Question

You are the Chief Risk Officer for a company and you’ve been tasked with identifying the areas where your company is exposed to systematic and unsystematic risks.

Respond to the following in a minimum of 175 words:

• Based on the information you learned this week, what approach would you take in explaining how systematic and unsystematic risks affect risk planning?
• Describe your approach.
• Name 3 or more systematic or unsystematic risks your company might face.
• Think of some implications if your company decides not to be proactive and plan for these risks

Answer 1

Systematic risk are risk related to the market and they cannot be eliminated whereas unsystematic risk are risk related to the performance of the company and the industry and they can be mitigated and they will be affecting the Risk planning.

Systematic risk is related to performance of a company in respect to macro factors like inflation and interest rates and political Shift, so these are beyond the control of the management of the company and they will be trying to proactively estimate these events and prepare various kinds of plans and they will be appropriately reacting to them but market risk cannot be managed in advance

Unsystematic risk are type of Pharma specific risk or industry specific risk which are mostly due to change in the demand and supply patterns or litigation related to the company or other aspects which can be easily managed and they are easily identifiable in advance also.

Three systematic risk my company will be facing is change in inflation along with change in interest rates and change its rules and regulation.

Three unsystematic risk my company will be facing is change in the industry demand patterns and litigation against company and higher employee turnover of the company

If company does not react proactively to these risk then it can lead to profitability of the company getting adversely affected and impacted.