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Business Exposed To Risks

Every business is exposed to 3 types of risks.

1. Market Risk

2. Credit Risk

3. Operational Risk

 

Market Risk: Market risk is referred to as decline in value of investment over a given period of time due to economic slowdown, policy changes or any other event that may impact the market.

 

Credit Risk: Credit risk is basically an investment risk of lose incurred from borrower’s default.

 

Operational Risk: Operational risk arises from failed or inadequate internal process, people or any other external event.

 

If we take latest example of Kingfisher Airlines, I would consider it exposed to primarily operational risk and secondary market risk.

 

Primarily Operational Risk is because since it’s inception in 2006 it has never made any profit and in-spite of that extra services have been provided continuously, without strengthen it’s presence in domestic market and gaining experience in aviation industry, it has been opened for international routes and etc.

 

Secondary Market Risk because of rise in fuel prices and taxes, however these are valid for all aviation  industry but other companies are still making profit. So I have consider these elements as secondary.

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  1. infant_dba
    April 13th, 2012 at 16:34 | #1

    As i was expecting KFA grown by 3-4 Rs… =~ 20 Rs

  2. infant_dba
    April 9th, 2012 at 23:34 | #2

    Yeah Sure….
    As per my knowledge … there are two kinda factor for any product that affecting performance of product as our exple is KFA
    1.External ( other avaiation company,govt policy,fuel price,railyay, ship, bus, bicycle ;) etc)
    2.Internal ( with in comany, emp salary,crediors etc).

    These factors leads to risk as u told.
    KFA is surrounded by both factors –

    External as well as internal ( while it look like everything is fabricated as per external factor)
    Banks are not lending loans. 29K is borrowed. Authority body is craeting probs ( looks like Maalya can manage all these things, he keep his poket tight as much as he can)

    While these external risk to leads internal risk,Salary, third party booking,delay/cancelled flight etc.

    Malya make dis issue as his pride, and hopefully thing should be fine passing by time.

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