Definitions: Top-10 List of Risk Categories
July 28, 2006
Some risk definitions, and a Top-10 List of “Risk Categories”, thinking of risk as a spectrum from political to economic to business/finance…
*The possibility of suffering harm or loss; danger.*A factor, thing, element, or course involving uncertain danger; a hazard.*The danger or probability of loss to an insurer; the amount that an insurance company stands to lose.*The variability of returns from an investment; the chance of nonpayment of a debt.
1. Risk = If outcomes will occur with known or estimable probability the decision-maker faces a risk; certainty is a special case of risk in which this probability is equal to zero or one.
2. At Risk = Exposed to the possibility of loss.
Top-10 List of “Risk” Categories
1. Political/Country: The potential volatility of foreign stocks, or the potential default of foreign government bonds, due to political and/or financial events in the given country.
2. Legislative: The risk that a new law or a change in an existing law could have a significant impact on an investment.
3. Regulatory: The risk associated with the potential for laws related to a given industry, country, or type of security to change and impact relevant investments.
4. Business: Risk associated with the unique circumstances of a particular company, as they might affect the price of that company’s securities.
5. Economic: In financing a project, the risk that the project’s output will not generate sufficient revenues to cover operating costs and to repay debt obligations.
6. Market: Risk which is common to an entire class of assets or liabilities; the value of investments may decline over a given time period simply because of economic changes or other events that impact large portions of the market.
7. Currency/Exchange Rate: The risk that a business’ operations or an investment’s value will be affected by changes in exchange rates.
8. Credit/Default: The possibility that a bond issuer will default, by failing to repay principal and interest in a timely manner.
9. Event: The likelihood that the rating of a bond will drop due to an event, such as the taking on of additional debt or a recapitalization by a company.
10. Systemic: Risk that affects an entire financial market or system, and not just specific participants.
11. Operation: Risk associated with the potential for systems failure in a given market.
CENSA Silicon Valley Event: “National Security, Market Failures and Sustainable Businesses”
July 11, 2006
CENSA Evening Program, Silicon Valley, July 27, 6:00PM
“National Security, Market Failures and Sustainable Businesses”
Speakers
1. Paul Frankel, Co-Founder and Managing Director, Ecosa Capital (speaker)
2. Sameet Mehta, CENSA Member and Sr. Manager, Business Development & Venture Capital, Cisco Systems (presider)
Date/Time: Thursday, July 27; 6:00PM Cocktails/Appetizers; 6:30PM Program; 7:30PM Adjourn.
Venue: MacArthur Park, 27 University Ave, (El Camino Real), Palo Alto, tel: 650-321-9990
Topics: (1) What is “National Security”?; (2) What are market failures and how do they relate to national security?; (3) How do market failures present opportunities for sustainable businesses?
Speaker: Paul Frankel is co-founder and Managing Director of Ecosa Capital, a debt fund that provides expansion capital to sustainable, emerging and growth-stage firms. Paul teaches environmental entrepreneurship at Stanford University and social entrepreneurship at UC Berkeley’s Haas School of Business. He is a co-founder and the former vice-chairman of the Wi-Fi Alliance. Paul earned a MBA from the American Graduate School of International Management (Thunderbird), and worked for U.S. Senator Dennis DeConcini and the Arizona state legislature.
Presider: CENSA Member Sameet Mehta is a Senior Manager in Business Development & Venture Capital at Cisco Systems. He received his BS in Electrical Engineering at Princeton University, and MBA from Stanford University.
Format: The evening will begin with a brief presentation, then the floor will be opened for a question and answer session. All remarks will be held off-the-record.
How to Register: To pre-register, email CENSA Strategy Associate Ben Oppenheim at: ben.oppenheim /at/ censa.net. To promote networking and a lively discussion, the event will be limited to 20 places. RSVP by July 25. Registration/Drinks/Appetizers Fee of $20 will be collected at the door.
Cool Commercials on Risk
July 10, 2006
A couple of very interesting risk-related commercials caught my eye over the weekend:
Definitions:
*risk taker = someone who risks loss or injury in the hope of gain or excitement.
*adventurer/venturer = a person who enjoys taking risks.
1. Ford Motor Company, “Bold Moves” campaign; Tagline = “bold takes initiative” (see Dry Cleaning commercial)
2. Travelers “In-Synch” campaign: Tagline = “life is in constant flux, so your risks are continually evolving.” (see big flight commercial; tagline: he can fly, but he can’t swim).
3. TEAM ABN AMRO champions its “making more possible” campaign (see Introduction to the Volvo Ocean Race).
The SF Chapter of CENSA (Council for Emerging National Security Affairs), which I direct, was launched in April. We hosted an event on “Risk and Reward in the Global Equity Markets” with Mike McDonnell, founder and research director of Berkeley Global Advisory, and Rebecca Buckman, staff reporter for the Wall Street Journal as moderator.
Mike discussed how geopolitical, security, regulatory and social developments impact global equity markets, and how investors should gauge global equity markets with respect to valuation, likely economic performance, volatility, current sentiment and event risk.
CENSA’s SF will hold its next event in late July, so stay tuned for more details. The aim of the chapter is to discuss the impact of emerging national security and geo-political issues on the Bay Area’s finance/ecommerce, information technology, private equity/venture capital, biotechnology and other innovation sectors.
For background, CENSA was esblished in 1999 as a non-partisan, non-profit 501(c)(3) research organization established in 1999 to contribute to the ongoing dialogue shaping national security policy through formal discussions, graduate level teaching programs, virtual collaboration, frequent publications, and research programs. Its members include mid-career public sector foreign policy specialists, military officers, private sector professionals, and academics.
About Me/Contact
July 2, 2006
Current: business development at Illumant, LLC, a Mountain View, CA-based enterprise advisory services firm that advises Fortune 500 and other public and pre-public companies (focusing on business process engineering, risk management, compliance and information technology).
Previously, William Robison served as a Vice President at The Bay Area Council, a CEO association that promotes regional and global economic prosperity. William developed the Council’s “Bay Area 3.0: Global Competitiveness Initiative“; directed projects on: Bay Area-China commerial and venture capital ties (focusing on IT; green-tech and bio-tech) and Information & Communication Technologies; and open the Council’s Silicon Valley representative office.
William also worked as a Director at Eurasia Group, a New York-based independent research and consulting firm specializing in global political risk analysis for financial institutions, multinational corporations and governments.
William Robison volunteers a Board Member and Director of the San Francisco Bay Area Chapter of the Council for Emerging National Security Affairs (CENSA). He is also a member of the State Outreach Committee of the National Security Network.
William holds an M.Sc in European and International Relations from Edinburgh University (Rotary Ambassadorial Scholar), an MA in Government from Essex University (Chevening Scholar), and a BA in American Studies from the University of California, Davis.
William is a member of the St. Francis Yacht Club, and sails with the SF J-105 Fleet. He is also a member of the Rotary Club of San Francisco, and the Pacific Council on International Policy.
Acknowledgements
July 2, 2006
Many thanks to Rod Boothby, author of the blog Innovation Creators, who provided both the inspiration and some technical know-how behind developing my own blog. To share Rob’s wisdom, see his entry on How to start a good business blog.
About Risk Ventures
July 2, 2006
Risk Ventures will explore ideas around issues of risk, innovation and globalization.
Risk Ventures 