“Contribution of Mercantile Bank Limited to the Economy through General Banking and Loan & Advance.”

• Second, the disruption risk of each item is assessed.

• Third, the significant risks of supply disruption are identified, • Finally, the risk that the company will be affected by disruptions to its supplies is assessed.

Sales Risk: Sales Risk is the risk that the business suffers from external disruptions to sales.

Sales may be disrupted by changes to market size, increase in competition, changes in regulations, or the loss of a single large customer. Sales risk is assessed in the following steps: • First, industry turnover is taken into account.

• Second, the competitive pressure is assessed by analyzing two major competitors.

• Third, the ease of entry into the industry by new competitors is assessed.

• Fourth, the risk of regulatory changes affecting sales is considered.

• Fifth, the risk of a single large customer switching to a competitor is assessed.

• Finally, an overall assessment of sales risk is made.

Company Risk: Company Risk is concerned with some internal factors of the business. It has two components and four sub-components as follows: Company Position Risk: Each and every company holds a position within its industry. This position has to be competitive. Due to weakness in the company’s position in its industry, a company may fail and this risk of failure is called company position risk. It is again subdivided into Performance Risk and Resilience Risk.

Performance Risk: Performance Risk is the risk that implies that the company’s position is so weak that it will be unable to repay the loan, even under expected external conditions.

Assessment of performance risk involves validating the company’s performance expectations. Performance risk is assessed in the following steps: • First, recent performance history of the company is analyzed.

• Second, the company’s competitive position is analyzed.

• Third, the company’s strategies are evaluated and its cash flow forecasts are analyzed.