Risk Management Complete Guide To Business -Myassignmenthelp.Com

Question: Discuss About The Risk Management Complete Guide To Business? Answer: Introduction According to the Harvard Business Review (2018), risk assessment can be defined as the process by means of which the various companies or the business organisations measure the amount of risk faced by their organisation. The amount of qualitative or quantitative risk faced by any organisation or company can be effectively measured by the use of tool called Risk Exposure Calculator(Harvard Business Review 2018). This particular tool is often used by companies as well as business organisations to measure the amount of risk faced by them. It is to be noted that a knowledge of the risks faced by a particular company or organization can help them to overcome those threats which will lead to the overall growth as well as the development of the company or the organisation concerned. The company selected to study the process of risk assessment is Property Millionaires. It is an Australian company and provides services to the customers in the real estate sector. The company is a medium sized one and have around 10 employees at their office. However, it is seen that the business of the company in the recent times have been expanding and the organisation is a dilemma regarding the kind of action which they need to pursue. The owner of the company, George wants to expand the company whereas the managers and the regional managers of the company do not favour the expansion idea of the owner, George. Pressure points due to growth In the opinion of authors like Simchi-Levi, Schmidt and Wei (2014), growth forms one of the major aspects of all business organisations and almost all the companies consider the overall growth as well as the development of their organisation to be their primary motive. However, as stated in the Harvard Business Review (2018), there are various risks involved with the process of growth as well as expansion. The major risks involved with the process of growth are listed as follows- Pressure for performance In the opinion of authors like Van Dooren, Bouckaert and Halligan (2015), the pressure for performance can become one of the primary sources of risk for any company or business organisation. In the context of the company Property Millionaires it will be seen that the owner of the company, George wants to follow the path of growth and therefore the existing employees will have to improve the level of their performance considerably. It is also noticed that the company does not have any particular strategy to increase their customer base. Each employees provides seminars to the customers using his or her intelligence and they report them back to the regional management only if they have developed anything substantial. Therefore, the company will have to take these factors into consideration if it wants to follow the path of growth and expansion. The score of the company as per the risk exposure calculator for this particular aspect is 4. Pressure for expansion According to authors like Aebi, Sabato, and Schmid (2012), every company can embark on the path of growth as well as development, however, it is very difficult to sustain that process. It is often seen many companies lose their way after initial periods of rapid growth as well as development and expansion. The owner of the company, George has decided to follow the path of expansion. Apparently, many customers are liking the services provided by the company and the company needs to hire more employees in order to cater to all the needs as well as the requirements of these customers. However, it is seen that the new candidates recruited by the company are not only inexperienced but inefficient as well. Therefore, the quality of the services provided by the company is declining. Thus, it can be said that the pressure for expansion is adversely affecting the company. The score of the company as per the risk exposure calculator is 5. Inexperience of key employees In the opinion of the author Picken (2017), the kind of employees working for an organisation or company determines the success or the failure of the organisation. Most of the employees of the company Property Millionaires work on a commission basis and have devised their own means to grab more customers. Moreover, the company in a bid to expand is recruiting new candidates. However, it is seen that most of these candidates are inexperienced and does not contribute much to the company. It could affect the prospects of the company in the longer run. The score of the company on this particular aspect is 4. Pressure points due to culture According to the article in the Harvard Business Review (2018), culture forms one of the most important aspects of any business organisation or company. It is often seen that the companies which have an aggressive work culture are more likely to succeed in the longer run than the ones which do not have such cultures. The pressure points due to culture are as follows- Rewards for entrepreneurial risk taking In the opinion of the authors like Lazonick and Mazzucato (2013), the success or the failure of a company or a business organisation depends on amount of run that its entrepreneurs are willing to take. It is to be noted that the company Property Millionaires provide free seminars to the customers in bid to sell them their real estate deals. These seminars are designed by the employees who get salaries on the basis of the number of the customers they bring to the company. They report about the seminars to the company only if something substantial economics up. Therefore, it can be said that the employees of the company are willing to take risk for the overall growth as well as development of the company. The score of the company for this particular aspect on the risk exposure calculator is 2. Executive resistance to bad news Authors like Beske and Seuring (2014) are of the opinion that the overall growth as well as the development of any company or organisation depends on the way they are able to handle the bad news. It is to be noted that the company George, provides free seminars to the customers to lure them to take their lucrative deals. These seminars are designed by the employees in the manner they see fit. They report back about these seminars only if they have some substantial results. Thus, it is seen that the negative as well as the bad news are not often conveyed to the regional managers. The score of the company for this aspect on the risk exposure calculator is 5. Level of internal competition Internal competition forms one of the most important aspect of any organisation or company and if properly utilised can lead to the overall growth as well as the development of the company or the organisation concerned. It is to be noted that the company, Property Millionaires do not provide fixed salary to the employees and they work on the commission basis. The level of competition within the company is very high and the employees who are able to bring amount of customers to the company are given more priority than the others. This sometimes creates negative kind of environment within the company and it is also seen that the employees to attract more customers use all sorts of unethical as well as immoral means. The score of the company on this particular aspect is 4 as calculated on the risk exposure calculator. Pressure points due to information management The article in the Harvard Business Review (2018), states that the effective management of the information within an organisation or a company is very important for the overall growth as well as development of the organisation concerned. The article also states that there are various risks involved with the process. The risks which are involved in the process are listed below- Transaction complexity and velocity The primary motive of the company is to provide effective services to the customers in the real estate sectors. The company in order to attract the attention of the customers provides free seminars to them, which informs them about the precepts of the real estate industry. The company therefore, needs to constantly update their database as it is usually seen that the laws which govern the real estate activities constantly change. However, it is seen that as the seminars are designed by the employees so they focus on the profitably of the transaction and not on the relevant regulations. The score of the company on this aspects as measured by the risk exposure calculator is 3. Gaps in diagnostic performance Effective measurement of the performance of the various employees as well as the organisation itself is one of the most important functions of the management team (Hofmann et al. 2014). However, in the company, Property Millionaires it is seen that the various regional managers are often unaware about the actual performance of the employees as they do not work on a fixed salary scale but on the incentive scale. Therefore, there is often a gap in the diagnosis of the performance and this can hamper the prospects of the company in the longer run. The score of the company for this particular aspect as measured by the risk exposure calculator is 4. Degree of decentralized decision making In the opinion of authors like Sadgrove (2016), the decision making power should within an organisation should be with the management team only. It is often seen that if the decision making power is provided to many people it leads to a gross misuse of the power. In the company, Property Millionaire it is seen that there is a management team which is supposed to make the various decisions related to the seminars. However, most of the time it is seen that the various employees design the seminars as per their requirements and they report back the changes to the regional managers only if any substantial result comes out of it. Therefore, it can be said that the power within the company is decentralised. The score of the company in this particular aspect is 4. The above given scores for various aspects when added up will give a overall score of 35, which makes the company fall in the danger zone category. Therefore, the company needs to come up with effective measures to save itself from the eminent risks which is facing at the present moment. Conclusion Therefore, from the above discussion it becomes clear that the management of risk forms an important aspect of any company or business organisation. Effective management of risk is very important as it can lead to the overall growth as well as the development of the entire company or the business organisation concerned. The risk assessment of the company Property Millionaires clearly indicates that it fall under the category of the danger zone and needs to come up with some effective remedial measures immediately in order to save itself from the threats which it is facing right now. References Aebi, V., Sabato, G. and Schmid, M., 2012. Risk management, corporate governance, and bank performance in the financial crisis.Journal of Banking Finance,36(12), pp.3213-3226. Beske, P. and Seuring, S., 2014. 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