• Unit 7: Risk Management "The first step in the risk management process is to acknowledge the reality of risk. Denial is a common tactic that substitutes deliberate ignorance for thoughtful planning." Charles Tremper This Unit will examine the various risks associated with running a business; the kinds of risks to consider and how these can be identified. It will address the practical issues necessary to forecast these items at the appropriate level of detail, as part of the planning process, and how they can be managed. On completion of this unit you will be able to: o Identify common risks associated with planning business activities o Understand and apply some of the common techniques used in business to quantify risks o Understand and apply some of the common techniques used in business to manage risks • Unit 7 Reading • Many businesses need to justify their existence in terms of producing a profit. The reading in this unit looks at ways of modelling risk and also highlighting where a business "breaks even" and what determines this. We'll particularly look at "sensitivity analysis" in simulating differing scenarios. • Required Reading: • For this unit you should read the following from Stutely, R. (2012) The Definitive Business Plan. 3rd Ed. Harlow: Pearson Education. • Unit 8: Business Decision Analysis "Planning is bringing the future into the present so that you can do something about it now." Alan Lakein This Unit will examine some of the tools of financial data analysis. In particular we will be examining how the costs and revenues of the business are affected by its level of activity and how this knowledge can be used to plan for financial and capital requirements. On completion of this unit you will be able to: o Describe how the concepts of fixed and variable costs are used in breakeven analysis o Identify the limiting assumptions of breakeven analysis o Draw a breakeven chart and compute the breakeven point and margin of safety o Use the analysis to examine different business scenarios as an aid to planning operations Unit 7 and 8 Journal Entry By the end of this unit you need to reflect on the topics you have studied in the past two weeks and how you will be able to apply it to your personal and/or professional life. Write a short (approx 300-500 words) Journal Entry to explain: • The key things you learned during the last two weeks • How can they relate to the workplace? • How they can aid your personal and professional development? • Remember to be specific and give examples. Your Journal Entry should be submitted to the Journal Tool. Your tutor will then provide brief feedback on your submission. At the end of this module you will be required to submit a summary entry in Unit 9, based on all the work you have done in the whole module. In total, your Journal Entries carry 20% of the marks for the module as a whole. To access the Journal Tool and post your reflection: • Click the Journal Tool button in the Module Navigation block • Give your Journal Entry a relevant Unit title • Your tutor will then post feedback through the Journal Tool