Essay Sample on Managing Risk in Business: Cybersecurity, Finance & More

Introduction

Identifying and managing risk in any business is significant to ensure the organization achieves its objectives. The company may encounter various type of hazards such as cybersecurity, operation, finance, human resource, business insurance, as well as contract and agreement threats. The financial risk is the direct threat that arises from how the company handles cash flow or the loss of organizational funds in terms of interest rate, liquidity, and currency risk. Cybersecurity threats refer to a situation where the normal functions of an information system are altered. The risk might be executed through data disclosure, destruction of the devices, unauthorized access to the system, and denial of service or the modification of data. Contract and agreement risk is the likelihood of the organization to experience risk as a result of the customer not fulfilling the agreement of the contract like payment (Sadgrove, 2016). Contract risk involves legal accountability such as infringements and breaches of contract in intellectual property as well as threat surrounding operations and image of the business like the negative staff and public opinion towards the company.

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The operational risk, such as theft or breakdown of the vital equipment may affect the smooth running of the organization. Human resource risk includes, the shortage of workers, people not performing, and employee denying additional roles or leaving before completion of the contract. Also, the company may encounter insurance risk since insurance organizations may fail to compensate the hazard insured against due to the introduction of complex and complicated rules and regulations. Managing risks needs making an investment decision for long-term capacity and developing and building adaptive strategies (Hubbard & Seiersen, 2016). Without recognizing risks, it is hard for the company to develop strategies for achieving its objectives. In reducing this risk, the proper plan needs to be employed in the risk management department team. However, different organizations face risks related to contract and agreement, business insurance, human resource, corporate finance, cybersecurity, and operations and should introduce policies and procedures to mitigate such issues.

Summary

The company may encounter the various type of risks such as cybersecurity, operation, finance, human resource, business insurance, as well as contract and agreement threats. Cybersecurity risk affects the ABC Corporation's financial budget since the company has to allocate resources to solve data issues as well as address the underlying challenges associated with cyber insecurity. The financial risk might result in businesses spending outside the budget or what was not in their plan. Human resource management is the process which can be categorized into writing job description and analysis, orientation, hiring, training, performance appraisal, discipline, and compensation. Contract and agreement risk can affect the organization due to the possibility of litigation (Hubbard & Seiersen, 2016).

Mostly, the company experiences breakdown in computer operations, employee leaving before the expiry of the contract, and complex governmental rules and regulations, thus affecting its success (Reyna &Chick, 2014). However, in reducing risks, the company should offer training to employees on technological matters to be able to recognize danger across the internet like the risk of unsecured networks. In mitigating financial risk, the ABC Corporations should hire competent financial risk managers like chief risk officer with needed certification to involve in financial risk activities. In reducing human resource risk in future, the ABC Corporation HR managers should maintain leadership skills and professional ethics, comply with local labour regulations, ensure reasonable compensation and pay and involve in talent acquisition and management to hire right individuals. Also, ABC Corporation should emulate advanced technology and quantitative models to manage the risk of the operation and change risk management team to recruit qualified risk managers who can recognize and solve the business insurance issues. Hence, ABC Corporation needs to introduce policies and procedures to mitigate the risks related to contract and agreement, business insurance, human resource, corporate finance, cybersecurity, and operations.

Available Policies and Procedures for Reducing ABC Corporation Risk

Contract and Agreement Risk

The ABC Corporation deals with an obligation or contractual committee in suppliers, customers and partners. Written contracts contain a letter confirming agreement or standard form, while verbal agreements rely on good faith and can be hard to prove. The legally binding contract should have an offer, acceptance, consideration and an intention to form a legal relationship. Contract and agreement risk can affect the organization due to the possibility of litigation (Hubbard & Seiersen, 2016). Inadequate contracting processes can result in business losses and slow in their operations. However, the ABC Company does not have many contracts since the organization mostly operates on good faith in the areas where it needs a formal deal (Hubbard & Seiersen, 2016). Lack of written contract leads to disagreement and conflicts, so written agreement helps in conflict resolutions. Thus, ABC Company is trying to comprehend the level of competence for its partners concerning the contracting process.

Human Resource or Employment Risk

Human resource management is the process which can be categorized into writing job description and analysis, orientation, hiring, training, performance appraisal, discipline, and compensation. Understanding these activities assist human resource managers in undertaking their roles and responsibilities effectively (Sadgrove, 2016). Failure to perform these duties properly raises the risk and penalizes the organization by not acquiring a competitive advantage. The ABC Corporation is prepared for the human resource risk mitigation by focusing on appropriate communication. The Human resource managers send clear messages, ensure interpersonal relationship, build rapport with workers and management team, offer proper orientation and training. However, the company does not provide benefits or rewards to the employees to maintain their loyalty, such as employee vocational and leave balances under Medical or Family Leave act. Incentives improve employee retention since they would feel comfortable and appreciated.

Business Insurance Risk

ABC Corporation also faces risk associated with business insurance. For the company to receive compensation, the loss must align with the hazard insured against, for example, material damage, theft of the property and profit and machinery breakdown. In most cases, the company pays the vast premium, which is not consistent with the losses the business may incur. Hence, ABC Corporation needs to change risk management team to recruit qualified risk managers who can recognize and solve the business insurance issues.

Corporate Finance Risk

The financial risk might result in businesses spending outside the budget or what was not in their plan. ABC organization may find paying hefty fines or penalized due to failure to comply with particular rules and regulations. Failure in operations affects efficiency, particularly when the organization is forced to raise its spending to control the damage. The ABC Corporations may face financial risks due to the unstable and volatile financial market, changes in supply and demand, actions of external parties like competitors, customers, suppliers, and vendors as well as failures of the internal workforce, system, and processes. Thus, ABC Corporation has identified various techniques to enable the organization to predict future risks to implement mitigation processes. However, the company has not recruited competent financial risk managers like chief risk officer with needed certification to involve in financial risk activities.

Cyber Security Risk

Cybersecurity risk affects the ABC Corporation's financial budget since the company has to allocate resources to solve data issues as well as address the underlying challenges associated with cyber insecurity. In this case, the company would incur losses related to the loss of the client's loyalty, negative press, and diminishing of brand reputation. According to a recent survey, almost 75% of the respondents indicated that the company cyberbullying could lead to negative organization publicity (Sadgrove, 2016). Concerning the cybersecurity risk, the ABC organization is prepared to implement proper decisions that would preserve brand equality and customer relations. For example, to offer complimentary credit monitoring and identity protection services. However, ABC Corporation has not incorporated policies that would eliminate the issues of cybersecurity. For example, training employees on technological matters to be able to recognize risk across the internet. Accordingly, many workers can access organization networks from mobile devices and computers, which imposes a cybersecurity risk to the business. Thus, the ABC Company has not identified the ways to eradicate off-site workers to ensure only authorized individuals access the system and data.

Operational Risk

Operational risk is associated with the failure of internal company processes, system, and legal. In most cases, the company experiences breakdown in computer operations, employee leaving before the expiry of the contract and complex governmental rules and regulations, thus affecting its performance. The company holds a regular meeting to discuss the success of the organization and where it needs improvement. However, ABC Corporation has not emulated advanced technology and quantitative models to manage the risk of the operation. The innovative helps the managers to invest fewer resources in risk mitigation and identification. Majority of operation risk management group operate as independent making it hard to focus on internal controls, compliance, and risk prevention (Hubbard & Seiersen, 2016). Also, the customers and supplier culture affect the organization due to differences in the reward structure, operation policies, and control system.

Recommendations for Current and Future Risk Mitigation

Contract and Agreement Risk

In minimizing contract and agreement risk, the ABC Corporation should not operate on good faith in the areas where it needs a formal deal but embrace written agreement for easy retrieval. Also, the ABC Corporation managers should comply with rules, regulations and requirement along with company expectations, for example, supplier and internal risk need to be analyzed, evaluated and eliminated.

Business Insurance Risk

The organization may encounter losses due to damage of physical assets which disrupt the operation process. Such incidences can be settled by insurance companies to enable the company recovery from failures. However, ABC Corporation faces insurances issues due to lack of retaining the services of insurance advisors to help the company buy proper insurance coverage at a reasonable price. Mostly, the ABC Corporation is paying the premium against the uncertainty, which has no probability of occurring so, the forecasting on the success or failure of the business is crucial. Maintaining the insurance advisors will assist the company take insurance cover against the uncertainty, which has the chances of happening to reduce the business losses.

Human Resource/Employment Risk

ABC Corporation should mitigate the current human resource risk by offering additional benefits to the workers like employee vocational and leave balances under Medical or Family Leave act. Incentives improve employee retention and performance...