instructions: there is no vocabulary for this chapter. read through the powerpoint and take notes on...
TRANSCRIPT
Instructions:
There is no vocabulary for this chapter. Read through the PowerPoint and take notes on
the material. Be sure to answer the questions throughout the
PowerPoint in your notes. The substitute will be collecting your notes at
the end of class.
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Part One
Risk Management
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NATURE OF RISK
RISK – Possibility of financial loss
RISK MANAGEMENT – The process of managing an
organization’s risk exposure consistent with public interest, human safety, environmental factors, and the law.
4. Implement the risk management program
3. Select a risk management method
2. Evaluate risks
1. Identify potential risks
The Risk Management Process
Sad Sally’s Service Station
You work as an assistant manager for a 24-hour a day self-service gas station and convenience store. Because of rising gasoline prices, you are experiencing an increasing amount of “drive-offs.” More individuals are filling their tanks and driving away without paying.
Assignment: Design a plan to reduce external theft at your gas station.
Types of Business Risks
Business Risk – possibility of business loss or failure.
Economic RiskNatural RiskHuman Risk
Economic Risk
Financial loss occurring from changes in overall business conditions
Economic Risk
Amount or type of competition– Businesses failing to change their
products to keep up with competitors.
Changes in consumer life styles or population– Two income households, Aging Baby
Boomers, Delaying marriage.
Economic Risks
Limited usefulness or style of the product– Markdowns and Sales
Product obsolescence – Products become outdated or obsolete
Government regulation– Product recalls, environmental laws, etc.
Inflation & Recession – high unemployment will effect sales
Natural Risks
Loss resulting from natural causes such as floods, tornadoes, hurricanes, fires, lighting droughts, earthquakes, and unexpected changes in weather conditions.
Natural Risks
Ski resorts need snow fall Hot summers increase sales in air
conditioners, fans, boats, swimming pools, etc.
Asian Tsunami Hurricane Katrina Fire
Human Risk
Business loss caused by human mistakes, as well as the unpredictability of customers, employees or the work environment.
Human Risk
Employees – errors, negligence, incompetence, internal theft
Customer dishonest – thefts, fraudulent payment or nonpayment
Safety– Accidents
High rise of computer crimes
Identify the Type of Risk
The National Hockey League goes on strike causing the cancellation of the season
Answer: ___________________
Identify the Type of Risk
An earthquake in California leads to increased losses for an insurance company
Answer: _______________
Identify the Type of Risk
Basketball shoes that were endorsed by players are no longer trendy among teenagers.
Answer: __________________
Identify the Type of Risk
Clothing companies can’t make production figures because of a cotton shortage due to the lack of rain.
Answer: _______________
Identify the Type of Risk
A local restaurant improperly cook hamburger sending customers to the hospital
Answer: ___________________
Identify the Type of Risk
An inventory shortage due to employee theft in the warehouse.
Answer: ___________________
Identify the Type of Risk
A high unemployment rate causes a decrease in retail sales.
Answer: ________________
Handling Business Risk
Risk Prevention and ControlRisk TransferRisk RetentionRisk Avoidance
Risk Prevention & Control
Screening & training employees
Providing Safe Conditions and Safety Instruction
Preventing External & Internal Theft
Risk Transfer
Purchasing Insurance – Contract between the business and an insurance
company to cover certain business risk.
Product & Service Warranties– promises made by the seller or manufacturer with
respect to the performance and quality of the product.
Risk Retention
Businesses retain or assume responsibility for the loss
Unaware of the riskUnderestimating the riskHope for profits
Risk Avoidance
Avoiding risk by anticipating them in advance.
Part Two
Legal Terms of business to know
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Intellectual Property
Patent – sole right for 20 years to make, use, and sell an invention or
process Copyright
– sole right to reproduce, publish, and sell literary or artistic work for the life of the author plus 70 years (also includes software)
Trademark – distinguishing name, symbol, or mark placed on a good or
service that is legally reserved for the sole use of the owner
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Intellectual Property
PATENTS Motors Mousetraps Games Computers
PATENTS Motors Mousetraps Games Computers
COPYRIGHTS Software Novels Poetry Textbooks
COPYRIGHTS Software Novels Poetry Textbooks
TRADEMARKS Names Symbols
TRADEMARKS Names Symbols
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State and Local Regulations
Licensing limits and controls those who plan to enter certain types of businesses (can be refused)
Building codes control the physical features of structures
zoning specifies which land areas may be used for homes and for different types of businesses