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Risk Management Overview Paper

Autor:   •  March 11, 2012  •  Essay  •  714 Words (3 Pages)  •  987 Views

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Risk management is a very important factor in any company. A company needs to understand the risks that it may face and why the risks are present and if they could have been prevented. The company in which I work for is an air filter distributor, John’s Air Filters, and these risks also pertain to my company. The two most important terms associated with the corporate risk terms are organizational risk and business risk. Although these are just two important terms, there are more that relate to my current and previous and probably future organizations. There are other important terms which are economic interest rate risk, cash flow risk, and earnings risk.

Organizational Risk

Organizational Risk will occur with the company's business functions, such as financial and systematic risk. These risks can result in the breakdown in internal procedures, systems and people.

Business Risk

A business risk is a circumstance that can have a negative impact on the profitability or operations of a company. The business risk can be either internal or external and can cover a variety of different issues. Those issues can range from a purchasing risk to a customer risk and can also include an information technology risk. Companies try to avoid business risks and also at the same time study them to better understand them. Once a company better understands what risks it may face, the more efficient and effective they can become.

John’s Air Filters Corporation

John’s Air Filters is an air filter distribution company in the Ontario, California area. John’s Air Filters sells to anyone that wants to purchase and air filter and this includes the public. One of the risks of the company is the mechanical shutdown. The company makes custom filters from standard sizes. The machines that are used cannot go down for long or this will cost the company money. Also the lost man hours and the man hours it will take to catch up on the orders could hurt the company financially. Another risk would be the breakdown of any of the company's vehicles.

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