Risk Management Report: Analyzing Risks and Developing Strategies

This report delves into the critical aspects of risk management within a business context. It begins by defining threats and exploring various risk sources, such as criminal activities, market changes, natural disasters, and data piracy. The report then examines threat assessment, emphasizing the importance of identifying and understanding the severity of risks to develop effective mitigation plans. It discusses a risk assessment matrix and the prioritization of uncertainties. The report also analyzes the different types of harm costs, including direct financial, physical, and intellectual costs, providing examples to illustrate each. Finally, it outlines traditional risk management strategies such as risk reduction, transfer, avoidance, redistribution, and acceptance, offering insights into how these strategies can be applied to enhance business functions and ensure long-term sustainability.

Running head: RISK MANAGEMENT
RISK MANAGEMENT
Name of the student
Name of the university
Author note

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Table of Contents
Introduction......................................................................................................................................2
Answer to question 1.......................................................................................................................2
Answer to question 2.......................................................................................................................3
Answer to question 3.......................................................................................................................5
Answer to question 4.......................................................................................................................7
References........................................................................................................................................9

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Introduction
The different aspects of the change in the market are based on the proper functioning of
the businesses in the market. Identification of the different uncertainties and the mitigation
strategies has helped the businesses to bring in changes in the systems of the business in the
market. The purpose of the discussion depends on understanding the different sources of risk and
their assessment to identify strategies to mitigate the same for bringing in improvements in the
organization.
Answer to question 1
Threat is defined as circumstances or situations that might affect the security of an asset.
The productivity of the organizations and its growth and expansion of the businesses is based on
the identification of the needs for protecting the assets (FEMA 452, 2018). The identification of
the uncertainties and the threats that might be faced by the organization helps in maintaining the
different levels of strategies to mitigate the risk factors.
The different sources of the risks that are faced by the organizations in the market are
based on the criminal activities, the commercial and the industrial changes that influence the
competitiveness in the markets, natural disasters that might affect the productivity of the
organizations and the foreign intelligence services that might result to the data piracy. The
identification of the different sources of the risks has helped the organizations to bring in
changes in the systems of the same in the market. Sheppard (2008) stated that identification of
varied risk factors has helped in enumerating the change in the systems facilitating sustenance.
On the other hand, Tucker and Broder (2006) stated that the enumeration of the risk factors and

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the identification of the different sources of the risks help in the identification of the motifs of the
different Terrorist and Extremist groups. The identification of the motifs and the beliefs of the
terrorists helps in bringing forth changes in the systems to facilitate the ways of counter-
terrorism.
Answer to question 2
The assessment of the threats is dependent on the identification of the threats that might
be faced by the enterprise while undertaking the different actions. Abbott (2016) stated that
threat assessment is a strategy that helps in identifying the areas of the risk, understanding the
seriousness of the threat and thereby developing plans to mitigate and avoid the threats. Fennelly
(2016) stated that the smooth functioning of the business is dependent on the functioning of the
assessment of the risks and thereby formulates strategies to bring in changes in the systems to
resolve the risks that are faced by the businesses in the market. The proper assessment of the
threats helps in enumerating strategies for mitigating.
The different ratings of identifying the risk factors are dependent on measuring the
likelihood of the risks to occur while the business undertakes its operations. It helps in
understanding the priorities of the risk factors and the manner in which the risks can be
mitigated. The identification of the priorities of the organizations and the manner in which the
different functions of the organization can be undertaken diligently is facilitated through the
identification of the uncertainties and ratifying the same. For example, the criminal activities
are severe in nature and very likely to happen while undertaking the activities of the business.
The different terrorist activities also affect the society and the organizations relating to their
functions. It is very likely in its nature and the effects are severe as it imposes serious threats on

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the society and the organizational structures. The different kinds of uncertainties that are faced
by the organizations while undertaking the processes is based on the risks of different fraudulent
activities and the violent actions. The smooth functioning of the businesses is subject to varied
changes in the systems and the performance of the business in the market. Therefore, the
prioritization of the uncertainty will be helping the organization to face the circumstances of the
threat that might affect the functions.
On the other hand, prioritizing the natural disaster of the organization or the
competition in the market will be helping the organizations to come up with strategies to face
the threat effectively. It will be helping the businesses to bring in changes more effectively in the
systems of the business in the market. The prioritization of the threat of a natural disaster is
significant as the company might face a decrease in the productivity of the business through the
change in the climatic and the atmospheric conditions (Fay, 2007). Again, the volcanic eruptions
and earthquakes might create serious damage to the properties of the business. It helps in the
identification of the different possible outcomes of the fall in the productivity of the business. On
the other hand, increase in the market competition is again an important risk that is faced by the
organization, which is severe in nature. The change in the trends of the market and thereby the
improper assessment of the trends might affect the market position of the business in the
respective markets.
Negligible Minor Moderate Significant Severe
Very likely
Likely

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Possible
Unlikely
Very unlikely
Figure 1: Risk Assessment matrix
(Source: By Author)
Answer to question 3
The different types of Harm Costs that are encountered by the organization are Direct
financial cost, Physical cost and Intellectual cost. The enumeration of the different harm
related costs helps organizations in understanding the different modes of improvements in the
market as per the needs of sustenance.
Direct financial cost is the costs that are incurred by organizations while replacing the
plant or personnel of the business after the risk is faced by the business (Halibozek, Jones &
Kovacich, 2007). It helps in assisting the costs of undertaking a change in the processes and the
functioning of the business to bring in improvements in the situation of the business in the
market. The direct costs that are incurred by the businesses help in maintaining the performance
of the businesses in the market. For example, the costs that are incurred by PepsiCo while
bringing in changes in the product range to improve their market conditions. The investments
that are made by the company have helped in sustaining the systems of the business in the
market against the competitors. It has also helped the business in bringing in changes in the
product offerings as per the needs of the customers in the market. The risk that is faced by the
organization is based on the outdated technology and the analysis of the trends of preferences of

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the customers. In order to adhere to the change in the tastes and the trends of the international
markets the company spent some $ 3,040 million to facilitate he sustenance of the business after
the assessment of the threat of dissolution of the business.
Physical cost refers to the cost that is incurred by the organizations due to loss of lives of
the workforce while undertaking operations. However, the loss of life cannot be replaced by the
organizations in terms of money until insurance claims are forwarded. The threats that are
incurred by the organizations while undertaking the change in the markets is based on the
effective functioning of the workforce. However, there are situations when mishaps happen and
that night cost the life of the people working for the organizations. For example, the Deepwater
Horizon explosion undertaken by Transocean of BP has snatched lives of many workers who
were working in the rigs. It has affected the growth of the organization and a cost of $ 2 billion
was incurred by the organization to cope with the threats that was faced by the same after the
impact.
Intellectual cost of the business is based on the intangible costs that are incurred by the
organizations due to the loss of goodwill and reputation of the business due to different
malpractices. The intellectual cost of the organization, being intangible in nature, is hard to
identify. However, there are in stances where the market situation of the business and the
goodwill of the business are compromised due to certain activities like the cyber attacks or low
quality of the products (Fischer & Halibozek, 2008). It affects the brand image of the
organization resulting to the incurrence of the intellectual cost. For example, Lloyds TSB
acquired HBOS plc (the holding company of Bank of Scotland plc) whose net assets produced a
negative goodwill of Lloyd’s in the market amounting to some GBP 11 billion. It has affected

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the functioning of the business in the market due to the generation of negative goodwill in the
market structure.
Answer to question 4
The traditional risk management strategies help in identifying and mitigating the risks
that are faced by the organizations. It helps in enhancing the functions of the businesses in the
market. The different traditional risk management strategies are:
1. Reduce the risk.
A sound security system and the assessment team of the organization help the same in
identifying and avoiding situations of the risk. For example, the risk assessment system that is
undertaken by US Government to understand the different aspects of the terrorism and create
policies and squads of counter terrorism that has helped the nation in exterminating the terrorist
activities.
2. Transfer the risk.
The outsourcing activities that are undertaken by the organizations help the same in
mitigating the factors of the risk that is adjoined to the production and the distribution functions
of the business. Transferring the risks that might be faced by the organization through
outsourcing helps in the reduction of the risks through the assignment of the skilled functions.
For example, IBM has taken steps to outsource their services through different software
modifiers. It has helped the organization in making a reduction in the risk count.
3. Avoid the risk.

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Avoiding the risks has helped in understanding the various aspects of the change as per
the needs of the business. Avoiding the situations of the risks through the proper assessment of
the factors and proper strategies helps organizations to undertake smooth functioning without
interruptions. For example, the Coca Cola Company has taken steps to undertake various
strategies to avoid the situations of the risks that affect the smooth functioning of the business.
4. Redistribute the risk.
Redistribution of the risks helps organizations to bring in changes in the system and the
functioning of the businesses as per the needs in the market. Redistribution of the resources helps
in maintaining the smooth functioning of the businesses in the market. For example, AIBI
International has taken steps to redistribute the risks that are faced by the organization to bring
in smooth functioning of the businesses in the market.
5. Accept the risk.
Accepting a level of risk helps organizations top take strategies based on anticipation of
the risk and the manner in which the businesses can take steps to reduce the risks in the market.
For example, BreadTalk has taken steps to identify and assess the risks that are faced by the
business and the manner in which the risks can be mitigated through proper formulation of
strategies.

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References
Abbott, R. (2016). 14 Hal the Inventor: Big Data and Its Use by Artificial Intelligence. Big Data
Is Not a Monolith, 187.
Fay, John Jay. (2007) Encyclopedia of Security (2nd Edition).
FEMA 452 - Risk Assessment: A How-To Guide to Mitigate Potential Terrorist Attacks Against
Buildings | FEMA.gov. (2018). Retrieved from https://www.fema.gov/fema-452-risk-
assessment-how-guide-mitigate-potential-terrorist-attacks-against-buildings
Fennelly, L. (2016). Effective physical security. Butterworth-Heinemann.
Fischer, R. J., & Halibozek, E. G. Green.(2008) Introduction to Security.
Halibozek, E., Jones, A., & Kovacich, G. L. (2007). The corporate security professional's
handbook on terrorism. Butterworth-Heinemann.
Sheppard, B. (2008). The psychology of strategic terrorism: Public and government responses to
attack. Routledge.
Tucker, E., & Broder, J. F. (2006). Risk Analysis and the Security Survey. Butterworth-
Heinemann.

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