A Risk Management Program for a Corporation Research Paper

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Businesses are always exposed to risks of several kinds, for which risk management becomes mandatory. To keep the corporation safe, an appropriate risk management program is obligatory even in times of uncertainty. Risk management helps in strengthening communication between the higher authorities and low line workers. The reports and analysis would be shared vertically and horizontally so that risk mitigation becomes easier through a smooth communication flow. It is conducive to a healthy organizational culture where trust is boosted and positivity is encouraged. In the absence of this program, the business would be unable to define its objectives or even meet its goals. This paper aims at designing a risk management program in which traditional and financial enterprise risk management would be covered. Further sections of the paper would discuss how those identified risks affect the organizational goals to get a clear picture of the business's existence and prosperity in the market.

A minimum of ten risks, both including traditional and financial risks, are as follows:

i. Since the strike of pandemic worldwide, there has been a constant risk of economic slowdown with slow profits and recovery (The One Brief, n.a.). There is a risk of reduced earnings as the businesses might not be progressing at the rate they were doing before.

ii. Project risks due to the slowdown of the economy, the project costs, or its schedule. The projects might be behind the projected timeline, and the expected deadlines are not met.

iii. Damage to the company's reputation in the market if a product fails due to economic slowdown or projections of the project. The company's image can also be affected by a privacy breach or any misconduct committed by the well-known company's management person.

iv. Market and trade risks are always present in the industry since competition always exists. Even if it is about the product pricing of two products offered by two different companies, the market, and trade risks would be there. Moreover, certain unanticipated risks cannot be predicted by market changes such as a sudden change in technology. It can eventually lead to financial risks for the corporation as well.

v. Political unrest such as a sudden change in the government can cause risk for the businesses and a change in laws and policies that directly affect the commercial practices.

vi. Cyber-attack is one of the most emerging and significant traditional forms of risk faced today. Breach of privacy, stealing important data, including customer's information by the cyber attackers, is one of the most talked-about risks of modern times.

vii. Human-made risks such as civil unrest, terrorism, or natural hazards are also some of the calamities that pose threats to businesses' normal workings on a global level.

viii. Credit risk is one of the most common forms of financial risk associated with borrowing money. In investment terms, if the borrower is unable to repay the loan, then he would become a defaulter, and the company or the investor can bear huge losses (Chen, 2020).

ix. Liquidity risk is another form of financial risk on which the company or the investor becomes unable to meet his short-term debt compulsions.

x. Operational risks are always involved in a business, and they also a form of financial risk. It can be due to poor management practices or faulty financial rationality. If the company or the investor is unable to succeed in what it has promised, then financial losses are inevitable.

Addressing These Risks with Meeting the Organizational Goals

Organizational goal of "survival" and identified risks

Addressing the risk of economic slowdown would help in the business's survival by strengthening its sustainability through tough times. It can involve marketing the business to the customers in an effective way so that it implants a mark in their minds, broadening of the customer base and attracting the new ones, boosting the morale of the employees so that they work with engagement to keep the business running successfully and bringing in innovation in the business practices (Queensland Government, n.a.). Networking can be a useful strategy to cope with economic slowdown since it would help the corporation know what other peers are doing to deal with the situation. Some more ways to minimize this risk would entail running assessments for improving the company's existing procedures, conducting evaluations on the employees for upgrading their skills and rectifying any mistakes, and finding new opportunities for the staff, suppliers, and other related business partners to keep them going.

Addressing the risk of project vulnerability can be handled by keeping a close eye on the technological advancements in the market and innovation.

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The projects, especially those related to product development, are highly dependent on technology, which has a high risk of changing each day (Kaplan & Mikes, 2012). Keeping updated information would help the organization deal with project risk and help in effortless survival.

The intangible assets, like the company's reputation, should be saved as it soon becomes a risk in uncertain or turbulent markets. A company with a durable repute would come out of the turmoil in such a market since it would easily attract new customers. The employees would be motivated enough to keep the company running with energy (Eccles, Newquist & Schatz, 2007). Such a company would be in the position of earning stable profits, and future growth would be guaranteed so that its survival is safeguarded in times of risk.

Market risks could be mitigated through diversification if the company knows the survival trick. Through diversification, a range of products and services could be introduced into the market so that if one product fails to impress the customers, the other might help the company earn some profits. It would be good assistance for the company to cope with market fluctuations and downturns so that business survival does not remain a…

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…slowed down in times of civil unrest and terrorism. The incoming of the required financial resources for the business's long-run profitability and growth becomes extremely challenging, and mitigating this risk becomes a priority for both small and large, businesses. For handling the implications of this risk on the business, the firm should have a preparedness plan by including protecting the employees, catering to the fortification of the facilities, resuming the operations with limited costs, necessary adjustments, and maximized net profits (Robbie, 2020).

Credit risk can be handled when the firm's ability to pay back is strong. If financial resources are available, the firm would be able to earn its reputation in the market by paying back the loans. Research has proved a positive relationship between credit risk management and business profitability (Sun & Chang, 2018). Higher the efficiency in credit risk management, higher the chances of business profitability and growth. Therefore, higher business profitability and growth can be achieved by paying attention to management and control over the finances and regularly keeping track of the balance sheet.

Studies have indicated that liquidity risk and profitability are inversely related, which means that if liquidity risk is high, profitability is low and vice versa (Saleh, Abu Afifa & Murray, 2020). Conversely, the higher risks are related to higher profits and thus are directly proportional. It is suggested that businesses earn high profitability and maintain growth when the firm's return on the investment is greater than its costs. The firm must explore its short term assets and short term liabilities so that whenever it feels it is going on the wrong track, it can quickly amend its actions and set things right.

Operating costs have a direct adverse effect on the firm's profitability and capital structure, especially for financial businesses. To prevent this risk, the business can conduct frequent risk-control self-assessment, stay updated with the regulation, scrutinize any misleading acts of the employees that can result in financial crimes, detect weaknesses early within the management practices, etc. (Eceiza et al., 2020). For achieving the organizational goal of business profitability and growth, the mitigation of this risk is essential for long term sustainability.

Conclusion

Risk management is the savior plan for any organization, either small or large. Managers and employees should prepare such a plan as soon as they enter the business since it prevents the business from bearing losses and makes their jobs safer. Strategies could be devised promptly so that injury trends and hurtful losses could be avoided from reoccurring. The potential risk identification would help the projects be completed on time as expected; the deadlines would be met, particularly for the construction companies whose projects are for other renowned companies.

Their profits are largely dependent on whether the projects would be delivered on time, and for that, detection of possible risks and their eradication is important. Further, it saves time and costs once the risks are identified beforehand,….....

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