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Enterprise Risk Management A SME CENTRIC APPROACH Ankita Agrawal [email protected] +919830192095 RISK The probability of an outcome which is not desirable Risk Implementation Risk Strategy Risk Business Legal Risk Environmental Risk Financial Risk Operations Material Risk Market Risk Compliance Risk Credit Risk Demand Risk Forex Risk Competitor Risk Reporting Risk Technology Risk Personnel Risk Control Risk I.T Risk Risk Assessment Measurement of probable risk “At Risk” model Measures both impact and likelihood of risk Benchmarking Assessment of Loss Events Back testing Quantitative Assessment Sensitivity Analysis Probabilistic vs. Nonprobabilistic Risk Assessment Qualitative Assessment A qualitative assessment based on non mathematical measurement of risk Measures only impact of risk Scenario Analysis Stress Testing Risk Appetite The tolerance and capacity of risk Risk Appetite Risk Tolerance Risk Capacity Risk appetite of the entrepreneur Risk averse Risk Neutral Risk appetite of the business Risk prone High Medium Low Enterprise Risk Management (ERM) Does not mean Pile of Documents Expensive Consultants Enterprise Risk Management (ERM) means Holistic approach to manage risk across organization Unless requires under a statue or an agreement – Risk Assessment and Mitigation May not be documented May not be formal May not be communicated to all levels of employees Enterprise Risk Management requires identifying – • The Risk Tolerance • The Risk Capacity • Steps to bridge the gap between risk tolerance and risk capacity • Business and Operational Risk • Options to mitigate identified risk MSME IN INDIA MSME Manufacturing Enterprise Service Enterprise Investment in Plant and Machinery Investments in Equipments Micro Enterprise Small Enterprise Medium Enterprise Micro Enterprise Small Enterprise Medium Enterprise Investment upto Rs. 25 lacs Investment between Rs. 25 lacs and Rs. 5 crores Investment between Rs. 5 crores and Rs. 10 crores Investment between Rs. 1 lacs and 2 crores Investment between Rs. 2 crores and 5 crores Investment upto Rs. 10 lacs India has more than 13 million MSME MSME forms for 45% if Indian Manufacturing and 40% of Exports from India Generate 31 million employment opportunities Contribute to 22% of the GDP Spread over 20,000 industries
