Commercial and financial risk management
Estimated duration : 7h30
In this Route, we are going to talk about Business and Financial Risk Management. All organizations involved in entrepreneurial activities face risks, both business and financial, that must be properly managed if they are to be successful. In general, companies manage their risks by identifying them, analysing them and then assessing whether these risks can be modified by appropriate treatment. We know that there are 5 main risks that businesses face: financial risk, operational risk, strategic risk, compliance risk and reputation risk.
Commercial risk arises first of all when the debtor defaults, when he becomes insolvent as a result of a deterioration in his financial situation. But this risk can also concern other aspects of the transaction such as the delivery of goods, the fulfilment of the contract, etc.
Financial risk is one of the major concerns of any business. Like all other risks, it cannot be totally eliminated, but the damage caused can be mitigated. We will see that 4 main categories of financial risks have been identified, namely: market risk, credit risk, liquidity risk and operational risk. We will see what each one consists of and how to get around them.
In any case, the company will need to develop a proper "risk management plan". The risk management process will start by identifying the risks that the company may face and categorizing them. We will see that it is important to adopt a systematic approach, similar to the HACCP approach to food safety, to analyse the risks, understand their consequences and categorise and prioritise them, as the responses to be made differ according to the type of risk.
We recommend that you complete the 2 levels of course 1 "Introduction to Business Management" before enrolling in this course.