Risk Management Essay Example | Topics and Well Written Essays - 3000 words

Risk Management - Essay Example The three main management risks that the Company faces are (i) procurement risk; (ii) Human Resources Management risk; (iii) and, accounting risk. These three kinds of risks are common to large chain store like Wal-Mart (Zsidisin, 2008). Wal-Mart has employed improved management strategies to deal with the problems caused by these risks. As an international organization, Wal-Mart constantly faces the challenge of maintaining cohesion among its employees who are multiracial and multicultural employees. This has been a serious issue that Wal-Mart tries its best to grapple with since it began its globalization drive. Similarly, there are perpetual worries about risks inherent in the procurement and the computation of yearly financial accounting. These three operational risks are broadly described below. 2 Current Risk Management Process Since the nature of the risks is dynamic, Wal-Mart has always come up with the appropriate approach to identify, respond, monitor and mitigate or contro l the three forms of risks highlighted in the foregoing. Through efficient management procedure and principles, Wal-Mart has been able to keep its operational risks under control—some of the approaches utilized by the organization is described as follows: (i) Human Resource Management Risk:-Wal-Mart faces many risks arising from its sometimes inefficient human resources management. A few of human resources problems that have threatened Wal-Mart’s brand in recent years is the odd practice of treating women unequally with their male counterparts, subtle racial discrimination and also the policy of refusing jobs or promotion to employees that have on-the-job life-threatening injury (Spedding and Rose, 2007). This problem has caused the organization millions of dollars in legal damages over the years. As a result of this, Wal-Mart has implemented an effective approach to handle this brand-destroying risk. (ii) Procurement risk:- Wal-Mart also confronts incessant procuremen t risk like every other chain store that receive supplies from different kinds of suppliers. There are risks associated with the sources and quality of the supplies that are sold to customers. Are they from legal or counterfeit sources? Have the suppliers utilized illegal labor (like in China) to produce the goods? Are the 3 goods of highest quality consumable by people in other countries? Are there any standards that are laid down to encourage suppliers to think about consumers’ delight rather than insane profitability? (McCullough et al., 2008). (iii) Accounting Risk:- Chain stores always experience huge risk in computing all their financial transactions that would be presented in their yearly annual reports due to human errors, market forces and the improper utilization of accounting software. This problem has been recognized as a serious risk an organization must make efforts to mitigate (Chorafas, 2007). Other causes of financial risk include but not restricted to unstab le exchange rates (especially for a multinational), volatility in the financial markets, and accounting risks sparked by business risk (Chorafas, 2007). The flowchart below explains how Wal-Mart typically handles the three risks described above. Flowchart: Risk identification, response, monitoring, and control. (a) Identification: Risk managers or officers are distributed to each department to discover any claims of racial or gender inequality among Wal-Mart