organization culture always encourages performing even better B u s i n e s s F i n a n c e
please answer the 2 following peers to the question below:
Identifying and Balancing Risk and Reward
Name one of the biggest strategic risks and one of the biggest financial risks that you face in your business or industry, and briefly explain how each of these can impact your business. For one of these, provide your ideas on the steps your company should take to significantly mitigate these risks.
Hello Dr. Lou and Classmates,
A ‘risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on one or more objectives. Positive risks are opportunities, while negative risks are threats.’ (1)
I am working on a new product/service for my company that follows a very innovative design culture in the working process. It basically works on the e-commerce trade for my company of providing shopping products to the customers. The organization culture always encourages performing even better than previous and is the best place which offers stress-free work.
The risk factors are the decision-making process that is necessary to be fixed in the organization, the organization risk factors are lying on the better decision-making process by overcoming the constraints in the organization. Another risk factor is the improper strategies; the strategies are required to be utilized for the benefit of the organization to avoid any competitive advantage.
The risk is quantitative because it is necessary to be pre-decided or pre-determined. Based on the probability the impact of the project is identified before any wrong aspect of the decision occurs in the organization.
The tools involved are Sensitive analysis and decision tree analysis. These two analyses are required to identify the risk in any project management or any model designing purpose to get the best outcome from it.
- PMI. PMBOK. 5th Edition.
Hello Dr. Lou and classmates,
Strategic Risk: Technological Shift rendering products obsolete
Financial Risk: Data/Cyber breach
As a major, player in the telecom industry, my current organization has remained viable based upon its history and branding. Known for having one of the most reliable networks, the company has remained in the good graces of its clientele. A shift in technological parameters could negatively affect this standing causing a rapid loss of customers and market share. Should the level of product offering decline, brand confidence may follow resulting in high churn and profit declination. The history of high customer reviews would quickly change as negative reviews spread quicker than any organization or person would like to admit.
A cyber attack or data breach would expose the organization to the possibility of law suites, as well as remediation of the breach. Once again customer confidence will be impacted as well as liabilities for the occurrence. Security is very high on everyone’s priority list and therefore no company can afford to be an easy target. Repeated occurrences will surely lead to an organization’s demise.
The significant mitigation of begins at the top with awareness and process controls. In regards to a Technological shift, the company must invest in innovative thinking. Beginning from the inside out, ensuring all employees understand their involvement in the process helps keep customer focus. Leadership must be able to engage both internal and external clients to keep an understanding of what customers want.
Maintaining an understanding of the industry with a vision to the competition, the company must stay in constant communication with its customers. With constant reviews and product testing, all offerings must be viable. The idea is to engage via a pull market and not relapse into the older push methodology. By keeping to products that answer customer needs and desires, the organization can mitigate the chance of experiencing a negatively impacting shift.
Monitoring current consumer trends and prototyping will also aid in mitigating the risk. Using an agile methodology, the company will be able to quickly respond to market shifts and balance its offerings. Having a direct understanding of the product lifecycle is paramount. We must be able to recognize a developing market need as well as one that is phasing out in order to maximize resource allocation. Once again, will be key.
Projects must be scrutinized and viewed harshly with rules such as Warren Buffets number one; never lose money. Based upon company guidelines, all product viability must pass standards before action would take place. Such controls are certainly the way to maximize limited resources. In summary, mitigation must be embedded within the company culture from top to bottom. All parts of the strategy must have a representation of mitigation built into its processes. Just as lean methodology stretches its hand through all levels, the same free flow must apply for risk management. Communication must be leveraged just as awareness.
- Bragg, S. M. (2017). The CFO Guidebook: Third Edition (3rd ed.). Accounting Tools.
- Corporate Finance Institute. (2020, March 27). Business Life Cycle. https://corporatefinanceinstitute.com/resources/knowledge/finance/business-life-cycle/
- Pidun, U., Rodt, M., Roos, A., Stange, S., & Tucker, J. (2021, January 8). The Art of Risk Management. BCG Global. https://