Systemic Risk Management for Maggi: Analysis and Recommendations

Running head: SYSTEMIC RISK MANEGEMENT
SYSTEMIC RISK MANEGEMENT
Name of Student
Nam of University
Author’s Note

1SYSTEMIC RISK MANEGEMENT
Table of Contents
1. Introduction..............................................................................................................................2
2. Views received from scholarly articles....................................................................................2
3. Chosen project..........................................................................................................................4
4. Leadership and Recommendation............................................................................................6
5. Conclusion................................................................................................................................9
References......................................................................................................................................10

2SYSTEMIC RISK MANEGEMENT
1. Introduction
Risks are an integral part of our society. Risks are present in all the organizations
irrespective of their nature, type or size. Every organization needs to have a risk management
team. This team assures that the company operates well and there are no risks that the company
would face in the future (Hopkin 2018). In case the company has any chance to face some risks,
the risks management team carries out risk management using various strategies. The risks are
considered as extreme events and sit on the tail of the distribution. This has very less probability
bit a high cost. Risk management can help the company to get rid of the risks by following five
stages that are considered as parts of risk management (Sadgrove 2016). These stages are risk
identification, risk measurement, risk management, risk monitoring and risk reporting.
This paper requires choosing an organization that has faced failure o risk management
and analyzing the risks that the company suffered from. The paper discusses the systemic risks
and cascade risks (McNeil, Frey and Embrechts 2015). System risks discuss the ones that have
occurred due to various loopholes in its systemic structure and cascade risks describe the risks
that are results of the systemic risks.
2. Views received from scholarly articles
According to Lam, (2014) strategic risk can be defined as the uncertainty of the loss of a
particular organization. The loss might be profit as well as non-profit. In other definition by it
has been discussing that strategic risk has no specific definition because the organizations are not
able to define and understand properly. Strategic risks have chances to arise due to political
impediments, regulatory or technological innovation. The risk might occur when an organization

3SYSTEMIC RISK MANEGEMENT
does not properly concentrate on the risks that might be faced by it due to various loopholes in its
working principles (McNeil, Frey and Embrechts 2015). The company might also face risks due
to the implementation of a new technology or strategies in its working principles. Hence it can be
said that it is not compulsory that a company would face risks because of its mistakes or
ignorance of the risks, it might also cause when the company intends to do something good.
Failure of risks management plans might cause due to numerous reasons which include improper
execution of the stages under risk management, the mistake occurred in a single stage or
improper carrying out of the stages (Haimes 2015). The Basel community has defined that the
operational risk is a risk which is caused due to direct or indirect loss that results from failed or
inadequate internal processes, systems and people or various external events. Operational risks
are a result of loopholes in internal problems like fraud employees, segregation of various duties,
corporate leadership, product flaws and information risk. Risks might occur in numerous
perspectives, it can be said that risk management is not possible to manage separately (Aven
2016). The risk management strategies should be integrated into a particular holistic manner.
These mentioned factors are among the major causes that contribute to emerging enterprise risk
management.
According to Giannakis and Papadopoulos, (2016) every organization faces some or the
other risks. Small enterprises as well as multinational companies face various risks depending on
the situation and their working background. The risks faced by various organizations depend on
numerous factors; these factors are strategic risks, operational risks, technology risk, political
risk, financial risk, reputational risk, human capital risk and legal risk (Kendrick 2015). This
literature mainly concerns mainly four kinds of risks. They are a financial risk, operational risk,
strategic risk and hazard risk. Usually risk occurs due to the failure of planning, leading,