The Risk Identification

Before we discuss further about the risk management applied in the company, first we have to know the definition of the risk. Because without knowing what risk is, we cannot understand further and being lost in gaining deeper explanation.

The term risk is variously defined as:
• The chance of loss
• The possibility of loss
• Uncertainty
• The dispersion of actual from expected results
• The probability of any outcome different from the one expected

Clasification of risk:
• Financial and non-financial risks
• Static and dynamic risks
• Fundamental and particular risks
• Pure and speculative risk

According to Merna and Al-Thani in Corporate Risk Management (2005), the term Risk management can be defined as any set of actions taken by individuals or corporations in an effort to alter the risk arising from their business. And according Meulbroek (2002) the goal of this risk management is to maximize the shareholder value.

There are some steps in the Risk Management:

1. Identification of risks/uncertainties.
2. Analysis of implications.
3. Response to minimize risk
4. Allocation of appropriate contingencies.
Risk management is a continuous loop rather than a linear process so that, as an investment or project progresses, a cycle of identification, analysis, control and reporting of risk is continuously undertaken.

Risk identification

It consist of determining which risks are likely to affect the project and documenting the characteristics of each one. This risk identification should address both the internal and external risks. By applying this theory to the company, we can track down what are the sources of the risk for the reseller company. here are the list below.
There are several sources of risk relate to this certain type of business;

1. Political : change in government policy, public opinion, disorder
2. Environmental : contaminated land or pollution liability
3. Planning : permission requirements, policy and practice, land use
4. Market :demand, competition, customer satisfaction
5. Economic : taxation, interest rates, exchange rates
6. Financial : margins, insurance
7. Natural : weather, earthquake, fire or explosion
8. Technical : design adequacy, reliability, operational efficiency
9. Regulatory : changes by regulator
10. Human : error, incompetence, tiredness, communication ability, culture
11. Criminal : theft, fraud, corruption
12. Legal : changes is regulation