About This Chapter
Foundations of Risk & Risk Management - Chapter Summary
In business, it's important to understand the foundations of risk and risk management. This chapter offers a handful of engaging and informative lessons that discuss risk management. Progress through the chapter to study the foundations of risk including how it is interpreted, categorized, and seen through the eyes of enterprises. To make sure you understand these concepts, we've included lesson quizzes and a chapter exam. You can revisit the lessons as many times as needed, and the Ask the Expert feature lets you submit any questions you may have about these risk management topics. The chapter is also available to study any time that fits your schedule. When you're finished with the chapter's resources, you should be able to:
- Describe the three major types of risk attitude
- Understand the impact of changes in the business environment
- Recognize the differences between different types of risk
1. Risk Attitudes: Types & Analysis
This lesson defines the concept of risk from the standpoint of economics. Then we go over the major risk attitude types and how people with such attitudes would make decisions with a concrete example.
2. External Environmental Changes Drive the Need for Risk Management
Businesses operate in a dynamic world where the only thing for certain is that things will change. Change can bring both risk and reward. In this lesson, you'll learn how change in the business environment drives the need for risk management.
3. Systematic & Unsystematic Risk: Definition & Examples
In financial markets, risk is an important concept to understand. If you hope to make money, you must risk money. In this lesson, we'll learn the difference between systematic and unsystematic risk, which will help you develop your investing strategy.
4. Financial Risk: Types, Examples & Management Methods
In this lesson, you will explore the various types of risks faced by a business and understand how financial risk is different from other types of risks. Then, you will learn about the different types of financial risks and methods to manage them.
5. Risk Control vs. Risk Management
In this lesson, we'll clarify the difference between risk management and risk control. We'll also describe a five step process commonly used in risk management, and then highlight four basic categories of risk controls.
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