Chapter 5 discusses Analyzing and Prioritizing Risks. Write a 500 word paper answering; THE MONSOON CUP CASE STUDY Risk analysis and categories There are basically two categories of risks ly systematic risks as well as unsystematic risks. The systematic risk refers a form of risk that affect a large number of portfolio of assets. It may be due to factors such as political conditions in country. It can also be due to natural calamities such as earthquakes, floods and landslides. This form of risk has less protection and it cannot be minimized easily. The case of Monsoon cup is a reflection of this form of risk. Unsystematic risk refers a form of risk that affects a small amount of asset portfolio and it can be due to industrial actions such as strikes and go-slows. This form of risk can easily be minimized through proper diversification of investment and it forms one of the highly ranked risk in the initiation of a project (Heldman, 136-142).Political riskPolitical risk was evident in the case of Monsoon cup owing to the fact that its initiation was based on political grounds. The prime minister of Malaysia who is one of the leading political class members was the first to take up this risk when he first visited PulauDuyong in the year 2005. By deciding to transform the island into a major tourism hub was a risk as he was not sure of the possible outcome. There seemed to be very little to be expected of the Island as it had very little resources and was hardly visited by famous people in the world. The political stability and national polices of the entire nation is also part of the political risk as it determined the number of people who from other countries who are willing to invest into the island (Heldman, 123). Direct foreign investments are highly dependable on the political policies and initiatives touching on economic growth and empowerment. The visitation and the promise to transform the entire island by the prime minister lower the political risks thus encouraging investment. Foreign Exchange riskThis form of risk is associated with the exchange rate which determines foreign investment. The amount of foreign investment in the Monsoon Cup will largely depend on the exchange rates which mainly affects financial instruments. Appreciation or depreciation of the dollar will determine the returns expected from investments in the region especially by foreign residents (Adams, 43-45). Probability impact scalesProbability indicates that a risk can be considered as an event that may occur. This ranges from 0 to 100 per cent. Impact defines a risk by its nature and it varies on how given risks affect key issues such as human life, investment and political factors (Schroeck, 03-09).Critical risks relates to those risks that have direct adverse effect on investment portfolio. In this case study such a risk includes foreign exchange rate risk.Significant risk have considerable amount of effect on the business operations and in this case such a risk include political risk.Negligible risk refers to those risks that do not affect the business operations at all. Such include country risks. Risk Impact ScaleLEVELLIKELIHOODDESCRIPTION4Very LikelyHappens more than once a year in the country3LikelyHappens about once in a year2UnlikelyHappens after every ten years1Very unlikelyHas only happened onceExamples of risks that need response planResponse plan refers to steps that are taken in order to minimize the adverse effects of risk taking. The steps include risk avoidance, mitigation and transfer. Examples of such risks in the above case study include credit or default risk, foreign exchange risk, interest rate risk and market risk (Poitras, 101).ReferencesAdams, C. F., Mathieson, D. J., Schinasi, G. J., Chadha, B., & International Monetary Fund. (1998). International capital markets: Developments, prospects, and key policy issues. Washington, DC: International Monetary Fund.Heldman, K. (2011). PMP: Project management professional exam : study guide. Indianapolis, Ind: Wiley.Poitras, G. (2002). Risk management, speculation, and derivative securities. San Diego (California) [etc.: Academic Press.Schroeck, G. (2002). Risk Management and Value Creation in Financial Institutions. New York, NY: John Wiley & Sons.