Risk (U4)

Question 1

List the Types of risk

Answer 1

Natural Disasters – Icelandic Volcano, Turkey Earthquakes

Failure of equipment – SpaceX rocket, Deepwater Horizon Spill

Employee Error – Amazon Web outage, evergreen ship blockage

Supply Problems – Ukraine War

Economic Factors – Brexit, Cost of living crisis

Legal Challenges – Volkswagen Scandal

Public Relations – Pepsi AD

Product Failure – Samsung Galaxy Phone Fires

Question 2

Define Risk Management

Answer 2

Risk management is the process of understanding and minimising what might go wrong in an organisation.

Question 3

What is the process of risk management

Answer 3

• the identification and analysis of risks to which the organisation is exposed
• a measurement of the likelihood of the risks occurring
• an assessment of potential impacts on the business
• deciding what action can be taken to eliminate or reduce risk.

Question 4

Define Contingency Plan

Answer 4

A contingency plan is a plan devised for an outcome other than the usual plan.

Question 5

What are the reasons for a contingency plan

Answer 5

Businesses face many risks, both quantifiable and unquantifiable.

By having a contingency plan, a business will be prepared for any eventuality that may occur.

This may save the business time and money in the long run.

Question 6

What are the reasons Against a contingency plan

Answer 6

Contingency planning may be expensive and time-consuming to carry out.

Unexpected events may still occur, since it is virtually impossible to plan for every possible outcome.

Question 7

Define Crisis Management

Answer 7

Crisis Management is the process of responding to and minimising the damage from an adverse event.

Question 8

Define Quantifiable Risk

Answer 8

Quantifiable Risk - Those that can be measured, such as a potential loss of overseas sales due to an increase in the exchange rate

Question 9

Define Unquantifiable Risk

Answer 9

Unquantifiable Risk - Cannot be measured, such as the adverse effect on a company’s image if a product is not successful.

Question 10

What are examples of contingency planning

Answer 10

• fire practices
• keeping back-up copies of data from computers
• planning for a situation in which a competitor makes a take-over bid
• having back-up plans in case there are problems with suppliers.