Answer Strategy Risk and the Global Financial Risk 1 More competitive 2 Alert to their circumstances 3 Resilient Probably not but did nothing to avoid it 1 Competitive advantage time shortened for leaders 2 Leads to volatility of leaders 3 Need for an Adaptive Strategy Create a set of optimal conditions for the continuous emergence of superior strategies 1 Risk 2 Boundaries 3 Corporate Purpose 4 Environment efficiency and redundancy excess capacity Business risk Risk Management Exam 3 print and fold paper in half to quiz yourself Question Topic 8 Stategy should make companies 3 Did strategy cause financial crises Is there a problem with strategy 3 Strategy must incorporate 4 There is a tradeoff between and The possibility that a company will have lower than anticipated profits or that it will experience a loss rather than a profit the risk or loss resulting from inadequate or failed internal processes people and systems or from external events Typically used in insurance industry to describe potential losses that only have a down side pure risks such as fire auto accident tornado flood or earthquake used to imply downside risk meaning the uncertainty of a return and the potential for financial loss stocks investments Potential losses variation from poor business decisions Often lump reputation risk under this risk but is often a separate classification We create so much data today how can organizations use it 3 ways the people processes and systems in place to produce the company s product service Fraud workplace fraud practice damages system failures process management workplace safety An extreme outlier high impact hard to predict rare events that generally people do not expect Operational risk accounts for of business loss Operational risk Hazard Risk Financial Risk Strategic risk 1 Data Mining 2 Buying Trends 3 Targeted Marketing Operational risk Black swan 30 Behavioral analytics adds that examination of the component mixed with statics and external analysis human Topic 9 Any condition or situation that presents a possibility of loss regardless of whether that loss actually occurs 3 elements of this Risk surrounding an Asset Exposed to loss Risk surrounding premature death Risk surrounding ones medical wellbeing Risk surrounding ones wealth Who has the largest financial impact from a premature death 6 steps to the risk management process Overview of Risk Individuals Loss Exposure 1 Asset exposed to loss 2 Cause of loss 3 Financial Consequence of loss Liability risk Life Risk Health Risk Financial Risk o Single with dependants 2 Determine objectives 3 Identify risks 4 Evaluate risks 5 Chooses your alternatives 6 Implement o Review and Evaluate 7 40 s 8 Wealth and income What age is someone at their highest risk Severity of risks varies and is based on and Topic 10 Natural Disasters 9 Hurricane Bangladesh 300k 10 Hurricane Katrina USA 74 686 M 11 Death toll damage effect on economy Deadliest natural disaster was Costliest Natural disasters What is the difference between a natural disaster and a great natural disaster This killed 3 of world s population 50 M of deaths from disasters in 15 countries 35 of top 40 insured losses belong to what 3 countries How many years between similar magnitude events Typically an relationship between frequency and magnitude bad hurricanes don t make landfall every year Actions to eliminate or reduce future deaths losses ect From natural disasters Population changes based on choices by 2050 If women have 1 6 children population drops to 3 6 B 12 1918 flu 13 80 o US o Japan 14 Europe o Return Period o inverse o mitigation Know these If women have 2 Children population grows to 10 8 B If women have 2 6 children population grows to 27 B What demographic transition phase it High birth and death rates Population maintenance Most of human history What demographic transition phase it Low death rates and high birth rates Population Explosion 1700 2000 What demographic transition phase it Low death rates and birth rates Population maintenance The ability for the environment to support a population Another name for great disaster is a These countries have a High Share of Risk Greater economic losses of GDP Least Resilient These areas have the biggest exposure risk 3 4 disaster Risk drivers Exposure is growing same decreasing Why are poorer nations worse off 4 What is the biggest global catastrophe risk Hyogo Framework 5 What could we be doing better to make progress in preventing risk in society 7 o Pre Transition o Transition o Post Transition o Carrying Capacity o Megadisaster o Poor Countries Small island developing states SIDS Land Locked developing countries LLDC o Potential losses relative to wealth development GDP Poor Urban governance Vulnerable rural livelihoods Declining Ecosystems Global Climate Change growing Less Resilient No insurance social coverage Lead to income and consumption shortfalls Negatively affect welfare and human development Infectious pandemic diseases biggest worry 1 Ensure that disaster reduction is a national and local priority with a strong institutional basis for implementation 2 Identify assess and monitor disaster risks and enhance early warning 3 Use knowledge innovation and education to build a culture of safety and resilience at all levels 4 Reduce underlying Risk Factors Strengthen disaster preparedness for effective response at all levels o Better building practices o Inspections Topic 11 people 65 and over outnumber those and under Life Expectancy is increasing or decreasing The number of 80 people will double in years Median Age of Western Europe and Japan increasing or decreasing Italy Spain and Japan a More than of all adults will be older than official retirement age More people in their s than 20 s Major Challenges of Aging Population 3 Specific challenges of older population 6 What is the 1 killer of the elderly Worker productivity typically improves or declines with age Tor F The US is better off than the rest of the world with the aging problem Today s nations are the only ones to go through full demographic transition What was the first country to go through the full demographic transition without being wealthy Problems with developed countries 5 o Warnings o Response o Infrastructure o Relocate 5 Protection o 5 o increasing o 30 o increasing a half o 70 s 1 Economic Development issues 2 Health and well being issues b Challenge of enabling and supportive environments 1 Slower economic growth 2 Poverty
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