1. Risk and Uncertainty © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 1

2. Definitions Risk and Uncertainty Risk – Measurable Uncertainty – Information missing – Rumsfeld know knowns...... © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 2

3. Uncertainty/information availability © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 3

4. Risk and reward 2x2 matrix Information incompleteness Contract incompleteness – Provisions to cope with uncertainty Company procedures to anticipate risk/return – Commercial management Client protection – Design teams © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 4

5. Influencing factors © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 5

6. Corporate governance Voluntary self regulation Statutory requirements – UK corporate governance code Opennes Integrity Accountability – Companies Act – Turnbull report Reporting on risk exposure © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 6

7. Capital Working capital – Definition – Sources Loan Equity – Where reported Balance sheet- current assets © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 7

8. Flexibility and capital Sources – Loans – Credit – PAYE Banks vs Shareholders – Capital gearing – Working capital ratios Current/acid Liquidity © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 8

9. Profitability Definition Income gearing Work in progress – Measurement of profit – Establishment of value – Establishment of cost Payment has no connection with value © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 9

10. Insolvency Risks and their management Limited liability Instability – Coping strategies – Indicators – Links to industry demand and market © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 10

11. Credit control Definition Debtor days Creditor days Management of income/expenditure © 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd. 11