Evaluate How Peoples Perception Of Risk Influences Risk Management

Question: Discuss about the Critically Evaluate How People's Perception Of Risk Influences Risk Management. Answer: Overview about the concept of risk: In general point of view, risk is often mapped to the probability of some undesirable happenings that can be predicted. In the scenario analysis, risk is perceived as distinct form of threat, which is very low predictable. With the gradual progress of market needs, business organizations have to implement change strategies for satisfying the demands of customers. Business risk can originate from different areas from internal sources to the internal. Risk be it internal or external renders an immense negative effective on the overall success of business (Ghadge, Dani and Kalawsky 2012). Therefore,risk management is one of the most significant processes of analyzing risk factors and giving a proper prevention method for controlling entire process of business. Financial risk is considered as one of the most effective challenges for any business organization. This very specific study has focused to evaluate on how organizations by implementing various riskmanagement theories and models c an prevent expected risk factors in controlling business profitability. ISO 31000:2009 risk: In November 2009, International Organization for Standard has implemented 31000-riskmanagement model, which enables numerous business organizations for overcoming various risk factors and uncertainties. This very specific study has focused to make in-depth overview on how organizations by implementing this 31000-riskmanagement model, would overcome financial risk factors. This specific model identifies that risk management is primarily constituted with several major principles, which are as follows: Creates and protects the value of organization from being affected on reputation Helps to predict the uncertainties by analyzing the risk factors Risk management is dynamic, interactive and responsive Helps to evaluate the continuous improvement of the organization While facing any kind of financial risks the organization can implement 31000-risk management model, in order to overcome the situation. With the help of this very specific model iso 31000 principles, the study would focus to identify some of the major factors for evaluating on how risk factors can be controlled. The factors are as follows: Identify the risk factors based on uncertainties: While running the entire process of business the organizational experts can get an effective clue for uncertain situations. Especially, the business experts while keeping a constant track about their growth of organizational profitability can get an overview (Lavastre, Gunasekaran and Spalanzani 2012). As per the profit level of the organization, the financial experts can analyze that they may have to face uncertain situations. In this kind of situation, the role of an efficient risk analysis manager is to identify the possible reasons due to which financial risk may arise within the process of business. For example, Woolworths while facing an effective dilemma in rendering business profitability has identified the possible reasons due to which the company has to face immense challenges in maintaining profit level. However, the business experts have identified the fact based on customers review of Woolworth that the quality of products especially fruits and vegetables are very poor. The service providers are delivering immature fruits and vegetables for reducing the cost of products (Kaplan and Mikes 2012). As a result, customers have showed their reluctant attitude for purchasing the products from Woolworths, which resulted an instable economic growth on the current market. After this particular incident the federal court has ordered to pay total penalties of $3.057 million for breaches of the Australian Consumer Law due to this quality issue of house brand products (productsafety.gov.au 2018). As a result, employees failed to get proper facilities and benefits from the organization . The rapid growth of employee turnover took place at that time. Set the performance goal to reach the peak of success: After identifying the risk, business managers have to set a goal based on which the organization can overcome their level of crisis. In order to overcome the financial crisis the business experts have decided to check the quality of products in order to regain the profit level. Use participative decision making by involving the entire managerial department: Only financial managers are not the concerned persons for overcoming the crisis. The entire managerial departments including operation management, finance management, product management, marketing management are involved for taking collective decision-making (Pritchard and PMP 2014). The business managers with the help of participative form of leadership style have decided to involve all the managers for sharing their opinion and views regarding the current issue. Collecting constant update about the response of stakeholders: In this specific case, the stakeholders include customers and the employees. Customers feedback is highly needed in order to know their response. After identifying the risk, the managers should make effective promotional activities in order to regain international image and reputation. After making the promotional activities, the customers effective response is highly needed to collect. On the other hand, feedback from the employees is also needed in order to understand the current situation of business (Tse and Yuan 2012). Employees are the most effective sources with whom customers responses are interlinked. Therefore, the business experts would have to focus on gathering effective response of the customers. However, iso31000-risk management model primarily aims to set an objective and principle of risk management. Based on the principles the model enables the risk manager on how to overcome risks and uncertainties within the entire business process: Justify financial risk in the organization: As already mentioned, Woolworths is claimed to pay total penalties of $3.057 million for breaches of the Australian Consumer Law by Federal Court due to the product quality issues. This very specific amount caused a major financial risk for the multinational supermarket like Woolworths. The customers intended to provide their reluctant attitude for purchasing products and services from this multi-national brands (Cole et al. 2013). As a result, the organization has to face innumerable difficulties in maintaining business image and reputation. Due to this ethical dilemma, the business experts had to face immense difficulties in paying the employee wages properly. Due to the lack of job security, the organization has faced immense difficulties in gaining the attention of organizational employees. However, after identifying the financial risk the organization has rendered several risk analysis strategies. Numerous eminent scholars have provided their own opinion regarding the impact of financial risk on organizational success. Schmitt and Singh (2012) stated that product quality is one of the most significant factors for maintaining business sustainability on the market. As opined by Purce (2014) due to the lack of product quality, the customers can lose their hope from the organization. As a result, business experts have to face immense difficulties for regaining the trust of people. On the other hand, Federal court in protest to the quality issue of their products and services has imposed the penalties on Woolworths. As a result, the organization had to face immense difficulties in regaining their economic growth. From that perspective, the various aspects of financial risk is completely justified. Critical evaluation about the impact that people have on risk management strategies Paape and Spekl (2012) opined that the overarching term, risk management strategy implies a coherent approach for identifying, assessing and managing risks. As already mentioned Woolworths is one of the most recognizable supermarket chains occupying a predominant place in the realm of retail sector. Two years before the organization had to face an ethical issue from Federal Court. Lack of product quality was the primary allegation that Woolworths had to receive from federal court. As per the allegation raised by customers, the organization was providing premature fruits and vegetables to the customers. After using the products customers had to face quality issue. After receiving the allegation, the organization had to face drastic consequence. Woolworth had to pay total penalties of $3.057 million penalty for giving a respect to customers complaints (productsafety.gov.au 2018). In this kind of situation, the organization had to face immense challenges in being part of the internation al business market. Customers showed their negative response while receiving the products. As a consequence, the organization had to face immense financial risk that gave a major market threat for the company in order to expand entire business process. However, this very specific study has provided in-depth critical overview on how people associated with the organization have various impacts on the overall risk management strategies. The lethargies of the people associated with the organization is the primary reason of this kind of crisis. Purce (2014) stated that human resource managers have immense negative impact on the overall risk management strategies. Behind this financial risk, human resource managers have rendered some limitation on their managerial process. For an example, human resource managers while hiring employees at the workplace have not focused on their competency level. As a result, the organization had to invest sufficient amount of money for training and development session. In addition, the human resource manager had decided to reduce the amount of salary so that the financial risk factors can be measured. It left major negative impact on the overall service of the employees. Schmitt and Singh (2012) opined that the operation manager can implement some of the most effective risk management strategies which ultimately left negative impact on reaching organizational goal. Technologies should be used in the operation process so that the company does not have to invest large amount of money for paying the labor force. In order to implement technology the employees should have proper knowledge and competency in operating advanced process technology. Due to the lack of that knowledge, the employees created major issue in maintaining quality of products even in the packaging system. The role of an efficient finance manager is to identify the risk factor and to analyze several ways on how to overcome finance challenges. Finance manager primarily aims to make an in-depth analysis about the balance between profit and loss. If the profit level of the organization is low, the finance manager has to give a systematic plan on how to reduce the rate of loss. After being affected in financial crisis the finance manager of Woolworths failed to maintain a chronological data about profit and loss. As a result, the entire business process has faced a drastic consequence. In order to increase the profit level the finance manager can provide an overall graphical annual report where the finance manager tends to give a forecast on how to overcome financial risk. However, Woolworths trained managers at that time failed to maintain data record properly. In addition, marketing manager of a business organization like Woolworths may have to play major role for reducing financial risk. After the ethical issue faced by Woolworths the business experts had to face innumerable challenges in maintaining their image and reputation. In this kind of situation, the marketing managers had to play major role for maintaining promotional activities more effectively so that the business experts can overcome the financial crisis. By using various media vehicle, the organizational managers would have to reach the doorstep of customers. Paape and Spekl (2012) opined that the business managers would have to communicate with the customers directly by assuring them superior quality of services. As a result, the customers would like to show their interest for purchasing the products and services from Woolworths. However, due to the lack of sufficient budget the marketing managers failed to maintain effective promotional campaign due to which business reputa tion could not be regained at that time. However, employees have a major impact as well in implementing financial risk management strategies. With the help of implementing an effective customer service system, the employees can maintain an effective balance between supply and demand. As a result, customers do not have to wait for a long time in order to receive the services. In addition, giving an effective value to the customers is one of the most effective ways of regaining the trust of people and reducing the financial risk. Numerous eminent scholars have provided their own opinion regarding the impact of people on financial risk management strategies. Tse and Yuan (2012) stated that every single person associated with the business organization has showed their dissatisfaction for providing effective service due to the lack of security. Employees did not give their best endeavor for maintaining a balance between supply and demands. As a result, the organization failed to regain their business image and reputation for sev eral years. References: Cole, S., Gin, X., Tobacman, J., Topalova, P., Townsend, R. and Vickery, J., 2013. Barriers to household risk management: Evidence from India.American Economic Journal: Applied Economics,5(1), pp.104-35. Ghadge, A., Dani, S. and Kalawsky, R., 2012. Supply chain risk management: present and future scope.The international journal of logistics management,23(3), pp.313-339. Kaplan, R.S. and Mikes, A., 2012. Managing risks: a new framework. Lavastre, O., Gunasekaran, A. and Spalanzani, A., 2012. Supply chain risk management in French companies.Decision Support Systems,52(4), pp.828-838. Paape, L. and Spekl, R.F., 2012. The adoption and design of enterprise risk management practices: An empirical study.European Accounting Review,21(3), pp.533-564. 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