Question

1. Nature of risk is “inability to predict accurately”. How you will prove this definition in context of COVID19?
2. Define nature of risk. How can risk be evaluated on the economic scale?

Answer 1

We are living in a world where technology is very advanced and we are in a situation to get solutions to almost all the problems. COVID19 has changed all these, Even though we have AI and Machine learning technologies we are unable to get rid of this situation and we failed to predict this situation in the initial stages. We did not even get proper insights for Vaccine. This made us realize that we still have many situations that require our attention and there is always an unpredicted risk.

We don't even have an endpoint to this situation at the moment. There are many trails going on for the vaccine development but it still takes a lot of time to get them completed. We also have many challenges on its way.

There are many businesses that had a large impact on their operations, especially when it comes to the industries which are operating on a daily basis and essential supplies. Goods that are produced by the companies for immediate consumption which includes dairy products and eatables are spoiled in large numbers and these industries have to suffer a huge loss. We know that daily essentials are almost consumed and these industries have less risk of sales. This is because of the demand they have and the fact that these goods are consumed on a daily basis and have high ROI. Unfortunately due to the lockdown situation we were not able to sell the products and have caused a lot of loss in this sector. Even though many people were aware that there could be spread of this disease however no one was able to predict the actual loss on the business end. This is really worst case in which all the forecasts and predictions did not work. Many best minds developed various strategies that could help our businesses but they did not last enough. Everything went out of control at the end and almost everyone went into losses.

b. Risk: it is defined as the action or activity which leads to loss of business. Risk can be divided into two types based on the end result. They are Positive Risk and Negative Risk.

Positive Risk: This type of risk is usually considered as the chance to change the way of working, In fact, this could be a type of warning to make corrections to our projects. For Example, Pre Assessing this type of risk can be beneficial to our operations. Predictions during critical times and forecasting the distribution during critical times can help us to develop certain things that lead to the profit.

Negative Risk: This type of risk indicates that the project is about to fail and we need to take necessary action to prevent this from further happening. Many types of loses can be predicted that may be due to transport, production and other distribution factors. In this kind of situations we dont get enough time or alternatives to select and act. This leads to product failure and has very low ROI.