S Chopra
-Center for Entrepreneur Development
India
Important trends
Economic uncertainty
prospects for GDP growth for 2008 and
Liquidity management 2009 are 7.9% and 6.9%, respectively
• Borrowing limit from foreign branches from 25% to
Inflation • Consumer Price(CRR)
Index-6.5%
(CPI) climbed to 9%
• Cash reserve ratio
Currency • Commodity
• Injection prices
of 1 trillion are slowing
rupees down
into the market
Depreciated by 24% in the last 12 months
• this helps to ease inflation pressures
Labour market
Real estate market 63.3% population is between the ages of 15 and
30% or 340 million people, is below the age of 15
•Real estate demand, supported by middle class
•Depressed by increasing interest rates so far
Foreign Trade policy 2009-14
Objective
TO double our percentage share of Global
merchandise share.
Use trade expansion as an effective instrument
of economic growth and employment
generation
Short term objective
To arrest and reverse the declining trend of
exports and provide additional support.
Export target 15% till 2011 & There after 25%
Foreign Trade policy 2009-14
Strategies
Fiscal incentives
institutional changes
procedural rationalization
Diversification of exports Market
Improvement in infrastructure related to exports
Bringing down transaction cost
Refund of all indirect taxes
Special thrust to employment intensive sector viz
Textile , leather , Handicrafts.
Directorate of trade remedy measures
Technology upgradation scheme
•EPCG zero duty scheme
•Town of Export excellence
•TUFS(technology upgradation fund scheme) for textile
Focus market Scheme
•Incentive raised from 1.25% to 3 %
•Large no of new products have been included
Focus product scheme
•26 new markets added
•FMS incentive raised from 2.5 to 3%
•Simplification of application
Market linked Focus product scheme
MDA/MAI
Higher allocation is being provided.
Inspection Presentation
Export of Docs to the
order Buyer
Culminates into
Shipment Importer’s
(Buyer’s) Bank
Assembling
Documents
Exporter’s (seller’s)
Negotiation Invoice , packing Bank
Submit
between Buyer and list , transport Documents
seller document viz.
Buyer
Makes
payment
Importer’s
(Buyer’s) Bank
Collects the
Exporter’s payment remit
(seller’s) Bank it to
3. Lodgment
7. Payment
of shipping
5a. Payment 5b. Shipping documents documents
4. Shipping documents
6. Payment Remitting
Presenting Bank
Bank
Risk is the possibility of an unfortunate
occurrence.
Risk is the possibility of loss.
Risk is a combination of hazards.
Risk is uncertainty of loss.
Risk is the tendency that actual results may
differ from predicted results.
Static Risks Dynamic Risks
Non-financial Risk
This type of risks may be during the selection of career, the choice of marriage partner,
etc. These may or may not have any financial implications and are difficult to measure.
Pure Risk
Pure risk are those which have only two outcomes, i.e., loss or no loss. Whereas
speculative risks involves the situation where is a possibility of gain .e.g. investment in
shares.
Fundamental Risks
Fundamental risks are those risks which are there because of the problems relating to the
major factors such as exchange of economic, social, cultural, and political.
Business Risk
It is concerned with possible reduction in business value from
any source. Unexpected changes in future net changes in future net
cash flows are major source of fluctuations in business value.
(i) Price Risk : Price risk arises due to magnitude of cash flow due to
changes in out put and input prices. Output price risk due to the risk of
changes in the prices which may change due to the change in the
demand for the goods
(ii) Credit Risk : Credit risk arises because of the delay or failure in
making promised payments by the customers and other parties. Credit
risk is high in case of financial institutions, commercials banks, etc.
Personal Risk
Personal risks are the risks faced by individuals and families.
There are number of personal risks like earning risk, medical expense
risk, liability risks, physical assets risk, financial asset risk and risk of
longevity.
Payment Risk
Credit Risk
Transport related Risk
Exchange fluctuation Risk
Political Risk
Investment Risk
Product liability Risk
Legal Risk
Cultural Risk
Riskmanagement is an integrated process of delineating
specific areas of risk, developing a comprehensive plan,
integrating the plan and conducting ongoing evaluation.
5. Principle of evaluation
This principle states that each available alternative has to be evaluated properly from all
the angles, i.e. financial, market etc.
3. Cost of financing
Cost of loss financing covers the cost of self insurance, the loading in insurance
premiums, and the transaction cost of arranging, negotiating and arranging, negotiating
and enforcing hedging arrangements and other contractual risk transfers.
4. Cost of risk internal risk reduction methods
These are various risk management methods available like insurance hedging and other
contractual risk transfers which reduce the uncertainty.
Uses of RMIS
1. For reporting
2. For claim adjustment process review
3. For examination about reasons of accidents.
Problems of RMIS
Incompatibility of software
Poor system documentation
Impurity of data
Lacks of service
Obsolesce
Inflexibility of system
Problems of proprietary
1. Loss Control
Loss control are those which reduce expected cost of losses by reducing the
frequency of losses and/or the severity losses that occur.
2. Loss financing
Loss financing are the methods used to funds to pay for or offset losses that
occur. It includes:
a. Retention
b. Insurance
c. Hedging
d. Other contractual risks transfers.
Losses of liability
Liability losses relate mainly to legal liability losses occur due to relationships with
many parties like suppliers, customers, employees, costs associated with liability
suits can impose substantial losses on firms.
(2) The identification of the operative cause or perils, coupled to the likely result.
Thank You
By: Dr. M P Singh
V.S Chopra