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Chapter 19

MANAGING RISKSMANAGING RISKS

19-1 Assessing Business Risks

19-2 Identifying Marketing Risks

19-3 Managing Marketing Risks

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Focus Questions:What service is being

offered by Zurich in this advertisement?

How do insurance providers help businesses manage risk?

As this ad indicates, Zurich can help businesses identify hidden risks. Why are insurance companies better at finding hidden risks?

©Z

UR

ICH

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ASSESSINGBUSINESS RISKS

GOALSGOALSExplain why businesses take risks and

how they are classified.Describe the four ways available for

businesses to deal with risks.

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The Nature of Business Risk

The possibility that a loss can occur as the result of a decision or activity is known as risk.

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Classification of Risk

Source of the riskResult of the riskControl of the riskInsurability of the risk

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Source of the Risk

Natural riskHuman riskEconomic risk

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Result of the Risk

Pure riskSpeculative risk

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Control of the Risk

Controllable riskUncontrollable risk

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Insurability of the Risk

Insurable riskNoninsurable risk

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Dealing with Risk

Management Strategy Result

Avoid the risk Business chooses a different strategy that doesn’t involve that risk

Transfer the risk Business lets another business complete the risky activity

Insure the risk Business pays insurer to reimburse the amount of losses from the risk

Assume the risk Business proceeds with the decisions made and takes full responsibility for the results

© 2009 South-Western, Cengage LearningMARKETINGMARKETINGChapter 19

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IDENTIFYINGMARKETING RISKS

GOALSGOALSExplain how changes in the economic

and competitive environment create marketing risks.

Describe marketing risks associated with each of the marketing mix elements.

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The Risk of Change

Risk managementEconomyLaws and regulationsCompetitionCustomer needs

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Risks to Elements of the Marketing Mix

ProductDistributionPricePromotion

© 2009 South-Western, Cengage LearningMARKETINGMARKETINGChapter 19

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MANAGINGMARKETING RISKS

GOALSGOALSExplain how the various sections of the

marketing plan should be used to avoid risks and limit the business’s exposure to risks.

Describe other ways to eliminate or control marketing-related risks.

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Handling Risks withMarketing Planning

Three-Step ApproachAnalysisStrategyAction

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Other Ways of Dealing with Marketing Risk

Security and safetyInsurance

Surety bondProduct liability insuranceProfessional liability insurance

Risk reduction