Enterprise Risk Management

Enterprise Risk Management

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Aim of the Business Organisation...............................................................................................3
Risk Threshold.............................................................................................................................3
Risk Register................................................................................................................................6
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Enterprise risk management is the strategic business process through which a business
organisation can organise, plan, coordinate and control the various activities of the business with
the intention to decrease or minimise the effects of external risks on the productivity,
performance, efficiency and profitability of the business organisation in the consumer markets
(Sweeting, 2017). This report assesses the enterprise risk management efforts of the business
organisation Tesco, a multinational retail business that specialises in the general merchandise
and groceries. Tesco was founded in 1919, an astonishing 101 years ago, and operates from its
headquarters in Hertfordshire, England. Having operated in the retail sectors for such a long time
has presented Tesco with ample opportunities to grow and expand their business operations into
international markets. Currently, Tesco operates around 6,800 in 7 different countries across
Europe and Asia and has become the market leader in terms of its total market share in the
United Kingdoms. For conducting its operations, Tesco employs around 450,000 distinct
individuals in various positions, helping generate great employment opportunities as well.
MAIN BODY
Aim of the Business Organisation
The primary aim of Tesco is to effectively manage the risks that are present in the
external retail industries, with the intention to make use of the various opportunities that risks
present to expand and increase their operations, profitability and to decrease the negative impact
of the threats, on their operational performance, efficiency, productivity, profitability, market
share and customer base in the retail markets.
Risk Threshold
Risks to a business organisation represent the numerous uncertainties in the consumer
markets and operating industries which can have both negative and positive impact on the
operational performance, efficiency, productivity and profitability of a business organisation
such as Tesco (Florio and Leoni, 2017). One of the many attributes that can influence the risks
along with the management strategies that business organisations can take is the risk threshold.
Risk threshold is dedicated tool used by project managers and risk managers with the intention to

measuring the level of uncertainty and the degree of impact which an external risk can have on
the organisation’s and its stakeholder’s interests. Risk threshold sets a dedicated value to risks
that a business organisation such as Tesco and its stakeholder’s are willing to accept. Risk
threshold is the next step in the risk tolerance approach as it quantifies the risk tolerance
attributes of a business organisation and sets a dedicated numeric value to it giving the business a
precise figure as to the likelihood of occurrence and its operational impact on the productivity
and profitability of a business organisation such as Tesco. Acceptable risk threshold is the
amount of external risks that a business organisation along with its stakeholders are willing to
take in order to conduct their operations in the consumer markets. As the various stakeholders of
a business organisation include diverse clients who have varying interests such as consumers,
employees, management, ownership, sponsors etc., it is imperative for any business organisation
to have a set consensus on the risk threshold of the business so that it can become the target for
the business to analyse and evaluate their future risks (Beasley and et.al., 2019). For a business to
expand and grow its operations, it has to accept a minimum risk threshold within its risk
tolerance strategy so that it can avail the opportunities in the markets to gain potential additional
rewards.
To assess the risk threshold of a business organisation such as Tesco, an impact
probability matrix is created which assigns quantifiable numeric values to the probability of risk
occurrence and the degree of impact it can have on the operations and functions of a business
organisation like Tesco (Oliva, 2016). After numeric value to both these attributes are assigned
they can be multiplied to know the risk rating which tells the business’s management whether the
given risk is within their risk tolerance strategy or not. The attributes of a probability impact
matric are as follows:
Risk Likelihood: This metric represents the likelihood of a potential risk occurring in a business
environment in which a business operates in. This is quantified using qualitative terms such as
low, moderate or high and can also be quantified using numerical values such as 1-5, that denote
the likelihood of a given risk occurring in the business, with higher values denoting increased
chance for risk occurrence, and lower values on the scale denoting rare chance of risk occurrence
(Brustbauer, 2016). For a normal risk likelihood scale 5 represents that risk occurrence is
frequent, 4 represents that risk occurrence is likely to occur, 3 represents that risk occurrence is