 Bismillahirrahmanirrahim next in our learning we should learn how to categorize risk when we say categorization it's not just one way of categorizing because it's a big universe of risks and items which are relevant and so we can categorize them in multiple ways and when we are reclassifying or looking at in a different perspective same risks maybe could look at in a different parameter so we'll be learning how to categorize and how apply them for better learning so when we have heard the word risk we are always fearing it and considering it something negative it's not the case risk are both ways they could be negative threats definitely risks we are there but they could be again the same time positive as well which can be considered as our opportunities for us to exploit and gain out of it so when we have negative risks our structure or policy is to avoid them mitigate them transfer them depending on what's their nature and even in some cases we have to accept few risks so these are multiple ways depending on what type is and how it can be further looked at but when we have some positive risks so these are more like an opportunities for us so we can learn from it we can use them we can exploit them to make our gain so we exploit we share we enhance and acceptance at the same time these are two ways so we have to clear our mind risk is not always bad risk is about volatility and risk can gain lot of things to us and another way of classifying risk is through this way total risk total risk as I its name says in different form total risk will be considered in different ways here we are talking about systematic risk and unsystematic risk we will be studying them with graphs and figures later but for basic understanding systematic risk relate to risk with respect to financial market so how financial market are saying or we are associated with that market goes up what impact is normally expected to a particular share unsystematic is a specific risk or unique risk of a business suppose you are buying a textile company share to anything happening exclusively to that textile is unsystematic risk anything happening to market that affect the company share that is systematic risk similarly we have financial risk as well as non-financial risk so multiple ways to classify and categorize these risk then we already discuss we already talked that exchange risk is a very important risk we need to look at so we are now further dividing it to understand and learn it in a more effective way to exchange risk can be further related and to translation risk economic risk and transaction risk no need to worry we will just discuss it translation risk is suppose you have entered in a foreign currency position you have bought something and you have to pay or you have you are selling something and you are going to receive money in future so during this time your year end comes in and once as you for example you sold goods for ten thousand dollars and at the year end that ten thousand is still receivable so in financial as you know in financial statement we have to report all our assets and liabilities so amount receivable in foreign currency is in dollars but we are making our accounts in rupees so what we have to do that day we convert our amount receivable and show our financial statements now the day the transaction was done and the balance sheet data it could be a major change so that's referred to as translation risk then is economic risk this is more broader parameter this is what is happening to currency normally currency depreciate or appreciate in the future impacts other economic parameters this is a global level or a major thing and effect in our long run transaction risk is the specific risk dealing in the foreign currency now the actual procedure that will be utilized in the transaction risk financial again falls in this particular category another way of classifying risk is with respect to attitude of the investors risk averse risk thinking and risk neutral this is more related to human nature but it can be considered from the company's perspective as well risk averse are those who are very cautious they don't want to take any kind of risk so they want minimum level of risk or if they take a risk they want a very huge return on that so normally people at a senior age normally fall in this category or anyone who is very much cautious so suppose they have an option of investing in fixed income and equity they'll prefer to go in fixed income that too in a very safe side even government trees risk seeker are also referred to as risk lovers they prefer to take risk and earn high return so if they are given option of investing in bonds or stocks they'll go for stocks because they think the potential is high so for little premium they will be willing to take risk normally these are investors with experience at the same time organization with good funding and good background they are willing to take higher risk to earn a higher return because we have always spoke about this higher the risk higher the return so these are those people risk neutral people are a bit indifferent with respect to if they have given option of fixed income as well as equities if the expected return is same so they'll be neutral to go in either of that direction so this is the attitude of mainly the human factors that is there but it can be applied in organization we can say nishad group companies are more risk lovers they prefer to take new venture they prefer to take risky part recently they have they are doing textile very good they're doing cement very good now they are moving into automobile so that means they are risk lovers for a few examples currency we have already discussed change in raw material cost is also a risk suppose you are making a production and you are committing yourself with a vendor that we will provide you this much quantity the risk is there that the items you are going to buy for making your production the price of those goes up normally we have a profit question or some question for that but if it's a major change then it could even make a transaction into loss because you log that suppose $10 rate and your expected cost was $8 profit but when actual materialized come inflation triggered highly and you end up paying 11 rupee cost for a 10 rupee sale process that can be a loss structure change in law order situation law and order situation refers to a geographical boundary or a particular region suppose add some war thread coming in or some bad news about a company or some anything which is related to economy or a larger jurisdiction that will be referred to as law supposedly law was positive for one industry but recently they have increased tariff or taxes that can impact and lastly is the change in investor behavior investor behavior is how they are dealing it is also discussed about risk seeker and risk lover and here it is also about what investor is willing in Pakistan we have seen investors sometimes flow towards real estate and sometimes they flow towards talk market so they are moving in a pattern so this is the risk that could impact your business or your investments thank you