KE Y L E ARNI NG POI NT S

RISK & INVESTMENT

DR HARWINDAR SINGH
RISK DEFINITIONS

Uncertainty of Outcome

Investment Risk is Danger with Opportunity (WEI
Qi)

Investment is sacrifice today for future gain
DR HARWINDAR SINGH
DR HARWINDAR SINGH
DR HARWINDAR SINGH
KEY STEPS IN
RISK MANAGEMENT
ALL MANAGERS SHOULD KNOW
WHAT TO DO WITH RISK
DR HARWINDAR SINGH
INVESTMENT IS BASED ON 3 TYPES OF
FEASIBILITY

= Do we have a
good strategic fit

RELATED RISKS INCLUDE PARTNER RISK, PRODUCT RISK OR
MARKET RISK (WRONG FOOT STRATEGY)
THEY ALSO INCLUDE VISION THAT IS NOT ACTIONABLE AND
LACK OF GOAL CONGRUENCE WITHIN A FIRM
DR HARWINDAR SINGH
INVESTMENT IS BASED ON 3 TYPES OF
FEASIBILITY

= Do we
SUFFICIENT RESOURCES TO COMPLETE THE
INVESTMENT AND WAIT FOR THE RETURNS

RELATED RISKS RELATE TO NON AVAILABILITY OF KEY
RESOURCES LIKE FINANCING, DISTRIBUTION NETWORK ETC.
THEY ALSO INCLUDE LACK OF ORGANIZATIONAL
COMPETENCIES SUCH AS POOR LEADERSHIP,
COMMUNICATIONS, AND LACK OF RELEVANT TALENT
DR HARWINDAR SINGH
INVESTMENT IS BASED ON 3 TYPES OF
FEASIBILITY

= has two aspects :
Availability of Finance and Achievement of
desired surplus or gain

RELATED RISKS INCLUDE NON AVAILABILITY OF FINANCE
OR FINANCIAL SUPPORT FROM WITHIN THE GROUP
(INETERNAL) OR FINANCIAL INSTITUTIONS (EXTERNAL)
THEY ALSO INCLUDE ALL THE FACTORS THAT WOULD
RESULTS IN A DESIRED SURPLUS NOT BEING ACHIEVED E.G.
INCREASE IN COSTS, FALL IN PROJECTED BUSINES VOLUME
ETC.
DR HARWINDAR SINGH
BUT THERE IS A FOURTH CATEGORY
OF RISK


Natural Disasters
Internal Accidents
Fire
Theft and Fraud
Injury and Strike
DR HARWINDAR SINGH
DR HARWINDAR SINGH
INTERNAL BUSINESS ENVIRONMENT

COMPRISES :
COMPETENCIES
RESOURCES
STRENGTHS
WEAKNESSES

MEASURED USING
SWOT
BCG AND SIMILAR MODELS
DR HARWINDAR SINGH
MICRO EXTERNAL ENVIRONMENT
COMPRISES :
CUSTOMERS
COMPETITORS
SUPPLIERS
ASSOCIATES

MEASURED USING
OT ANALYSIS
5 FORCES ANALYSIS
SUPPLY CHAIN AND OTHER SIMILAR MODELS
DR HARWINDAR SINGH
MACRO EXTERNAL ENVIRONMENT

COMPRISES THE :
GLOBAL ENVIRONMENT
REGIONAL
NATIONAL
INDUSTRY / SECTOR

MEASURED USING :
P E S T E L
DR HARWINDAR SINGH
CONDUCTING FEASIBILITY
USING RISK ADJUSTED PROFITS

ONE SUCH PROFIT IS A CASH SURPLUS CALLED

DR HARWINDAR SINGH
ANOTHER ONE IS THE


MEASURES THE TIME TAKEN TO RECOVER INITIAL
INVESTMENT IN A PROJECT

SHORTER PAYBACK PERIOD IS GENERALLY SAFER
DR HARWINDAR SINGH