The risk that will be analyzed belongs to the sphere of business opportunities. NIB focuses on the active exploration of options outside its comfort zone without the appropriate strategic planning. One of the reasons for selecting this high risk is its ability to cause substantial harm to the company and result in massive financial losses. Additionally, utilizing available business opportunities is one of the main ways for any company to evolve, which means that the risk identification and analysis regarding this issue acquire the top priority for a firm that wants to develop and play a leading role in the world economy. For this reason, this very factor is selected for the analysis.
Risk Identification
One of the main ways to identify the given risk was through the in-depth analysis of the company’s functioning, previous experiences associated with similar firms, and investigation of traditional risks that are related to the utilization of business opportunity without the preliminary analysis and creation of the strategic plan needed to overcome all possible difficulties that might emerge in the course of new business venture realization. The effect of this aspect can be highly significant as it can occur at any stage of the business opportunity exploration and precondition its failure, which should be considered one of the most undesired outcomes undermining the company’s financial power and stability.
Risk Analysis
Having identified the risk, it is critical to analyze it to find its mitigation mechanism. The threat of business opportunity’s ineffective evaluation or failure can be considered quantitative. It will result in significant financial losses and might emerge because of the inadequate consideration of all factors that might impact the company at particular stages of its development and evolution. A drop in market stocks because of the inability to enter the New Zealand market will also precondition the deterioration of relations with NIB’s investors, which is critical for the future prospects of the company and its ability to compete with other actors who have interests in the same sphere.
Risk Evaluation
In evaluating the given risk, it is possible to admit that there is a high probability of failure because of the inappropriate planning and poor organization of preliminary activities. Considering the fact that NIB has already failed to grant a foothold in the New Zealand health insurance market, one can predict that the situation might become worse because of the insufficient attention devoted to this factor. This is why discussing the given aspect of the organization’s work; one should accept the fact that there are multiple options for it to become necessary for the future company’s development and evolution.
Risk Treatment
There are several options for treating this risk. First of all, the strategic analysis of the new entry with a calculation of all possible financial losses should be performed. It will help to avoid severe complications and problems and guarantee specific stability at all stages (Crouhy, Galai & Mark 2014). Second, a unique pool of available money should be created to use for any unexpected situations (Crouhy, Galai & Mark 2014). This will help to avoid significant and unplanned spending and create a more comfortable environment for the further growth of the company and its holding leading positions. Adhering to the proposed strategy, the company will be able to minimize the threat associated with the risk and continue its evolution.
Reference List
Crouhy, M, Galai, D & Mark, R 2014, The essentials of risk management, 2nd and, McGraw-Hill Education, London.