Identifying and Mitigating Risks Faced by Organizations
Discuss About The Public And Government Responses To Attack.
The different aspects of the change in the marketing are based on the proper functioning of the businesses in the market. Identification of the different uncertainties and the mitigation strategies has helped the businesses to bring in changes in the systems of the business in the market. The purpose of the discussion depends on understanding the different sources of risk and their assessment to identify strategies to mitigate the same for bringing in improvements in the organization.
Threat is defined as circumstances or situations that might affect the security of an asset. The productivity of the organizations and its growth and expansion of the businesses is based on the identification of the needs for protecting the assets (FEMA 452, 2018). The identification of the uncertainties and the threats that might be faced by the organization helps in maintaining the different levels of strategies to mitigate the risk factors.
The different sources of the risks that are faced by the organizations in the market are based on the criminal activities, the commercial and the industrial changes that influence the competitiveness in the markets, natural disasters that might affect the productivity of the organizations and the foreign intelligence services that might result to the data piracy. The identification of the different sources of the risks has helped the organizations to bring in changes in the systems of the same in the market. Sheppard (2008) stated that identification of varied risk factors has helped in enumerating the change in the systems facilitating sustenance. On the other hand, Tucker and Broder (2006) stated that the enumeration of the risk factors and the identification of the different sources of the risks help in the identification of the motifs of the different Terrorist and Extremist groups. The identification of the motifs and the beliefs of the terrorists helps in bringing forth changes in the systems to facilitate the ways of counter-terrorism.
The assessment of the threats is dependent on the identification of the threats that might be faced by the enterprise while undertaking the different actions. Abbott (2016) stated that threat assessment is a strategy that helps in identifying the areas of the risk, understanding the seriousness of the threat and thereby developing plans to mitigate and avoid the threats. Fennelly (2016) stated that the smooth functioning of the business is dependent on the functioning of the assessment of the risks and thereby formulates strategies to bring in changes in the systems to resolve the risks that are faced by the businesses in the market. The proper assessment of the threats helps in enumerating strategies for mitigating.
Types of Harm Costs: Direct Financial, Physical, and Intellectual Costs
The different ratings of identifying the risk factors are dependent on measuring the likelihood of the risks to occur while the business undertakes its operations. It helps in understanding the priorities of the risk factors and the manner in which the risks can be mitigated. The identification of the priorities of the organizations and the manner in which the different functions of the organization can be undertaken diligently is facilitated through the identification of the uncertainties and ratifying the same. For example, the criminal activities are severe in nature and very likely to happen while undertaking the activities of the business. The different terrorist activities also affect the society and the organizations relating to their functions. It is very likely in its nature and the effects are severe as it imposes serious threats on the society and the organizational structures. The different kinds of uncertainties that are faced by the organizations while undertaking the processes is based on the risks of different fraudulent activities and the violent actions. The smooth functioning of the businesses is subject to varied changes in the systems and the performance of the business in the market. Therefore, the prioritization of the uncertainty will be helping the organization to face the circumstances of the threat that might affect the functions.
On the other hand, prioritizing the natural disaster of the organization or the competition in the market will be helping the organizations to come up with strategies to face the threat effectively. It will be helping the businesses to bring in changes more effectively in the systems of the business in the market. The prioritization of the threat of a natural disaster is significant as the company might face a decrease in the productivity of the business management through the change in the climatic and the atmospheric conditions (Fay, 2007). Again, the volcanic eruptions and earthquakes might create serious damage to the properties of the business. It helps in the identification of the different possible outcomes of the fall in the productivity of the business. On the other hand, increase in the market competition is again an important risk that is faced by the organization, which is severe in nature. The change in the trends of the market and thereby the improper assessment of the trends might affect the market position of the business in the respective markets.
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Figure 1: Risk Assessment matrix
(Source: By Author)
Traditional Risk Management Strategies for Mitigating Risks
The different types of Harm Costs that are encountered by the organization are Direct financial cost, Physical cost and Intellectual cost. The enumeration of the different harm related costs helps organizations in understanding the different modes of improvements in the market as per the needs of sustenance.
Direct financial cost is the costs that are incurred by organizations while replacing the plant or personnel of the business after the risk is faced by the business (Halibozek, Jones & Kovacich, 2007). It helps in assisting the costs of undertaking a change in the processes and the functioning of the business to bring in improvements in the situation of the business in the market. The direct costs that are incurred by the businesses help in maintaining the performance of the businesses in the market. For example, the costs that are incurred by PepsiCo while bringing in changes in the product range to improve their market conditions. The investments that are made by the company have helped in sustaining the systems of the business in the market against the competitors. It has also helped the business in bringing in changes in the product offerings as per the needs of the customers in the market. The risk that is faced by the organization is based on the outdated technology and the analysis of the trends of preferences of the customers. In order to adhere to the change in the tastes and the trends of the international markets the company spent some $ 3,040 million to facilitate he sustenance of the business after the assessment of the threat of dissolution of the business.
Physical cost refers to the cost that is incurred by the organizations due to loss of lives of the workforce while undertaking operations. However, the loss of life cannot be replaced by the organizations in terms of money until insurance claims are forwarded. The threats that are incurred by the organizations while undertaking the change in the markets is based on the effective functioning of the workforce. However, there are situations when mishaps happen and that night cost the life of the people working for the organizations. For example, the Deepwater Horizon explosion undertaken by Transocean of BP has snatched lives of many workers who were working in the rigs. It has affected the growth of the organization and a cost of $ 2 billion was incurred by the organization to cope with the threats that was faced by the same after the impact.
Intellectual cost of the business is based on the intangible costs that are incurred by the organizations due to the loss of goodwill and reputation of the business due to different malpractices. The intellectual cost of the organization, being intangible in nature, is hard to identify. However, there are in stances where the market situation of the business and the goodwill of the business are compromised due to certain activities like the cyber attacks or low quality of the products (Fischer & Halibozek, 2008). It affects the brand image of the organization resulting to the incurrence of the intellectual cost. For example, Lloyds TSB acquired HBOS plc (the holding company of Bank of Scotland plc) whose net assets produced a negative goodwill of Lloyd’s in the market amounting to some GBP 11 billion. It has affected the functioning of the business in the market due to the generation of negative goodwill in the market structure.
The traditional risk management strategies help in identifying and mitigating the risks that are faced by the organizations. It helps in enhancing the functions of the businesses in the market. The different traditional risk management strategies are:
- Reduce the risk.
A sound security system and the assessment team of the organization help the same in identifying and avoiding situations of the risk. For example, the risk assessment system that is undertaken by US Government to understand the different aspects of the terrorism and create policies and squads of counter terrorism that has helped the nation in exterminating the terrorist activities.
- Transfer the risk.
The outsourcing activities that are undertaken by the organizations help the same in mitigating the factors of the risk that is adjoined to the production and the distribution functions of the business. Transferring the risks that might be faced by the organization through outsourcing helps in the reduction of the risks through the assignment of the skilled functions. For example, IBM has taken steps to outsource their services through different software modifiers. It has helped the organization in making a reduction in the risk count.
- Avoid the risk.
Avoiding the risks has helped in understanding the various aspects of the change as per the needs of the business. Avoiding the situations of the risks through the proper assessment of the factors and proper strategies helps organizations to undertake smooth functioning without interruptions. For example, the Coca Cola Company has taken steps to undertake various strategies to avoid the situations of the risks that affect the smooth functioning of the business.
- Redistribute the risk.
Redistribution of the risks helps organizations to bring in changes in the system and the functioning of the businesses as per the needs in the market. Redistribution of the resources helps in maintaining the smooth functioning of the businesses in the market. For example, AIBI International has taken steps to redistribute the risks that are faced by the organization to bring in smooth functioning of the businesses in the market.
- Accept the risk.
Accepting a level of risk helps organizations top take strategies based on anticipation of the risk and the manner in which the businesses can take steps to reduce the risks in the market. For example, BreadTalk has taken steps to identify and assess the risks that are faced by the business and the manner in which the risks can be mitigated through proper formulation of strategies.
References
Abbott, R. (2016). 14 Hal the Inventor: Big Data and Its Use by Artificial Intelligence. Big Data Is Not a Monolith, Economics.
Fay, John Jay. (2007) Encyclopedia of Security (2nd Edition).
FEMA 452 – Risk Assessment: A How-To Guide to Mitigate Potential Terrorist Attacks Against Buildings | FEMA.gov. (2018). Retrieved from https://www.fema.gov/fema-452-risk-assessment-how-guide-mitigate-potential-terrorist-attacks-against-buildings
Fennelly, L. (2016). Effective physical security. Butterworth-Heinemann.
Fischer, R. J., & Halibozek, E. G. Green.(2008) Introduction to Security.
Halibozek, E., Jones, A., & Kovacich, G. L. (2007). The corporate security professional’s handbook on terrorism. Butterworth-Heinemann.
Sheppard, B. (2008). The psychology of strategic terrorism: Public and government responses to attack. Routledge.
Tucker, E., & Broder, J. F. (2006). Risk Analysis and the Security Survey. Butterworth-Heinemann.
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