ENFUCO_MOD6

• Risk


  The uncertainty about loss or injury
• Various kinds of risks confronted by the small business

  • Fire
  • Burglary
  • Accidents
  • Infidelity of employees
  • Damage to other people's property
• Speculative risk


  Involves a chance of either profit or loss, e.g. engaging in entrepreneurship
• Pure risk


  Involves a threat of loss with no chance of profit, e.g. risk of fire, robbery, injuries/accidents, calamities
• Risk management


  An organized strategy for protecting and conserving assets and people, helps reduce financial losses caused by destructive or damaging events
• Risk management


  1. Identify the pure risks confronting the firm

  2. Estimate the probability of financial loss in various situations

  3. Decide on the most economical way to handle the possible losses
• Methods of dealing with risk

  • Avoiding the risk
  • Reducing the risk
  • Assuming the risk
  • Shifting the risk
• Avoiding the risk


  Eliminating the source of risk
• Risk reduction


  Steps undertaken to lessen the likelihood of a loss
• Risk assumption


  The company assumes the risk and gets ready for whatever loss comes from the risks covered
• Shifting risks to an insurance company


  The firm, for a fee, agrees to pay another firm a sum of money stated in a written contract when a loss occurs
• Premium


  The insured party's fee to the insurance company for coverage against losses
• Types of insurance coverage

  • Life
  • Non-life
• Life insurance policies


  Cover risks of losing one's life, disability, or sickness
• Non-life policies


  • Fire and allied risks
  • Motor car
  • Marine
  • Surety
  • General liability
  • Miscellaneous risks
• Types of life insurance policies

  • Life policies
  • Accident policies
  • Health policies
• Types of life insurance according to coverage

  • Term life insurance
  • Whole life insurance
  • Endowment life insurance
  • Other types (group life/credit life)
• Business uses of life insurance

  • As a fringe benefit for employees
  • To protect the firm against financial problems caused by the loss of a key person
  • To aid in transferring ownership rights
• Other types of insurance for a small business

  • Fire insurance
  • Motor car insurance
  • Marine insurance
  • General liability insurance
  • Bonds
  • Miscellaneous insurance policies
• Enacted by the Philippine Congress in 1991 as Republic Act 6977, and amended by Republic Act 8289 in 1997, and further amended by Republic Act 9501 in 2008, the law is geared towards the development of the Filipino entrepreneurial spirit by providing a business environment conducive for MSMEs
• Created under said Magna Carta to help promote and develop and MSMEs is the Small and Medium Enterprise Development (SMED) Council that establishes and supervises Negosyo Centers together with DTI as one of the banner programs of the administration
• Micro, small and medium enterprises (MSMEs) have a very important role in developing the Philippine economy. They help reduce poverty by creating jobs for the country's growing labor force. They serve as valuable partners to large enterprises as suppliers and providers of support services
• Declaration of Policy


  Recognizing that MSMEs have the potential for more employment generation and economic growth and therefore can help provide a self-sufficient industrial foundation for the country. It is hereby declared the policy of the State to promote, support, strengthen and encourage the growth and development of MSMEs in all productive sectors of the economy particularly rural/ agri-based enterprises
• MSME definitions


  • Micro: not more than P3,000,000
  • Small: P3,000,001 - 15,000,000
  • Medium: P15,000,001 - P100,000,000
• The second week of July of every year shall be declared as the "Micro, Small, and Medium Enterprise Development Week". the MSMED Council, the Department of Trade and Industry, and the SB Corporation shall be jointly responsible in organizing activities for the event
• Cooperative


  An autonomous and duly registered association of persons, with a common bond of interest, who have voluntarily joined together to achieve their social, economic, and cultural needs and aspirations by making equitable contributions to the capital required, patronizing their products and services and accepting a fair share of the risks and benefits of the undertaking in accordance with universally accepted cooperative principles
• The Rochdale Society of Equitable Pioneers, an early consumer co-operative, formed the basis for the modern co-operative movement


  1844
• Basic Cooperative Principles


  • Voluntary and Open Membership
  • Democratize Member Control
  • Member Economic Participation
  • Autonomy and Independence
  • Education, Training and Information
  • Cooperation Among Cooperatives
  • Concern for Community
• Cooperative Practices


  • Yearly reports to Cooperative Development Authority (CDA)
  • Regular monitoring of DOSRI (Directors, Officers, Staff and Related Interests)
  • Use of approved Standard Chart of Accounts (SCA) and COOP-PESOS Rating
  • Qualifications of Board of Directors
  • Loan delinquency computed based on Portfolio At Risk (PAR)
  • Funding of Reserve Funds
  • Networking with other coops
  • Yearly external audit
  • Proper documentation of loans
  • Continuous capital build up
  • Monthly BOD meetings
  • Regular Annual Plan and Budget and 5-Year Strategic Plan
• Types of Cooperative


  • Credit Cooperative
  • Consumers Cooperative
  • Producers Cooperative
  • Marketing Cooperative
  • Service Cooperative
  • Multipurpose Cooperative
  • Advocacy Cooperative
  • Agrarian Reform Cooperative
  • Cooperative Bank
  • Dairy Cooperative
  • Education Cooperative
  • Electric Cooperative
  • Financial Service Cooperative
• Interest on share capital

  Restrictions on transfer of shares or interest in the cooperative
• Patronage refund


  Amount returned to individual patrons in proportion to their individual patronage of the cooperative's products and services