Comprehensive Risk Management: Supply Chain, Investment, and Planning

This assignment provides a comprehensive overview of risk management within a supply chain context, investment decisions, and general risk mitigation strategies. It identifies potential risks at various stages of a restaurant's supply chain, including those faced by growers/harvesters, manufacturers, distributors, restaurants, and customers, suggesting measures to avoid or manage these risks such as natural disaster precautions, financial incentives, securing distribution skills, and adhering to legal rules. The assignment also addresses investment choices, comparing two projects (X and Y) based on cash inflows and ROI, ultimately favoring Project X due to its higher cash inflow and lower risk. Furthermore, it explains key concepts like compound interest, the main steps of managing risk (identifying, analyzing, evaluating, treating, and monitoring), and the differences between market and liquidity risks, providing examples for each. The assignment concludes with a discussion on risk management meetings and a case study involving potential risks at a wedding ceremony location, complete with a risk assessment table and contingency solutions.

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Risk management
Name
Professor
Course
Date

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Risk management refers to the practice of identifying any potential risk that can be
associated in advance and therefore coming up with the appropriate precautions or measures to
prevent it in future (McNeil et al,50).
Question 2
(a) Grower/Harvester.
Natural disaster risk and financial risk.
The grower can avoid risk by coming up with appropriate measures to control natural
calamities (McNeil et al,45).Use of incentives can solve financial crisis.
(b) Manufacturer.
Labour risk and financial risk.
Employing adequate labour and checking labour turnover avoids risk. Accessing
monetary assistance reduces the financial risk.
(c) Distributor.
Operational risk and the knowledge risk.
The distribution skill within the chain should be secured (McNeil et al,85). Aspect of loss
should be avoided.
(d) Restaurant.
Legal risks and delay risk.
Managers need to adhere to rules and avoid loses incurred by delays in the restaurant.
(e) Customer.
Costs risk and timely delivery.
Managers ought to ensure there is alignment of value chain towards the overall goal of
supplying to the customers.

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Question 3
Project X cash inflowsproject Y cash inflows
Year1. $5.000*(1/1.10%)1=$4,545 Year 1. $4,000*(1/1.12%)1=$3,571
Year 2. $6,000*(1/1.10%)2=$4,959 Year 2. $6,000*(1/1.12%)2=$4,783
Year 3. $7,000*(1/1.10%)3=$5,259 Year 3. $8,000*(1/1.12%)3=$5,694
Total=$14,743 total =$ 14,048
Therefore, one can choose project X.
It has highest cash inflow as compared to Y therefore it has small risk hence fetching adequate
profits on investment (Cardona,78).
Question 4.
1.Compound interest. Since it’s based on principal and the interest accumulated each period
unlike simple interest based on principal amount only.
2.Main steps of managing risk.
(a). Identifying the risk. The manager identifies the risk that will be anticipated during the
operation of the business. At this stage the manager will start to prepare the appropriate project
risk register.
(b). Analyzing the risk. Once the manager identifies the risk then the consequences associated
with the risk is analyzed (Cardona,100). The manager detects how the risk will affect the goals
and the objectives of the business. The information is put in the register.

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(c). Evaluate /rank the risk. The risk is ranked depending on the magnitude each has on the
business (Hull,34). The manager allows the decisions that is appropriate depending how the risk
is acceptable or whether it is of serious type or not. The information is also recorded on the Risk
Register.
(d). Treating the risk. It is also defined as the risk response planning. At this stage the highest
ranked risk is recorded followed by the planning to be met in order to treat the results associated
with the risk in the business. Different strategies are formed and preventive measures employed
and then the treating risk measures are recorded on the risk register (Hull,65).
(e). Monitor and review the risk. It involves taking the overall information contained in the risk
register and therefore using it to monitor, track and review the associated risk within the
business.
3.Market and liquidity risks, give one example for each.
Market risk refers to the risk whereby the investment value may reduce due to various
changes in market that is a fluctuation that will affect the all the assets that are risky in the
market. Forexample, the interest rate risk and the equity risk associated in the business (Cornett
et al,68).
Liquidity risk refers to the potential whereby the entity will not be able to access the cash needed
so as to meet the short term obligation required by the business. Forexample, the accounts
receivable experienced in an enterprise.
Question 5.

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Risk management meeting forms basis for the managers to come up with measures on
how to avoid risk (Cornett et al,98). It is done continuously before the close of the project. The
risk was identified on the location of the ceremony.
(a)Risks in Location area.
Risk
Description
Risk Impact Type of Risk Rank Severity Contingency
and solutions
Risk
consumed in
car rental
contract.
Probability
of occurring
is 5
Car can incur
damages at
any time.
Issue of car
loss is
common in
wedding
ceremony.
Ranked as
the first risk
1
Total
soverity
incurred
5*1=5
-much care
should be
taken.
-terms and
conditions for
hiring the car
should be
followed.
The wedding
reception
contract risk
Probability
of occurring
is 10
Risk can be
experienced
within the
restaurant
during the
wedding
ceremony.
Damages are
always there.
Ranked as
the second
risk 2
Total
soverity
incurred
10*2=20
-compensation
for any
damage
experienced in
the restaurant.
-responsible
for any
liability
incurred in

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reception.
Works cited

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McNeil, Alexander J., Rüdiger Frey, and Paul Embrechts. Quantitative risk management:
Concepts, techniques and tools. Princeton university press, 2015.
Cardona, Omar D. "The need for rethinking the concepts of vulnerability and risk from a holistic
perspective: a necessary review and criticism for effective risk management." Mapping
vulnerability. Routledge, 2013. 56-70.
Hull, John. Risk management and financial institutions,+ Web Site. Vol. 733. John Wiley &
Sons, 2012.
Harrington, Scott E., and Greg Niehaus. Risk management and insurance. McGraw-Hill/Irwin, 1999.