Question

Can all risks be controlled? Explain why or why not providing three reasons to support your position. has to be 250 minimum

Answer 1

Risk means deviations from Expectations. Risk is measured in terms of variability of returns. While the concept of ‘Expected return’ reflects the benefits an investor anticipates from an investment, ‘Required return’ reflects the return an investor demands for assuming risk. Therefore, when expected return matches required return in all scenarios, the risk is considered low.

Having understood what is risk, it is also sure that there are some part of uncertainties also attached to it because the entire concept is based on ‘Anticipation’ and ‘Forecast’ which may have a chances of error or non-performance. Hence all risks cannot be controlled. Few could be mitigated completely while few could be controlled to some extent and the rest other, are out-of-control risks.

There could be several reasons to support this. First, that Organizations may control the risks of Operations in terms of the Technicalities of the Projects, Costs involved in the operations, the marketing Framework, etc. However, the Organizations may fail to control certain risks that could be either man-made or natural. In such circumstances, not all risks could be controlled. The Market mechanism of Demand and Supply plays an important role to make a Producer understand whether its products are indeed marketable in nature or not. When the Demand or the Supply curve shifts, risks occur. Secondly, a lot is also depended upon the infrastructure that facilitates a certain operation. If the Government stops, for e.g., all the communication lines related to internet, then there could be a major setback in the IT industry. If the roads accessibility to the country-side reduces, then the goods cannot reach to the Target audience of the rural masses. In this way, infrastructural uncertainties are the risks that cannot be always controlled. Likewise, Force Majeure, i.e. the natural calamities, the existing Political and social scenario and the tensions thereupon, the fluctuations in Foreign exchanges, etc. are also few of the other risks that are absolutely out of control and hence it could be concluded that not all risks could be controlled.