The paper "Risk Management Insurance Strategies And Their Impacts " is a perfect example of a Management Assignment. Risk is an aggregate of specific hazards and the probability that the hazard will occur. Big Red Bicycle PTY LTD is exposed to several risks based on their budget where some arise from their staff and some due to an unrealistic plan formed by them. Risk management is the process of combining the risk assessment with an aim of addressing the risk and doing so in ways that put into consideration technical and social aspects of the risk assessment(Dionne, 2013).
Risk assessment is a systematic process of checking the potential risks that the company may come across in a projected activity or undertaking(Aven, 2012). The following are several risks that Big Red Bicycle PTY LTD is exposed to: According to the data provided, there's a uniform supply of sales which may not always be the case. Sometimes you may sell more and other times less since it always about the current economic progress in that region. For example, sales In Q1, Q3, and Q4 are thirty percent less than the sales in Q2, which had been estimated to be one million dollars, but this was not achieved.
Due to this, the profit estimated may not be accurate and it may cause disruption of some of the plans the company may have made. Some end up being eliminated, yet they were supposed to show the growth of the enterprise. Overstatements can lead to vague and unrealistic goals that may be too high to achieve. They should try not to rely on the historical data as sales may not be uniform throughout a period. Big Red Bicycle PTY LTD may be exposed to the risk of theft, but they have not accounted for that in their budget.
The risk may be due to the frauds committed by the accountant or even the errors such as error of omission, the error of transposition or the error of original entry(Fraud Risk Management, 2015). This can lead to high losses that may be too difficult to fix in a short time. They also do not have an auditor that can help them in checking the books of account regularly hence exposing the accountant to so much control to the accounting records books of account.
This can be prevented by employing an external or internal auditor who would be checking the books of account regularly to prevent the accumulation of records that would be too difficult to review in a short time without making errors(Fraud Risk Management, 2015). Some products may be damaged while still in the warehouse either because of improper storage before they are sold by the sales department. If this is not discovered early, it can lead to a very big loss and hence the estimated sales may not be met resulting in a reduction of profits.
Sometimes the damaged products may be sold as second-hand goods that are always cheap. Furthermore, repair and maintenance costs may increment expenses that will, in turn, lower the company's approximated net profits.
Anantatmula V. and Fan Y. (2013). Risk management insurance, strategies and their impacts on project Success. International journals of Risk and Contingency Management.2(2),pp. 27-41
Aven T. (2012).Foundational issues in Risk Assessment and Risk Management issue. Risk Analysis. 32(10). Pp,1647-1656
Fraud Risk Management (2015). Journal of Business Management and Economics.
Whittaker, M. (2015), Risk Assessment and Alternative Assessment: comparing two methodologies, Risk analysis,35(12) pp2129-2136