Risk Management: A Case Study

2. Risk Management Defined:

The Economic Times (2017) defines risk management as the proactive identification of potential risks, their analysis and the mitigation of the implications of risk. (http://economictimes.indiatimes.com/definition/risk-management)

4.1 History of risk management:

Risk management is an integral aspect of and is synonymous with corporate governance. According to Dione (2013), risk management has relatively new beginnings, with an awareness commencing from post World War II, where risk management was primarily associated with financial risk mitigation, but has now widened it’s scope to various other non-financial risk management events.

As individuals and organisations, there is a tendency to underestimate their

A risk analysis or Kurt Lewin’s (1951) Force Field Analysis are ideal tools for businesses to access and weigh their options with regards to the severity of the risk that the business will be exposed to and whether the risk is worth taking. Pritchard and PMP (2014) state that every project involves a certain level of risk and therefore it’s success is the precursor in determining which risks are worth taking on and which are to be avoided.

With the passage of time, there are several factors that contribute to organisations adopting a robust risk management framework, such as technical complexity, conflict of interests at a board level and across the organization, and manipulation of any kind in business, amongst a host of other contributing reasons.

4.3 Principles of Sound Risk Management: In order for a business to strike the ever elusive balance between profitability and maintaining a strong business ethos, it is imperative that they understand and follow the principles of sound risk management. Larcker and Tayan (2015) define risk management as the process where organisations self-assess their exposure to risk. They state that COSO proposes that risk management should be ingrained into the organizational DNA from strategy to execution across the organization following an eight step process as

The organizational activity stemming from Apple Inc. are the production and manufacturing of the electrical components which are coming from low cost suppliers in Asia. It is due to the cost advantage that Apple Inc. requires to have hawk like vigilance towards it’s suppliers and their reciprocal responsibility to Apple Inc. While Apple Inc. is vocal about its stringent standards and focus on quality by constantly requiring suppliers to imbibe ethical practices and empowering them with the required knowledge, skills and abilities to be on the same wavelength.(https://www.apple.com/supplier-responsibility/) . An over-reliance of outsourcing production and manufacturing of it’s components is one of the biggest risks Apple Inc. faces not only in terms of quality control but also other peripheral issues such as ethical and human practices. One of Apple Inc.’s biggest suppliers is China, a country plagued by political instability and military regime. Any form of upset in this equation can have a catastrophic effect on the supplier’s ability to meet Apple Inc.’s demands and therefore impact the end product distribution, not only causing financial damage, but also severe reputational damage. Another aspect to seriously consider is the quality of components that are manufactured as well as a breach of confidentiality and leaking information to the market and