Explaining Systematic and Unsystematic Risks in Risk Planning,Reflection This reflection is comprised of two sections, collectively totaling a minimum of 500 words. Complete your reflection by responding to all prompts. Systematic and Unsystematic Risk You are the chief risk officer for a company, and you’ve been tasked with identifying the areas where your company is exposed to systematic and unsystematic risks. Based on the information you learned about this concept, what approach would you take in explaining how systematic and unsystematic risks affect risk planning? Describe your approach. Name 3 or more systematic or unsystematic risks your company might face. Think of some implications if your company decides not to be proactive and plan for these risks. Venture Capital You are a business consultant who works with new business owners. A new client wants to start a bakery and seeks your advice. Based on what you’ve learned from the readings, discuss the advantages and disadvantages of using venture capital as startup funding for a business. Describe what approach you would recommend for the client by using the information you researched. How does your approach differ from the recommendations of your classmates? How might your recommendations change after reading your classmates recommendations?

Explaining Systematic and Unsystematic Risks in Risk Planning

As the chief risk officer for my company, I would take a two-pronged approach in explaining how systematic and unsystematic risks affect risk planning (Financial Times Guide to Risk, 2019). Firstly, it is important to understand the difference between the two types of risks. Systematic risk refers to “risks that affect an entire market, or the entire economy,” such as changes in interest rates or political instability (Financial Times Guide to Risk, 2019). These risks are often beyond the control of an individual company, and are generally diversifiable through portfolio diversification. On the other hand, unsystematic risk refers to “risks that are specific to a particular company or industry,” such as a product recall or a lawsuit (Financial Times Guide to Risk, 2019). These risks are often specific to a particular company or industry, and are not diversifiable through portfolio diversification. In explaining the impact of these two types of risks on risk planning, it is important to emphasize the importance of proactive risk management in mitigating the potential negative impacts of both types of risks (KPMG, 2019). By proactively identifying and analyzing potential risks, companies can develop strategies to mitigate or transfer the risks, such as purchasing insurance or implementing risk control measures (Ernst & Young, 2020). Three examples of systematic risks that my company might face include changes in economic conditions, changes in interest rates, and changes in exchange rates (Ernst & Young, 2020). Three examples of unsystematic risks that my company might face include product recalls, lawsuits, and operational disruptions (KPMG, 2019). Cont…

 

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