The primary purpose of qualitative risk analytics is to rank, prioritize, and categorize risks for the purpose of determining and assessing if further analysis is justified to clearly articulate and quantify the risk. In this week's assignment you are requested to qualitatively assess the three risks you identified in the week two assignment and assess if they could potentially require further quantitative analysis. If you are not happy with the risks you previously identified I give you the option to change. See Figure 17.4 in the textbook for a good mix of risks for a new product introduction in a competitive environment. You are requested to provide a two page summary of how you would qualitatively assess these risks using Scenario Analytics (Chapter 22) and Industry Fusion Analytics (Chapter 17). I am not expecting you to perform a detailed qualitative risk assessment. In this class we are more concerned with the analytics-based methods and techniques used in risk identification, assessment, and mitigation. I would only request that you summarize what steps you would take or have hypothetically taken to assess the likelihood and impact for each of your three risks using the conceptual techniques described in the chapters. It is important for you to conclude, by risk, if there is a need for further quantifiable analysis. Please make sure that at least one risk must be eligible for further analysis using quantitative analytics techniques which we will study in week four and will be the subject of the future weekly assignment. I would suggest that you also read Chapter 18, Interpretation of Statistical Analysis (these are short chapters) to determine if your chosen risks would be appropriate for quantitative analysis, including predictive modeling.After selecting and qualitatively assessing your three risks you should update and also submit the risk treatment and response plan provided in the week two assignment. If applicable, you should include an explanation as to why one or more of these risks are considered candidates for further quantitative analysis. These documents will evolve as we proceed with the class.

Module 6: Business Plan Assignment 5The next step you will take in developing your Business Plan is to create financial statements (step 13) and the loan or investment proposal (step 14).Business Plan Elements 1. Title Page and Table of Contents 2. The Executive Summary 3. Mission and Vision Statements 4. Company History (If you are purchasing an existing business or are looking to expand an existing business) 5. Business and Industry Profile 6. Business Strategy 7. Describe the venture’s product or service 8. Marketing Strategy 9. Location and Layout 10. Competitor Analysis 11. Description of Management Team 12. Plan of Operation 13. Financial Statements 14. Loan or Investment Proposal 15. Conclusion A. Key assumptionsB. Financial Statements (year 1 by month, years 2 and 3 by quarter) 1 Income statement 2. Balance Sheet 3. Cash Flow Statement C. Break even analysisD. Ratio analysis with comparison to industry standardsLoan or Investment ProposalA. Amount requestedB. Purpose and use of fundsC. Repayment or cash out schedule (exit strategy)D. Timetable for implementing plan and launching business.Personal Financial StatementInclude personal financial statements for each owner and major stockholder, showing assets and liabilities held outside the business and personal net worth. Owners will often have to draw on personal assets to finance the business, and these statements will show what is available. Bankers and investors usually want this information as well.II.Startup Expenses and Capitalization You will have many expenses before you even begin operating your business. It’s important to estimate these expenses accurately and then to plan where you will get sufficient capital. This is a research project, and the more thorough your research efforts, the less chance that you will leave out important expenses or underestimate them.Even with the best of research, however, opening a new business has a way of costing more than you anticipate. There are two ways to make allowances for surprise expenses. The first is to add a little “padding” to each item in the budget. The problem with that approach, however, is that it destroys the accuracy of your carefully wrought plan. The second approach is to add a separate line item, called contingencies, to account for the unforeseeable. This is the approach we recommend.Talk to others who have started similar businesses to get a good idea of how much to allow for contingencies. If you cannot get good information, we recommend a rule of thumb that contingencies should equal at least 20 percent of the total of all other start-up expenses.Explain your research and how you arrived at your forecasts of expenses. Give sources, amounts, and terms of proposed loans. Also explain in detail how much will be contributed by each investor and what percent ownership each will have.III.Financial PlanThe financial plan consists of a 12-month profit and loss projection, a four-year profit and loss projection (optional), a cash-flow projection, a projected balance sheet, and a break-even calculation. Together they constitute a reasonable estimate of your company's financial future. More important, the process of thinking through the financial plan will improve your insight into the inner financial workings of your company.12-Month Profit and Loss ProjectionMany business owners think of the 12-month profit and loss projection as the centerpiece of their plan. This is where you put it all together in numbers and get an idea of what it will take to make a profit and be successful.Your sales projections will come from a sales forecast in which you forecast sales, cost of goods sold, expenses, and profit month-by-month for one year.Profit projections should be accompanied by a narrative explaining the major assumptions used to estimate company income and expenses.Research Notes: Keep careful notes on your research and assumptions, so that you can explain them later if necessary, and also so that you can go back to your sources when it’s time to revise your plan.Four-Year Profit Projection (Optional)The 12-month projection is the heart of your financial plan. This section is for those who want to carry their forecasts beyond the first year.Of course, keep notes of your key assumptions, especially about things that you expect will change dramatically after the first year.Projected Cash FlowIf the profit projection is the heart of your business plan, cash flow is the blood. Businesses fail because they cannot pay their bills. Every part of your business plan is important, but none of it means a thing if you run out of cash.The point of this worksheet is to plan how much you need before startup, for preliminary expenses, operating expenses, and reserves. You should keep updating it and using it afterward. It will enable you to foresee shortages in time to do something about them—perhaps cut expenses, or perhaps negotiate a loan. But foremost, you shouldn’t be taken by surprise.There is no great trick to preparing it: The cash-flow projection is just a forward look at your checking account.For each item, determine when you actually expect to receive cash (for sales) or when you will actually have to write a check (for expense items).You should track essential operating data, which is not necessarily part of cash flow but allows you to track items that have a heavy impact on cash flow, such as sales and inventory purchases.You should also track cash outlays prior to opening in a pre-startup column. You should have already researched those for your startup expenses plan.Your cash flow will show you whether your working capital is adequate. Clearly, if your projected cash balance ever goes negative, you will need more start-up capital. This plan will also predict just when and how much you will need to borrow.Explain your major assumptions, especially those that make the cash flow differ from the Profit and Loss Projection. For example, if you make a sale in month one, when do you actually collect the cash? When you buy inventory or materials, do you pay in advance, upon delivery, or much later? How will this affect cash flow?Are some expenses payable in advance? When?Are there irregular expenses, such as quarterly tax payments, maintenance and repairs, or seasonal inventory buildup, that should be budgeted?Loan payments, equipment purchases, and owner's draws usually do not show on profit and loss statements but definitely do take cash out. Be sure to include them.Opening Day Balance SheetA balance sheet is one of the fundamental financial reports that any business needs for reporting and financial management. A balance sheet shows what items of value are held by the company (assets), and what its debts are (liabilities). When liabilities are subtracted from assets, the remainder is owners’ equity.Use a startup expenses and capitalization spreadsheet as a guide to preparing a balance sheet as of opening day. Then detail how you calculated the account balances on your opening day balance sheet.Optional: Some people want to add a projected balance sheet showing the estimated financial position of the company at the end of the first year. This is especially useful when selling your proposal to investors.Break-Even AnalysisA break-even analysis predicts the sales volume, at a given price, required to recover total costs. In other words, it’s the sales level that is the dividing line between operating at a loss and operating at a profit.Expressed as a formula, break-even is: Breakeven Sales = Fixed Costs 1- Variable Costs (Where fixed costs are expressed in dollars, but variable costs are expressed as a percent of total sales.)Include all assumptions upon which your break-even calculation is based.And of course, depreciation does not appear in the cash flow at all because you never write a check for it.