Risk management is defined as the process used to identify, assess and prioritize risks. Risks are normally handled or given attention according to the priority they are given. There are several steps involved in each of the processes of risk management.
In the identification of the risks, one has to consider their causes, the disruptions they cause to the company’s operations, the reasons for their occurrence, and the resultant changes (Haslet 2010, p. 12). In risk assessment, hazards consist of the harm that might be encountered in the course of managing the risk.
Therefore, precautions, implementation and re-evaluation of all the stages and close monitoring, are the steps that need to be taken. All these factors are also considered in prioritizing risks (Lark, Galai & Crouhy 2000, p. 110).
Political Risks
The location of the company’s production and manufacturing unit near Pluwer River is likely to raise concerns in the society. Operating restrictions may be a big setback and they could hinder the company’s expansion plans. The surrounding neighborhood complains of the risks of disease outbreak due to chemicals that have been spilled into the waters.
The states and countries that use the Pluwer River’s waters are likely to file these complaints in court (Moran 2004, p. 65). Therefore, the company needs to re-examine its level of preparedness in managing these risks. The controls operating currently also need to be examined.
The decision making operations should continue without failure as this may help solve the problem and improve the economy of the people living in this area, who depend on the company for employment (Henisz & Zelner n.d., p. 3).
Economic Risks
The likelihood of the company having economic problems is another factor that should be considered. Due to the changes that have occurred in the global market, the organization must put in place new prizes for the company’s products. This is a risk that must be made by the company to avoid losing its trusted customers. The competition it gets from other car battery manufacturing companies is fierce.
Demand is likely to go down due to the relatively cheaper products of other companies, which are available in the market. Another way to solve the economic crisis this company is facing is the production of high quality products. The name of the company is a household brand in many countries, and this is one of the areas it could exploit (Rudolf, Hommel & Frenkel 2005, p. 212).
Social Risks
The requisite measures should be taken to protect the vulnerable people in Puma Township. The social protection criterion has to be presented as safety for the poor and the employees living in Puma town. The program should aim at improving the quality and standard of living of the people in this town. This could help promote cohesion between the company and the society (Lynch 2009, Para. 1-4).
Technological Risks
One of the technological risks facing this company is the production of batteries of poor quality. This might be a little higher in expenditure cost, but it could help in maintaining the customers’ trust and confidence.
The reason behind this is the stiff competition from other manufacturing companies in the market. Since the prices of its batteries are relatively high, coming up with high quality products can enable it to record more sales without necessarily lowering its prices (Chapman 2011, p. 312).
Legal Risks
The company faces various legal risks, which need to be resolved. Product and employee liability risks are among the various legal dangers it faces. The product liability risk can be minimized by the company through outsourcing. This absolves the company from being legally responsible for the final products.
The employee’s liability refers to the deduction of their payments so that the company can invest more in regaining its economic stability (Dilanchian 2009, Para. 2).
All companies must comply with the companies’ act of legislation and The Bart Err Limited is not an exception to this rule. If it fails to comply with this act, the company risks being subjected to legal action by the government or the other authorities involved (Padmanabhan, Lakshmikumaran & Sridharan n.d., p. 1).
Environmental Risks
Environmental protection is very important to any organization or company. The Bart Erry Ltd. Company has a legal responsibility in protecting the environment from pollution. The risk of spillage of the company’s chemical storage tanks to the Pluwer River is an environmental problem that must be tackled at once.
The company is likely to be fined according to the law governing the environmental management and responsibility of such companies. This is an inescapable risk that the company has to take (Petley & Smith 2009, p. 122).
Competitive Risks
The risk of competition is likely to see the company reduce the price of its batteries and their components. This will help attract customers who might consider buying batteries from the new companies that sell their products at cheaper prices. The company may experience an income reduction but at least maintain its market segment (Kytle & Ruggie 2005, p. 2).
Disaster Recovery Plan
The Company should employ environmental hazard management experts to help in detoxification of Pluwer River. Appropriate anti-toxins should be used to reduce the level of the toxins released by the chemicals the company manufactures (Fischbacher-Smith & Fischbacher-Smith 2012, Para. 1).
The company can also decide to compensate the small scale fishermen in Puma town and encourage them to stop fishing until detoxification is completed. Taking into account the technical hazards that normally emerge, the company will have to construct a wall surrounding its storage facilities. This wall will prevent any future disasters from occurring in the future.
The Bart Erry Ltd. Company has an obligation to ensure that the storage systems of its chemicals are improved so as to eliminate the possibility of spilling. The tanks should be closed with tight lids that should not break open, even under high pressure (Holzmann, Sherburne-Benz & Tesliuc 2003, p. 3).
The value chain analysis involves the manufacture, distribution, and supply of products to the consumers. The main parties involved in the chain are the shareholders of the company. In addition to manufacturing, the company also carries out distribution in order to reduce the cost of its batteries at the consumers’ level. The chemicals used by the company are produced by the same factory (Holzmann & Jorgensen 2000, p. 4).
This reduces the expense incurred in buying finished chemical products as the cost of producing them is cheaper. The employees are directly linked to the company and can directly by doing business with it.
The company employs these four principles for effective chain business running: auctions and bidding, chain coordination and supplying in e-business, multiple channels of supply and network design. These methods are yet to be fully implemented, even though some of them are underway (Simchi-Levi, Wu & Shen 2004, p. 3).
In summary, the Bart Erry Ltd Company is a blooming business oriented project with a vision of improving the lifestyle of people around Puma town and the world at large. Unanticipated disasters and other risks that occur in this type of business are to be expected. However, the effective management of the risks involved and the implementation of its well thought out strategies will see its expansion plans become a reality.
References
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Dilanchian, N 2009, ‘Business law loegal risk management framework’, Dilanchian.com. Web.
Fischbacher-Smith, D & Fischbacher-Smith, M 2012, ‘Risk management’, Palgrave- journals.com. Web.
Haslet, WV 2010, Risk management: foundations for a changing financial world, CFA Institute, Hoboken, NJ.
Henisz, WJ & Zelner, BA n.d., Political risk management: a strategic perspective, Wharton Publishers, Philadelphia, PA.
Holzmann, R, & Jorgensen, S 2000, Social risk management: a new conceptual framework for social protection, and beyond, The World Bank, Washington, DC.
Holzmann, R, Sherburne-Benz, L, & Tesliuc, E 2003, Social risk management: the world bank’s approach to social protection in a globalizing world, The Pennsylvania State University, Washington, DC.
Kytle, B, & Ruggie, JG 2005, Corporate social responsibility as risk management, Harvard University, Cambridge, MA.
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Lynch, GS 2009, Risk management and economic change: a catalyst for re-evaluating business preparedness, mitigation and response, Marsh & McLennan Companies, Inc., New York, NY.
Moran, TH 2004, International political risk management: the brave new world, The International Bank for Reconstruction and Mangement/ The World Bank, Washington, DC.
Padmanabhan, TK, Lakshmikumaran, D, & Sridharan, F n.d., Corporate legal risk- management and mitigation, North Dakota, New Delhi.
Petley, DN, & Smith, K 2009, Environmental harzards: assessing risk and reducing disaster, Routledge, New York, NY.
Rudolf, L, Hommel, U & Frenkel, M 2005, Risk management: challenge and opportunity, Springer Berlin, New York, NY.
Simchi-Levi, D, Wu, S, D & Shen, Z, M 2004, Supply chain analysis and e-business, Kluwer Academic Publishers, New York, NY.