992 Coursework Assignment Two: Strategic and Operational Risks

This coursework assignment, addressing the 992 course, delves into the critical aspects of risk management within a business context. It examines both strategic and operational risks, emphasizing their impact on a company's future and prosperity. The assignment explores reputational and legal risks, highlighting the importance of brand name and the potential consequences of operational failures, using examples like BP and GSK. It further differentiates between business and non-business risks, discussing how the board's choices influence the overall risk profile of an organization. The coursework analyzes various types of vulnerabilities including work, information delivery, and production vulnerabilities, providing a comprehensive overview of potential threats and their management. The assignment covers the complexities of observer administrative execution and social vulnerability to give students a deep understanding of the subject matter.

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Word count: 2785
Q1
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Every company faces risks that could put its future and prosperity at risk.
The risk is characterised as the probability and results of an opportunity. The danger for the
managers lies in the use of procedures, strategies and devices to address these dangers.
The risk is for managers to acknowledge what could badly be achieved, evaluate the risks to
be addressed and update processes to deal with these risks. Organisations which have
identified the risks will be better organised and will have more know how to manage
them(Olson et al., 2015).
The reputational and legal risk associated with the planned sale
Administrators are aware of the importance of the brand name of their organisations.
Companies with solid constructive reputations attract better people. The company is viewed
as giving more consideration, which often allows them to charge a premium. Their
customers become more and more stable and buy more items and administrations. Because
of the trusts that these organisations will deliver sustained income and future development,
their profits and market values are more expensive, and their capital costs are lower.
Additionally, associations are particularly helpless in an economy where 70 to 80 per cent of
the market's esteem comes from untouched resources like, for example, brand value,
scholarship capital and dividends (Mikes et al., 2014).
Adequately monitoring the reputational risk begins with the recognition of the
importance of the brand name. The general reputation of an organisation is an explicit
component in classes (item quality, corporate governance, representative relations,
customer management, academic capital, currency management) between its different
partners (speculator companies, clients, providers, employees, supervisors, lawmakers,
nongovernmental associations). A strong positive reputation among partners throughout
numerous classes will give the organisation a strong positive reputation in general.
Familiarity is specific to the organisation's actual character or conduct and could be
better or worse. This hole represents a generous risk when an organisation's brand name is
more positive than its hidden reality. In the end, the deception of a company to satisfy its
demand is revealed, and its reputation degenerates until it co-ordinates the truth more
carefully. Similarly, a famous company, British Petroleum, gives the impression that this is
the hardest way of learning. BP has accused the plant disaster of careless operational
practices, and yet government examiners have stated that cost reduction has also
contributed. Many reports suggest that the driver behind the issue of Prudhoe Bay may have
been inadequate and non equipped in maintaining and examining practices and that
managers cannot take any warnings about potential consumer issues into consideration.
These and other occasions have harmed the name of BP as mirrors of media inclusion.
Operational Risks
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Another important determinant of reputational opportunity is changing convictions
and desires for partners who may create hindrances in how the operations are run. The
brand name reality is increasing, and risks are growing at the time when desires are moving,
and the character of an Organization remains equivalent.
There are different instances of practices once suitable, which partners never think
they are pleasant or moral again. Based on the cross-holding of offers among the world-
class gatherings of organisations called Keiretsu, unfamiliar takeaways in Japan until the
1990s were practically unbelievable, which was a training that undermined the intensity of
different investors that the company can learn from. In the last 10 to 15 years, investor rights
and takeovers have risen by weakening the Keiretsu structure. Business companies using
their review capabilities to sell speculative banking deals are now deemed to be unsuitable
in the United States; financial protection motivates the deposits of forces for intermediaries
that cost businesses and structures inclusion to serve the customer's interest in contrast to
that of clients(Baxter et al., 2013).
Some standards of time have advanced after a while, as most created nations now
generally wish that organisation if by any degree of imagination, should be negligible at fault.
Adaption of a major organisation's conduct or strategies can quickly enable partners to move
forward, which can jeopardise the reputations of enterprises that adhere to old guidelines.
For example, General Electric's "ecomagination" activity in 2005 may increase existing
expectations of various organisations. It proposed that GE increase its R&D interest in
achieving cleaner advantages, increase revenue from items and administrations that have
remarkable and quantifiable natural advantages and reduce GE's own nursery emanations.
It goes without saying that different partners ' wishes can be drastically separated,
which makes it particularly difficult to determine adequate standards. At the time
GlaxoSmithKline was a leader in anti-retroviral medicines for AIDS research and
improvement of items, it was strengthened, and investors met its reputation for leading
haemorrhage research. At first, they were ready when GSK brought the South African
government to court for a gathering of pharmaceutical organisations after it passed
enactment in 1997, allowing the nation to import more affordable, conventional adjustments
to Aids drug listed in GSK. However, in 2001, GSK investors went round in reaction to a
growing work by NGOs and the preliminary proceedings that made it voracious and
unethical to GSK and the other drug organisations. GSK gave a "free" permit to produce
non-exclusionary returns of its AIDS medicines with its reputation as a diving company and
allowed it to a South African organisation (Baxter et al., 2013).
In some cases, dormant concerns may explode to the surface. Any inquiry as to
whether Merck had fully discovered its Vioxx painkiller capability to cause heart attacks and
strokes is a precedent. In 2004, Merck was caught up in a large number
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of claims concerning the joint inflammatory medicine. This argument has raised the wishes
of patients and specialists that sedating medicines made by organisations, enjoy market
participation after administrative approval of medicines, should reveal increasingly dot-by-
point results and preliminary clinical studies. This means that their operations are free of any
discrepancies and faults entirely.
Q2
Strategic Risks
The key choices made by leaders with regard to an association's goals are the vital risks. In
essence, the danger of neglecting to achieve these business objectives is vital.
 Business risks–Such risks are arising out of the Board's choice of items or
administrations the association supplies is a valuable subdivision of key dangers.
They incorporate dangers related to the establishment and promotion of such items
or administrations, monetary risks affecting items and costs and hazards arising from
mechanical changes affecting transactions and manufacturing processes(Hillson et
al. 2017).
 Non-business risks–Risks that do not come from the supplied items or
administrations. For example, hazards related to the fund's long-distance sources are
used. The vital risk levels are related to how the whole organisation is situated and
not exclusively influenced by what the management chooses. Container activities
affect chance in item advertising, and innovative developments may lead to creative
processes or items becoming obsolete quickly.
The Board's choices on the destinations and the course of the association shall dictate
key risks. This must be intensive in the arrangement of the board and the essential forms of
leadership. A report by the UK Cadbury states that the leaders shall establish a formal
agenda of issues that they can choose from. They should include major acquisitions and
transfers of benefits, risks, capital assignments and treasuries.
In order to take the important decisions correctly, sheets need adequate data on the
company's performance and important financial, business and mechanical circumstances.
To examine the range of main risks the board faces, the vision needs to be expanded;
administrative reports subsequently suggest that a board is adapted in terms of skills,
information and experience.
Whether or not, irrespective of the board's best work in corporate management on
essential basic leadership techniques, that does not really guarantee that the BOD has mad
the right decisions.
Three categories of vulnerabilities are incorporated into work vulnerability: work
vulnerability, corporate vulnerability to information delivery, and vulnerability to creation. In
contrast to the overall impact of the business, the vulnerability in respect
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992Coursework assignment two answer template
of certain jobs or different information sources is often explicit. Work deficiencies include
changes in the efficiency of the worker due to agitation or strikes, for example. The provision
of sheltered working conditions for representatives reduces the individual risk for specialists
as well as coordinated damage risk claims at the company. Deficiencies in gross materials,
changes in the quality of sources and additional restrictions on components are instances
where the information supply class faces a firm working vulnerability.
Vulnerability in the provision of information will probably be most important if a solitary
provider or sorted collection gives the company basic contributions (Mikes et al., 2014).
Microeconomics wrote it had established the indeterminate nature of the reciprocal
relationship between an individual buyer and single provider. Investigators refer to the
business relationship between a business and a certain provider as a "low number of
bargaining" circumstance. MacDonald (2012) points out the disguise of provider work by
companies, to reduce the chances of multiple providers performing artificially. The third type
of working vulnerability is vulnerability creation.
The vulnerability of generation includes machine deception varieties in yield. Other
irregular variables, for example, malfunctions, are also incorporated into the generation
vulnerability that compound the process of creation. Bond vulnerabilities are linked by the
creation or utilisation of items in an organisation to unexpected destructive impacts. The
vulnerability to subject risk identifies unforeseen negative effects associated with the use of
an item which may lead to lawful activity against the manufacturer. Companies can also
legally consider themselves responsible for specific external impacts, such as, for example,
the release to the earth of contaminants which may be vulnerable due to their advantages is
referred to as "social vulnerability."
The complexities of observer administrative execution in the world are complemented by
differences in cash estimates from equality, hyperinflation, and deviations in inside MNE
exchange costs from market shadow costs (to exploit routine differences across countries).
In the above picture, two-sided arrangements with settled work were shown as vulnerabilities
in information supply(Gao et al., 2012). The terms of the links between the company and the
work as an aggregate haggling unit are therefore extensively vulnerable.
Social vulnerability also refers again to self-employment activity with regard to oversight
officials or representatives who break their express or legally binding partnerships with the
company. The words presented in this field enable us to identify the vulnerabilities of
workplace power as a rule, and those connected with those who exploit the assets of the
company for the benefit of individuals(Baxter et al., 2013).
Financial Risk Management
The main risk reduction strategies for the money are protection and purchase and
sale of budgetary instruments (forward contracts, contracts for
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992Coursework assignment two answer template
prospects, swaps and choices). The dealer in the agreement is required to provide a pre-
indicated amount of products or resources to a forward-look or forward-look contract at a
fixed time later. The ability to secure a fixed cost is the major danger in reducing the number
of purchasers and forward contracts. Global undertakings are widely used to control foreign
trade opportunities through monetary support instruments.
While money hypothesis allows companies to close, their exposure to foreign trade
or product development in the future and fates display cases and ensure against a wide
range of disasters, the extent to which the key instruments and markets have caused shifts
from nation to country. In addition, there are no support and protection instruments to reduce
exposures to a large number of the vulnerabilities identified in the last segment, even in
countries with the largest range of monetary market instruments. The absence of a
coordinated correlation between corporate exposures to vulnerabilities and budget support
and protection instruments shows that vital reactions need to be consolidated, along with
strategies related to money to monitor corporate danger.
The lack of business sectors to support exposure to many unsure environmental
opportunities is itself a consequence of vulnerability. For example, for objects with a high-
value vulnerability, fates markets are less likely to occur. Protection markets flop due to the
simple absence of information to perform actuarial assessments of dangers or too
inconsistent data on conduct and presentation of the meetings in search of protection. Such
data asymmetry leads to problems of antagonistic determination, in which protection for a
whole class of exposures may be excluded, in the extraordinary (Olson et al., 2015). The
screening or self-selection of buyers may reduce the issue of "non-existent" exchange and
pooling risk markets.
Companies purchase property protection and reverse misfortunes and risk suits for
items. Protection policies for remote direct speculations against ex-privacy of advantages,
common conflict, war and monetary incapacity are provided by the private back-up schemes,
government-supported offices, such as the US Abroad Private Investment Corporation
(USA) and multilateral associations, such as the Multilateral Investment Guarantor Agency.
Protection for exposures to industry and company vulnerabilities is limited in specific cases
of item risk and worker disability. The cost of protection is the part that goes beyond the
normal estimation of the misfortune of the association.
This fee in excess of the normal misfortune estimate covers the cost of the insurance
agency as well as the expense of good and unfriendly determination understood. If due to a
lack of market improvements, the conceivable consequences for the future and prospects
are limited by contracting or protecting them from potential miseries, the risk posed to
executives by cash related movements is significant in reducing exposures to ecological
vulnerabilities (Bromiley et al., 2015).
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3
Advantages and disadvantages of the four risks
Operational risks advantages
 There will be Better, more effective and more reliable operations;
 There would be a significant reduction in losses from damages, threats, illegal
activities and exploits;
 The cost would be lower in terms of compliance; and
 The reduction in future potential damages would also be minimum.
Challenges
 Not aware of the risk and may not be able to categorise it as an operational one
or any specific risk.
 The advocation of the operations may not necessarily e that effective, and it may
lead to a failure in mitigating risks.
Reputational risk
Advantages
 The organisation is facing and the right way of resolving crises.
 Company risk management is generally better in areas in which it has direct control,
such as compliance with legislation and regulations or employee or management
misconduct.
Challenges
 In the meantime, firms face more difficulties in areas where risks such as those of
ethical behaviour of third parties, competitive attacks, environmental problems, or
disasters are not controlled or not identified.
Financial Risk
Advantages
 There can be ease in raising finance.
 The day to day operations can be easily managed by having a proper audit system.
Challenges
 The wrong people or management can affect the functioning by not maintaining
proper records.
Strategic Risk
Advantages
 The appropriate strategy needs will be looked after for the organisation.
Challenges
 If the different risks are not handled by a specialist, there can be consequences.
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Recommendations
For the company to work successfully, the risk management process and
management need to be efficiently functioned. The procedure and the executives should
work productively to ensure the organisation functions effectively.
Accordingly, the procedure of the executive procedure:
 Methodically identify the risks related to your business activities,
 Evaluate the likely nature of an event,
 Understand how to respond to these occurrences,
 Implement systems to address the implications,
 Monitor the effectiveness of your approaches and checks to the risk management.
To evaluate hazards, the positioning of these hazards is beneficial once the manager
identifies them.
This should be possible if the results and probability of each risk are considered. Many
organisations find the results and probabilities for the survey to be high, medium or low
satisfactory.
This could then be contrasted with your marketable strategy to identify which dangers
might impact on the objectives and evaluated in the light of legitimate requirements,
expenses and financial specialists. The cost of moderating a potential risk could now and
then be so high that nothing can be done well(Lam et al., 2014).
Some devices can be used to assist in hazard evaluation. The criticality and
likelihood of the danger can be determined from a risk map. Each risk is measured in one to
ten sizes. If a hazard is assessed 10, this means it is very important for the organisation.
One of them is the least remarkable. This guidance document will allow the manager to
imagine the dangers, assess the level of the hazards and plan what type of controls should
be updated to alleviate the hazards(Vinnari et al. 2014).
Anyway, organising hazards allows managers to coordinate time and cash to the
greatest risks. To manage the outcome of an event, managers can set up a framework and
controls. This may include characterising the procedure for choosing and accelerating any
organisation should any incident or occasion to occur.
References
Books:
Hillson, David, and Ruth Murray-Webster. Understanding and managing risk attitude.
Routledge, 2017.
Lam, James. Enterprise risk management: from incentives to controls. John Wiley & Sons,
2014.
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Mikes, Anette, and Robert S. Kaplan. "Towards a contingency theory of enterprise risk
management." AAA, 2014.
Olson, David L., and Desheng Dash Wu. Enterprise risk management. Vol. 3. World
Scientific Publishing Company, 2015.
Pritchard, Carl L., and PMI-RMP PMP. Risk management: concepts and guidance.
Auerbach Publications, 2014.
Journals:
Bromiley, Philip, Michael McShane, Anil Nair, and Elzotbek Rustambekov. "Enterprise risk
management: Review, critique, and research directions." Long range planning 48,
no. 4 (2015): 265-276.
Baxter, Ryan, Jean C. Bedard, Rani Hoitash, and Ari Yezegel. "Enterprise risk management
program quality: Determinants, value relevance, and the financial crisis."
Contemporary Accounting Research 30, no. 4 (2013): 1264-1295.
Gao, Simon S., Ming C. Sung, and Jane Zhang. "Risk management capability building in
SMEs: A social capital perspective." International Small Business Journal 31, no. 6
(2013): 677-700.
Hoornweg, Daniel, and Perinaz Bhada-Tata. What a waste: a global review of solid waste
management. Vol. 15. World Bank, Washington, DC, 2012.
MacDonald, Noni E., Jennifer Smith, and Mary Appleton. "Risk perception, risk management
and safety assessment: what can governments do to increase public confidence in
their vaccine system?." Biologicals, 40, no. 5 (2012): 384-388.
Vinnari, Eija, and Peter Skærbæk. "The uncertainties of risk management: A field study on
risk management internal audit practices in a Finnish municipality." Accounting,
Auditing & Accountability Journal 27, no. 3 (2014): 489-526.
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