Risk-return analysis guide 1 2 3 Review of listed risks In this section, you need to review the risks listed in the annual report. Avoid making up your own risks. We are after external risks. Investment decisions, financing decisions, health and safety, compliance and human resource management are all internal risks; ignore them. For Telstra, this is on page 12. Key risks that should be discussed in depth would be 'Major Regulatory Change' and Network resilience'. Telstra's monopolistic grip on the market is constantly being eroded by government intervention. This is the result of efforts of lobby groups and perceived public pressure. Competitors of course benefit from these changes as they are able to carve out their little niche to play in. Network resilience/reliability is constantly an issue when the company is operating on such a large scale and having limited staffing resource due to budget constraints. Competition is not a risk; it is the reason the company is in business. Climate change is not a risk. Evidence of risk Identifying the risk is only part of the story. You have to now show evidence of the risk. The evidence that you provide are for the risks identified in the previous section. No marks are awarded for risks that are identified without clearly showing evidence that they have impacted the company. This can be done in a few ways; relevant newspaper articles, correlation with identified variables, trend analysis, and comparison with competitors, etc. Share price decrease can be visual way to show the impact of the risk in the past. This is where you obtain the majority of the marks allocated to this section. For Telstra, you are able to find many articles discussing the impact of regulatory changes and network resilience. Do not address the steps taken by the company to address the risks. Please take time to investigate and document your findings. Review of shareholder returns The total return to the shareholder is the capital growth plus the dividend received.