So let’s now discussed how can can businesses overcome the fear of risk

SLIDE 1
OVERCOMING THE FEAR OF RISK
Everyone accepts that taking risks is needed to keep ahead of the
competition. That's why employees need to understand better what the real risks are, so
they could share responsibility for the risks being taken and to see risks as an
opportunity, not a threat. Ang mga employees ay dapat alam or alamin ang kanilang
kakaharaping risks para mas maging prepared sila and makagawa ng strategies para
maging opportunities ang mga risks na ito imbes na ito ay maging threat para sa kanila.
Understanding how organizations manage risk effectively is important since
makakatulong ito upang maprotektahan ang kanilang assets dahil na rin kapag alam
nila ang mga potential risk na kakaharapin, then magkakaroon sila ng plans para
macontrol ito and mapaghandaan which helps para maminimize ang mga losses and
damages sa kanilang asset. Pero hindi lang ang pagmamanage ng risk ang possible
strategy na maovercome ang fear of risk. Another approach is to look for ways to use
the risk to achieve success by adding value or outstripping competitors or both.This
approach ay gagamitin nila ang risk para maidentify ang ways para makacreate ng value
or mag gain a competitive edge in the market. Sa pag acknowledge nila sa risk then
maglelead ito sa innovation and growth ng business. And para maisagawa ito, the
organization needs to stop taking the fun out of risk by controlling it in ways that are
perceived as bureaucratic and stifling. It emphasized the importance of avoiding overly
strict practices that will cause long delays. Risk is both desirable and necessary since
kung risk presents also opportunities. Risks possess positive aspects na magagamit ng
company for their growth and advancement. Recognizing risk as both desirable and
necessary, organizations will shift their perspectives from fear of failure to embracing
opportunities for progress and success. It provides opportunities to learn and develop
and compels people to improve and effectively meet the challenge of change.
SLIDE 2

C. CONTROLLING AND MONITORING ENTERPRISE-WIDE RISK

The following questions when answered truthfully and positively will assist managers in
deciding how to manage the risks that confront the business enterprise.

~Where are the greatest areas of risk relating to the most significant strategic
decisions?
-In answering this question, the manager will identify areas of high risk in strategic
decisions na makakatulong sa manager upang mapriotize ang mga resources and
attention towards mitigating potential negative impact sa goals ng business.

What level of risk is acceptable for the company to bear?

-Establishing risk tolerance levels will guide the manager in decision making and will be
able to align risk-taking activities in accordance to the company’s objectives.

What are the potentially disclosing events that could inflict the greatest damage on
your organization?
-Anticipating potential events with significant consequences will allow the manager for
more proactive planning and development that will help the business minimize the
negative effects.

What are the risks inherent in the organization’s strategic decisions, and what is the
organization’s ability to reduce their incidence and impact on the business?
~Assessing risks associated with strategic decisions and evaluating mitigation
strategies will ensure that risks are managed effectively which will enhance the
likelihood of successful outcomes on the business
What is the overall level of exposure to risk? Has this been assessed and it is being
actively monitored?
-Regular assessment and monitoring of overall risk exposure enable managers to stay
informed about the risk they would face and make timely actions to address emerging
threats.

What are the costs and benefits of operating effective risk management controls?
-Evaluating the costs and benefits of risk management controls helps the manager
improve the resource allocation and ensure that risk management practices deliver
value to the organization.

What review procedures are in place to monitor risks?

Evaluating the effectiveness of monitoring of risk procedures will ensure timely
detection and the manager will be able to respond immediately to emerging risks that
the company will face.

Are the risks inherent in strategic decisions (such as acquiring a new business,
developing a new product or entering a new market) adequately understood?
-This question will ensure that decision-makers have a clear understanding of the risks
associated with strategic decisions which would help them to make informed choices.

SLIDE 3

At what level in the organization are the risks understood and actively managed? Do
people fully realize the potential consequences of their actions, and are they equipped
to understand, avoid, control or mitigate risks?
- This will determine the extent to which risk awareness and management practices are
established in many different organizational levels. It will also promote risk awareness
and equip employees with the knowledge and tools to identify, assess, and mitigate
risks effectively.

To what extent would be company be exposed if key staff left?

It will assess the company's dependency on key staff and be able to identify the
potential risks associated when they decide to leave the company.

If there have been major developments (such as new management structure or

reporting arrangements), are the new responsibilities understood and accepted?
-This question addresses the impact of significant organizational changes on risk
management. Major developments, such as changes in management structure or
reporting arrangements will introduce new responsibilities and change existing roles
within the organization. It's important that the manager ensure the employees affected
by these changes fully understand their new roles and responsibilities related to risk
management.

Are management information systems keeping pace with demands? Are there
persistent black spots- priority areas where the system needs to be improved or
overhauled?
-This question assures that the management they use can be able to keep up on what
they demand to do without any errors. This will help managers in identifying parts of the
information system that are not working well and causing problems. By figuring this out,
these issues would be fixed which helps the systems run smoothly and efficiently.

Do employees resent risk, or are they encouraged to view certain risks as

opportunities?
-Fostering a culture that encourages employees to view risks as opportunities will
promote innovation, resilience, and proactive risk management practices within the
organization.
So again, by addressing these questions will help managers in deciding how to manage
the risks that confront the business enterprise.

SLIDE 4
PRACTICAL CONSIDERATIONS IN MANAGING AND REDUCING FINANCIAL RISK

Finance is the lifeblood of every business Why? Because it plays a significant role in the
success of the business, it shapes the strategies and decisions it makes on every level.
However, despite its importance many managers struggle to grasp financial issues. It is
revealed after the 2008 global financial crisis, many managers have lost sight of
fundamental principles which lead to severe consequences in the businesses
worldwide. Such as global recession, this financial crisis triggered a severe worldwide
economic downturn, leading to recessions in many countries. Unemployment rates
soared, and many businesses encountered challenges, including bankruptcies and
closures. This served as a reminder of how important managing and reducing financial
risks is.

When setting and reviewing strategies, managers must consider factors like profitability,
cash flow, long-term shareholder value, and risk.

This section provides practical guidance about financial decision and explains how to:

*IMPROVE PROFITABILITY;
*AVOID PITFALLS IN MAKING FINANCIAL DECISIONS;
*REDUCE FINANCIAL RISK.

SLIDE 5
IMPROVE PROFITABILITY
Entrepreneurial flair and financial rigour are as much about attitude as skill.
Entrepreneurial flair refers to the creative and innovative mindset that entrepreneurs
possess. While financial rigour involves discipline and precision in managing finances
within a business. Nonetheless, certain skills will ensure that decisions are focused on
commercial success. Which are Variance Analysis, Assessment of Market Entry and
Exit Barriers , Break Even Analysis and Controlling Costs.

SLIDE 6

A. Variance Analysis
Interpreting the differences between actual and planned performance is crucial. It
compares what actually happened in your business (actual performance) to what you
planned or expected (planned performance). By understanding the differences
(variances), you can figure out where things went well and where they didn't. For
example, if you planned to sell 100 units of a product but only sold 80, variance analysis
helps you understand why there was a shortfall. Maybe your pricing was too high, or
there was unexpected competition.This allows them to understand the reasons behind
these variations and take corrective actions accordingly.Variance analysis is also used
to monitor and manage the results of past decisions, assess the current situation and
highlight solutions.
Common causes of variances include inefficiency, poor or flawed planning (for example,
relying on historically inaccurate information), poor communication, interdependence
between departments and random factors. Every business should use variance analysis
but in a practical and pragmatic and cost-effective way.

B. Assessment of Market Entry and Exit Barriers:

Understanding the barriers to entering or exiting a market is crucial for making strategic
decisions that can impact profitability.High entry barriers, such as significant capital
requirements or strong competition, may prevent new entrants, reducing competition
and potentially increasing profitability for existing market. Similarly, low exit barriers,
where it's easy to leave a market, can enable businesses to cut their losses and
reallocate resources to more profitable ventures. This flexibility can contribute to overall
profitability by avoiding prolonged losses in unprofitable markets. For instance, if you're
thinking about opening a coffee shop in a busy neighborhood, you'll want to consider if
there are already many other coffee shops around (high competition) and if it's easy to
sell the shop if it doesn't do well (low exit barriers).

C. BREAK- EVEN ANALYSIS

The break-even point is when sales cover costs, where neither a profit nor a loss is
made. It is calculated by dividing the costs of the project by the gross profit at the
specific dates, making sure to allow for overhead costs. It is used to decide whether to
continue developing a product, alter the price, provide or adjust a discount, or change
suppliers to reduce costs. It also helps in managing the sales mix, cost structure and
production capacity, as well as in forecasting and budgeting.By conducting break-even
analysis, businesses can assess the viability of their operations and make informed
decisions to improve profitability. Imagine you're starting a small business making
handcrafted candles. Break-even analysis helps you calculate how many candles you
need to sell each month to cover all your costs - things like materials, labor, and rent.
Once you sell more than that number, you start making a profit.

By understanding variances in the business performance, assessing market conditions

for entry and exit, and conducting break-even analysis, the business can make smarter
decisions that will improve profitability.

That is all for my part, let us now proceed to the controlling cost which will be discussed
by Miss Flores.