Solution

Risk and its management briefly defined: In most simplistic terms, when the actual outcome varies from the expected outcome, it is called risk. For example, if you buy shares of a company @ AED 50 per share. There is a risk of this price being different than AED 50 when you wish to sell it. It could go to AED 55 or drop to AED 45 at the time of sale. This is risk. The idea of risk management is to minimize the negative impact of downside and capitalize upon the upside potential.

Five different types of risk:

Every organization operates in a different environment with varying degree of external environment effecting its core operations. For example, foreign exchange risk is more relevant to an internal business than it is to a local one. Similarly, the company I work for, ADNOC refinery, the environment risk is more relevant than it is to a trading business. Five different types of risks and the consequences thereof are below. Notice this is not an exhaustive list but makes strong link to the organization I work for:

Reputational risk: Reputation risk,

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