Entrepreneurship Management Managing Risk 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 it’s Rewards “ R A M 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 1 st Age2 nd Age3 rd Age Types of RisksNon EntrepreneurialEntrepreneurial SolutionsReactiveProactiveProactive FocusInternalInternalInternal & Market StrategyUn-coordinatedSystematic

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.Suppliers’end - 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