1. Define value drivers and explain their usefulness in understanding business processes. To interpret past results and take the appropriate actions to achieve desired outcomes, managers need to understand how specific business activities drive results on the financial statements. These factors that affect financial statements results are referred to as value drivers. By understanding how processes drive financial results, managers can focus on executing the company's operating, investing and financing activities.
   
   
2. Identify the resources necessary to support the value chain. Companies require three primary resources to enable the value chain: human, physical, and financial capital. Firms must be sure to have people with the right experience, skills, and collective morale, supported by the appropriate equipment, technologies, and financial capital, to be able to implement the value chain activities necessary to execute strategy. Successful firms use the value chain to transform resources into results.
   
   
3. Define business risk and describe the uncertainties affecting value creation. Business risk is the threat that an event or action will adversely affect a firm's ability to achieve its business objectives and execute its strategies successfully. This risk stems from the complex and dynamic interactions a firm has with its environment. The complex set of stakeholder relationships and process interactions that characterize business create many uncertainties that managers attempt to control or mitigate. The business risk model highlights the relationships among different types of risks.
   
   
4. Discuss how companies identify and manage business risk. A successful risk management program will (1) identify the risks that might affect the success of the firm's business strategy; (2) determine why, how, and where business risks originate (outside the firm or within the business processes); and (3) measure the severity, likelihood, and financial impact of the risk. Managing business risk is actually managing the organization: planning, organizing, directing, and controlling firm resources and systems to achieve objectives.