
2. How likely are they to happen ?
3. Are we taking the right steps to prevent them ?
Hide from risk and you hide from its Rewards
RAM P
The Risk Analysis and Management Programme is a system that helps the
enterprise manage their risks to gain the competitive advantage

Entrepreneurship Management
Risk Management
1st Age

2nd Age

3rd Age

Types of Risks

Non Entrepreneurial

Solutions

Reactive

Proactive

Proactive

Focus

Internal

Internal

Internal & Market

Strategy

Un-coordinated

Entrepreneurial

Systematic

Entrepreneurship Management
Risk Management
Risk is a future event which results from Action taken NOW
Risks often define conventional thinking
Ten Most Critical Risks

Environment

Safety of employees

Product liability

Fire & Explosion

Business interruption

Credit Risk

Image impairment

Security of property

Political Risk

Pension fund integrity

Entrepreneurship Management
Risk Management
High Reward &
Low Risk

High Reward &

High Risk

Low Reward &

Low Risk

Low Reward &

High Risk

Entrepreneurship Management
Risk Management
A Structure for managing risks
1. Identify and assess risks
2. Set policies
3. Monitor Risks
4. Implement policies and manage risks
5. Introduce and test contingency plans
Strategic and Operational Risks
Strategic Risks
These risks to be tackled at apex level
a. Govt. action - economic change, new legislation, Regulators
b. Customers - changing attitudes and expectations
c. Competition changing and becoming global, no market is immune to
competition, especially one which is profitable will certainly attract
competition.
d. New technology

Entrepreneurship Management
Risk Management
Strategic Risks have major impact on enterprises profitability and
sustainability.
Operational Risks
It involves entire value chain
a.
Suppliersend - interruption of supplies, poor quality
b.
Process and internal risks fire, pollution, fraud, IT - computers,
accidents, labour disputes.
c.
Distribution counterfeiting, tampering, logistical
d.
Customers payment problems, product liability( use batch
numbers)
e.
Competition competitors activity (non ethical)

Entrepreneurship Management
Risk Management
Solutions
1.
Stakeholder Concept
2.
Strategic planning of Markets and Products
3.
Empowerment
4.
Quality management
5.
Customer care
6.
Investment
7.
Innovation
8.
Cost reduction
Discuss
1.
Complaint Recall
2.
Penalties for breaking the law
3.
Preventing Environmental pollution

Entrepreneurship Management
Risk Management
Preventing Environmental Pollution
1. Growing cost of compliance
2. The cost of breaking the law
3. The polluting enterprise is more vulnerable to changes in environmental
legislation
4, Polluters will increasingly find it difficult to obtain finance and insurance
cover
5. The polluting enterprise will find it harder to attract and retain talent
6. The polluting enterprise can be attacked as being anti social and
uncaring
7. The polluting enterprise can find itself left behind by competitors which
adopt greener products and processes