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Bài giảng Tiếng Anh về Risk Analysis (phân tích rủi ro)
SECTION RISK ANALYSIS RISK ANALYSIS Risk introduction Risk analysis tools Risk reducing solutions RISK INTRODUCTION What is risk ? Why risk analysis ? Types of risk RISK WHAT IS RISK? Risk, in traditional terms, is viewed as a ‘negative’. Webster’s dictionary, for instance, defines risk as “exposing to danger or hazard”. The Chinese symbols for risk, reproduced below, give a much better description of risk The first symbol is the symbol for “danger”, while the second is the symbol for “opportunity”, making risk a mix of danger and opportunity WHAT IS RISK? Risk is possibility of difference between actual outcome and expected outcome as planned. WHY RISK ANALYSIS ? Future Certainty is Uncertainty Project returns are spread over time Most variables affecting NPV are subject to high level of uncertainty Information and data needed for more accurate forecasts are costly to acquire Need to reduce the likelihood to undertake a "bad" project while not failing to accept a "good" project WHY RISK ANALYSIS ? Business is associated with uncertainty To deal with uncertainty: Assume things will be as planned and be ready to adapt to possible change Predict and limit uncertain elements WHY RISK ANALYSIS ? Decision making contexts With Certainty With Risk With Uncertainty Probability Objective Subjective WHY RISK ANALYSIS ? TYPES OF RISK Systematic risk Can diversify Unsystematic risk Can not diversify [...]... Prices Profitability Solvency Liquidity TYPES OF RISK STRATEGIC RISK Strategic risk relating fundamental changes in the economic and political environment RISK ANALYSIS TOOLS Sensitivity Analysis Scenarios Analysis Monte Carlo Risk Analysis Software: Crystal-Ball, @Risk SENSITIVITY ANALYSIS Sensitivity Analysis is the first step to risk analysis Test the sensitivity of a project's outcome (NPV)...TYPES OF RISK Business risk Financial risk Strategic risk TYPES OF RISK BUSINESS RISK Business risk relating product market of project, includes: Technological changes Materials, Equipments Product design Substitute Marketing Market demand Competitor operations TYPES OF RISK FINANCIAL RISK Financial risk relating possible damages in financial market... at a time Basically "What if" analysis Allows you to test which variables are important as a source of risk A variable is important depending on: Its share of total benefits or costs Likely range of values LIMITATIONS OF SENSITIVITY ANALYSIS Range and probability distribution of variables Sensitivity analysis doesn't focus on the realistic range of values Sensitivity analysis doesn't represent the... Estimate x x x Now Variable Value Time DETERMINISTIC VS SIMULATION ANALYSIS Deterministic Analysis Simulation Analysis $ V2 Price V1 Quantity V1 V2 Revenue (V1 x V2) F1 Materials V3 Salaries Expenses V5 V2 V3 V4 V3 V5 Operating Cost (V3+V4+V5) F2 Fixed Cost V4 V1 V6 Total Costs (F2 + V6) F3 Profit/Loss (F1 - F3) F4 V4 V5 FOUNDATIONS OF RISK ANALYSIS PROBABILITY DISTRIBUTIONS Symmetrical Distributions Relative... Identify and define correlated variables Positive or negative correlation Strength of correlation 5 Simulation model: does a series of analysis for various combinations of parameter values 6 Analysis of results Statistics Distributions SENSITIVITY ANALYSIS $ Risk Variables Price V1 V1 Quantity Revenue (V1 x V2) Materials V2 V2 V3 V3 Salaries V4 V4 Expenses Operating Cost (V3 + V4 +V5) Fixed Cost... arising SCENARIO ANALYSIS Interpretation is easy when results are robust: A Accept project if NPV > 0 even in the worst case B Reject project if NPV < 0 even in the best case C If NPV is sometimes positive, sometimes negative, then results are not conclusive Unfortunately, this would be the most common case MONTE CARLO METHOD OF RISK ANALYSIS A natural extension of sensitivity and scenario analysis Simultaneously... SENSITIVITY ANALYSIS One-at-a-time testing is not realistic because of correlation among variables A) If Quantity (Q) sold increases, costs will increase Profits = Q (P - UC) B) If inflation rate changes, all prices change C) If exchange rate changes, all tradable goods' prices and foreign liabilities change One method of dealing with these combined or correlated effects is scenario analysis SCENARIO ANALYSIS. .. ANALYSIS Scenario analysis recognizes that certain variables are interrelated Thus a small number of variables can be altered in a consistent manner at the same time What is the set of circumstances that are likely to combine to produce different "cases" or "scenarios"? A Worst case / Pessimistic case B Expected case / Best estimate case C Best case / Optimistic case Note: Scenario analysis does not... or Density Function Normal Cumulative Probability Area = 100% Prob X ≤ X0 100% Prob of X 50% X X0 X X0 Triangular 100% Prob of X 50% A B X A B X Uniform 100% Prob of X 50% A B X A B X FOUNDATIONS OF RISK ANALYSIS PROBABILITY DISTRIBUTIONS Non-Standard Flexible Distributions Relative Prob or Density Function Step Rectangular 50% Prob X ≤ X0 45% 45% Prob of X 40% 100% 90% 80% 70% 30% 35% Cumulative Probability... x -0.8 V1 V2 x F1 +0.9 V3 Salaries V4 Expenses Operating Cost (V3+V4+V5) V5 y F2 Fixed Cost V5 V6 Total Costs (F2 + V6) F3 Profit/Loss (F1 - F3) F4 R1 Results R2 R3 R4 RESULTS Deterministic Analysis Simulation Analysis Probability Cumulative Probability 1.0 1.0 Return Return PROBABILITITY DISTRIBUTION OF NPV Cumulative Probability 1.0 8 6 4 2 0 -300000 -200000 Banker 0 100000 Owner 200000 Economy 300000 . SECTION RISK ANALYSIS RISK ANALYSIS Risk introduction Risk analysis tools Risk reducing solutions RISK INTRODUCTION What is risk ? Why risk analysis ? Types of risk RISK WHAT IS RISK? Risk, . Liquidity TYPES OF RISK STRATEGIC RISK Strategic risk relating fundamental changes in the economic and political environment TYPES OF RISK RISK ANALYSIS TOOLS Sensitivity Analysis Scenarios Analysis Monte. RISK Systematic risk Can diversify Unsystematic risk Can not diversify Business risk Financial risk Strategic risk TYPES OF RISK BUSINESS RISK Business risk relating product market of project, includes: