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    Business risk, financial risk, and portfolio risk

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    Scenario:

    The Hammons, Tim (35), Anna (32), children Mary (13) and Mark (11), consider themselves among the typical up and rising middle class. Overall, by today's standards, they have achieved a fair level of success: they are buying a home, have a modest savings account, and hold some investments. After serving 4 years in the military as an intelligence agent, Tim currently holds the position of plant manager at a local firm. Anna, a stay-at-home mom, is considering starting a private duty nursing service for the terminally ill. Based on her previous experience as a registered nurse, she fully understands the demand for private nursing care and the relatively low level of supply.

    Over the years, the Hammons have had lengthy discussions about their future aspirations and dreams for themselves and their children. Future plans include having sufficient funds to help the children with their educational pursuits, buying a family vacation home on the beach in South Carolina, and retiring when Tim reaches the age of 55.

    When Tim and Anna reach retirement, they aspire to continue enjoying their current standard of living, travel internationally, and spend ample time with family members located throughout the United States and Canada. Tim and Anna dream of living comfortably, but they also desire to leave a well-endowed estate for their children.

    The Hammons appreciate the importance of having an adequate financial plan that incorporates their desires, so they have contacted you, a licensed financial planner, to help guide them through the process. Based on their objectives, you have proved the following timetable for the Hammons:

    Short-term

    Review, estimate, and purchase insurance coverage for both Tim and Anna.
    Develop and implement an investment plan to achieve the family's objectives.
    Develop a strategic plan for Anna's private duty nursing service.
    Long-term

    Implement Anna's private duty nursing service.
    Purchase a beach home in South Carolina.

    Problem:
    After having read some information about the various risks that firms encounter, the Hammons have asked you to investigate and analyze specific risks they may encounter as owners of a private duty nursing service. Your investigation and analysis should be specific and focused on three areas: business risk, financial risk, and portfolio risk.

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    https://brainmass.com/business/finance/business-risk-financial-risk-and-portfolio-risk-87521

    Solution Preview

    Problem:
    After having read some information about the various risks that firms encounter, the Hammons have asked you to investigate and analyze specific risks they may encounter as owners of a private duty nursing service. Your investigation and analysis should be specific and focused on three areas: business risk, financial risk, and portfolio risk.
    Risk is an aspect of any organization's operation. When it is recognized, understood, and managed, risk can set the stage for sustainable growth. Companies need identify risk within their operations and plan a systematic approach to managing it.
    According to www.anao.gov.au:
    "Effective risk management contributes to better decision-making because it develops a deeper insight into risks and their potential impact. It is a structured and disciplined approach: it aligns strategy, processes, people, technology, and knowledge with the purpose of evaluating and managing the uncertainties the enterprise faces as it creates value."
    For our current purposes, we can classify the risk of a firm into two ...

    Solution Summary

    This explains the business risk, financial risk, and portfolio risk

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