Will business operations ever operate smoothly in the environment? From the study of several different types of business operations, individuals will find out that there are uncertainties which will hinder them from achieving their goals. These uncertainties are known to as risks. A risk is defined as uncertainty in the business regarding the company’s objectives. Risks include staff strikes, the crisis of the cash flows, security issues, weather among several others. For the firm to pick the desired direction, there is the need to address the issues arising from risk management (National Research Council, 2013). Risk management refers to the process of coordinating a firm’s activities to control risks which are likely to occur or have happened in the business process (Waldron and Kassing, 2016)
A successful risk management entails several things which include a critical analysis of the environment. The environment is what decides whether organizational goals will be achieved for after all it is the one supporting the production factors which are land, labor, market, capital, entrepreneur, and several others. Some of the critical elements in the risk management process of a firm are consultation, communication and stakeholder management (Aswathappa, 2014).
Macro risks arise due to political actions in the country where the business is located and have the ability to affect all the foreign operations of a firm. Some macro risks might come from events which the government does not have any control. Every business activity has financial, ethical and legal obligations to perform. Communication and consultation are very efficient in making sound choices so that a firm does not fail to fulfill these requirements. Communication is paramount in solving the macro risks. For instance, a company running international activities in another nation is at a high risk of macro-risks, through communication via different platforms like the social media, television, radio and several others, the investors will be able to know the possible risks they are likely to face in a given business year (Sharan, 2016). For example, if a company decides to operate in a nation like Britain, communication will help them to know the tax requirements and any other government activities likely to hinder their development.
What happens when a firm is not aware of the macro risks? The only way to go is to seek consultation from the existing firms in that particular nation. From their advice, managers and stakeholders can make positive choices to counter the possible risks in the new environment. Communication is essential for the provision of information in the risk department of any firm. Everything in a firm rely on communication to move forward.
For a micro risk, not all businesses are affected. They include implementation of strict environmental laws. Such regulations will affect only a few industries which engage in cumbersome production processes like manufacturing of goods where much pollution is involved (Symposium on Environmental Change and Human Health, 2013). Industries such as the service industries cannot be affected by such laws. It is through communication that a firm is made aware of the rules governing certain industries hence prepare for such risks suppose they occur. Nevertheless, through communication, management is informed of the micro risks in a foreign land and hence engage in proper preparation to counter the risks. To understand the possible hazards, the need for communication and consultation are very high. An individual cannot solve a problem which he/she is not familiar with. Through information, management can analyze the costs likely to be incurred in controlling the risks. This helps them to come up with strategies to aid in countering the micro-risks, for instance, in the case of government laws regulating production activities which lead to hazards like environmental degradation, managers will be able to bring up measures to control pollution. Such risks will not befall them even if the government makes such implementations.
The significant role which communication and consultation play is making the risk information readily available. Information is the best weapon in the decision-making process. It is what will either lead to the success or failure of an organization. If the right information is at hand, then risk management becomes a simple challenge to deal with.
After obtaining such crucial information, it is the role of the managers to disseminate it to the concerned departments of the company. How do they use such information to solve the micro and macro risks? Meetings can be held for consultation. Members of the enterprise, more especially the management can consult each other on how they will use the information they have obtained to prepare the organization for risks. Bringing different ideas into consultation is crucial. It yields the best course for problem-solving. If employees are also involved in contributing their opinions, the best course of action will be obtained. Almost every production activity taking place in a company affects the employees, and so are the decisions made. Employees are the ones who ensure that ethics is put to use.
Most companies present this information even in the consumer products. How many times have you bought goods in which you find the cost is attached and the tax breakdown indicated? When you buy products and provided with receipts, take a good look at the price breakdown, you will notice that different taxes are included in it. Tax forms part of the macro risks of a company. When companies levy heavy taxes on goods, manufacturers tend to raise prices so that they can recover the money used to pay for taxes. But how is the tax information useful to the consumer?
Consumers form the biggest part of the organization, without them businesses may close down. When prices rise due to taxation, people might start feeling overexploited, they will see it as unethical (Food, 2014). Providing them with the tax information will help them to understand that the government is the one behind the increased costs. Instead of complaining to the company, they will raise their issues to the government to reduce the tax charged on manufacturers. The risk of losing reputation to the clients is thus avoided (Bedell and Lennox, 2015).
The stakeholders of a company play a great role in a company, which involves the Risk management process. They finance and run the business (Gossy, 2014). Stakeholders should pay particular attention to the macro and micro risks likely to face their organization. The focus will include putting money aside for risk control, forming a team among them which will be responsible for handling risks and investing in research will aid in identifying possible future risks. Knowing potential risks enables one to prepare for the eventual line of action. This makes the stakeholders be so crucial in the risk management process (Kellermann, Haan and Vries, 2013). At some point, company stakeholders can choose to select their representatives in the government to help them overcome over-exploitation by the government laws which might be passed to favor few individuals. The ambassadors will ensure that there are equity and equality in the laws.
Nevertheless, the optimum method of countering the risks can be made by the stakeholders. Stakeholders will come up with a strategy to minimize the losses due to the present risk. The stakeholders are always aware that the reason behind risk control is to reduce the loss of assets. The stakeholders also do evaluation of the risk (Borghesi, Gaudenzi and Borghesi, 2013).
Some of the risks which may arise from visitor’s behavior and activities include the poor presentation of the organization to the public, sharing the company’s crucial information with other people or competitors, negative attitudes and beliefs among others (Lundgren and Mcmakin, 2013). It is through communication that such visitors get private information of a company. There is, therefore, the need to control communication between the stakeholders and visitors in the workplace. The organization should set a culture which will prevent employees or any staff member from sharing some information with the public (Golub and Tilman, 2015).
When a visitor leaks out certain information to the public regarding its products, clients will turn away from the products if the message is defaming. In the case where visitors give out a positive image of the organization, the company will gain more clients. In the event of defamation, the company can employ communication strategies to solve the problem (Beaver and Parker, 2015) For instance, the management stakeholders can post messages to counter the visitor’s message to the people. Another way to avoid such risks is to share organizational information with few people only, for instance, managers only (Waldron and Kassing, 2016). Nevertheless, before sharing any information to a visitor, it is nice to consult the entire management.
There are so many methods of managing risks in organizations (Alkuwaiti, 2015).They include sharing the risk, retaining the risk, avoiding the risk, changing the consequences likely to be brought about by the risk and so many others. It is the role of the stakeholders and management to invest and chose the most efficient method to manage the micro, macro and risks likely to be brought about by visitors (Osmani, 2015). Some factors such as financial viability, reputation, and personal safety should be put into consideration when determining the method of risk management (Lam, 2013).
Waldron, D. V. R., & Kassing, D. J. W. (2016). Managing Risk in Communication Encounters: Strategies for the Workplace. Thousand Oaks, Sage Publications. https://public.eblib.com/choice/publicfullrecord.aspx?p=996318
Sharan, V. (2016). International business: Concept, environment and strategy. Delhi, Pearson Education
Aswathappa, K. (2014). International business. New Delhi, Tata McGraw Hill Education
Kellermann, A. J., Haan, J. D., & Vries, F. D. (2013). Financial supervision in the 21st century
Golub, B. W., & Tilman, L. M. (2015). Risk management: approaches for fixed income markets. New York, John Wiley & Sons
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Beaver, W. H., & Parker, G. G. C. (2015). Risk management: problems & solutions. New York, McGraw-Hill.
Borghesi, A., Gaudenzi, B., & Borghesi, A. (2013). Risk management: how to assess, transfer and communicate critical risks. Milan, Springer. https://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=537820.
Lundgren, R. E., & Mcmakin, A. H. (2013). Risk communication: a handbook for communicating environmental, safety, and health risks. https://public.eblib.com/choice/publicfullrecord.aspx?p=1192824.
Waldron, D. V. R., & Kassing, D. J. W. (2016). Managing Risk in Communication Encounters: Strategies for the Workplace. Thousand Oaks, SAGE Publications. https://public.eblib.com/choice/publicfullrecord.aspx?p=996318
Gossy, G. (2014). A Stakeholder Rationale for Risk Management: Implications for Corporate Finance Decisions. Wiesbaden, Betriebswirtschaftlicher Verlag Dr. Th. Gabler / GWV Fachverlage. https://public.eblib.com/choice/publicfullrecord.aspx?p=748780.
Lam, J. (2013). Enterprise risk management: from incentives to controls. Hoboken, N.J., Wiley. https://www.books24x7.com/marc.asp?bookid=11241
Osmani, S. S. (2015). The process of identifying key stakeholders in pluvial flood risk management: the case study of the London Borough of Redbridge
Alkuwaiti, A. J. (2015). Study guide for the PMI Risk management professional® exam. United Arab Emirates, Abdulla J. Alkuwaiti
National Research Council (U.S.). (2013). Improving risk communication.
Bedell, J. R., & Lennox, S. S. (2015). Handbook for communication and problem-solving skills training: a cognitive-behavioral approach. New York, J. Wiley.
Joint Fao/Who Expert Consultation On Risk Assessment Of Microbiological Hazards In Food. (2014). Joint FAO/WHO Expert Consultation on Risk Assessment of Microbiological Hazards in Food, Rome, 17-21 July 2000. Rome, Food and Agriculture Organization of the United Nations
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