More Related Content Similar to Business risk and financial risk Similar to Business risk and financial risk (20) More from himanshujaiswal More from himanshujaiswal (20) Business risk and financial risk2. • UNEXPECTED
• MOSTLY NEGATIVE
• ACTUALS DIFFERENT THAN EXPECTED
• LOSING SOME OR ALL ORIGINAL INVESTMENT
4. BUSINESS RISK
1. •STRATEGIC RISK
2. •FINANCIAL RISK
3. •OPERATIONAL RISK
4. •COMPLIANCE RISK
6. CORRELATION BETWEEN BUSINESS
RISK & FINANCIAL RISK
Well Balanced
Group A
Dangerous
Group
Conservative
Group
Well Balanced
Group B
B
U
S
I
N
E
S
S
R
I
S
K
H
I
G
H
LOW HIGH
F I N A N C I A L R I S K
L
O
W
9. TECHNIQUES
• Payback
• Risk Adjusted Discount Rate( Risk free rate +
Risk premium
• Sensitivity Analysis
• Scenario Analysis
• Sequential Investment Decisions
10. Other Methods
• Reduction in Fixed cost(operating leverage)
• Pricing Strategy
• Financial leverage(because of debt)
• Insurance
• Strategic Alliance
• Derivatives(hedging, speculation)