Question
Risk Assessment
The purpose of this assignment is for you to initiate a risk assessment of a business of your own choosing. Use the provided Word template to complete the assignment. Once you have completed the template, please upload it into the assignment area within Blackboard. Please be sure to properly cite and reference any outside resources that you may use,Please explain, in a paper of at least 500 words, how you determined whether each risk was low, medium, or high impact, and include a more detailed plan for improvement.
Sample paper
Risk Management
| Risk Description | Risk Type | Risk Impact | Potential Action for Improvement |
| Failure to attract top talent | Human resource risk | High | Provide benefits and good remuneration |
| Fluctuation in currency exchange rates | Marketing risk | Low | Currency hedging |
| Economic recession | Financial | Low | Downsizing |
| High debt whose maturity is in the near future | Financial | High | Efficient administrative system |
| Changes in legislative or regulatory environment | Legal | Medium | Regulatory risk management program |
| Data loss through hacking | Process risk | High | Ensuring the information systems and related software are up-to-date |
| Damage to physical property | Process risk | High | Improve the security network |
| High staff turnover | Human resource | Medium | Improve working conditions |
Failure to attract top talent is in the category of human resource risk. Failure to attract top talent is a high impact risk. The determination of risk impact examines the possible consequences of the risk occurring in the organization. Failure to attract or retain top talents can negatively affect the business’ competitiveness. This because businesses rely on the talent of their employees to develop innovative products that meet customer needs. Businesses can overcome this challenge by offering attractive benefit packages and remuneration to employees. This can reduce poaching of top talent by other businesses. Another risk is fluctuation in currency exchange rates since the business is international (Aubert, 2012). The risk impact is low. The impact of risk was determined through a qualitative assessment. In qualitative assessment, the risk manager looks at the probability of occurrence and the possible impacts. Although the probability of currency fluctuation is high, it might not have a significantly high impact especially in the long-run. Action for improvement involves currency hedging, which acts like some kind of an insurance against the impacts of currency fluctuations.
Another risk is economic recession, whose impact is low. Determining the risk of economic recession involves examining the probability of occurrence and possible impacts. Incidences of economic recession are infrequent, meaning the risk is less likely to occur. Furthermore, businesses can be able to take measures to cushion themselves from the impacts. Potential action for improvement is downsizing the scale of operations. For instance, the business may reduce benefits or lay-off some employees. High debt is a financial risk with high impact (Aubert, 2012). In determining the risk of high debt, it is important to analyze the risk to business if the maturity date is reached. One possible consequence is receivership, which indicates that the risk of bad debts is high. It is also important to consider the impact on the business reputation. Bad debts damage the reputation of the business. A business can avoid bad debts by ensuring there is an efficient administrative system. This can help examining the cash flow estimates to determine if the business can be able to pay its creditors.
Changes in the legislative and regulatory environment present a medium risk to the business. This risk is medium because it has a low probability of occurring. Furthermore, the regulatory risk can only affect a business only in circumstances where it is unable to respond appropriately to the new regulations or laws. A plan for improvement entails implementing a regulatory risk management program that can help in scanning, assessment, and monitoring of risks. Data loss through hacking or cybercrime presents a high risk to the business. This is a high impact risk since there is a high probability of occurrence and the potential for loss is high. Cyberattacks can lead to damage to the reputation and customer confidence. The potential action for improvement is the use of up-to-date information systems. Legacy systems have a higher chance of experiencing cyberattacks.
Another high impact risk is damage to physical property, which is under process risk (Aubert, 2012). Modern commercial buildings are equipped with expensive machinery and other technologies, which may be difficult for the business to replace. Damage to physical property is high risk because of the high loss that can arise in the event that the risk occurs. The risk of damage is also high, which may result from fire, burglary or theft, natural disasters, and other reasons. A potential action is improving the security around business premises through hiring guards and installing CCTV. High staff turnover presents a medium risk to the business. The costs of replacing staff may be relatively higher. However, the management can be able to take action to prevent high staff turnover, which makes it a medium risk. A potential action is to improving the working conditions.
Reference
Aubert, N. (2012). A world of danger. Retrieved from http://www.artscouncil-ni.org/images/uploads/business-support-documents/risk_guide_for_board_members.pdf
