Responses to minimize the risk.
There are several ways to minimize the risk;
1. Risk avoidance.
Either by removing of a particular threat or eliminating the source of risk. For example in removing the source of risk for contaminated land, the company create a better managed system related to the wasted materials so it doesn’t corrupted the land and building. And also for human error, the company stressed out the point how to work there for the workers so the workers will work accordingly, without creating any problems due to the human errors.
2. Risk reduction
When the risk is already occured, risk reduction may involve either lowering its probability or lessening its impact. For example in the company is that when the workers is pouring the chemical liquids from the barrel to the plactic bag. To reduce the damage of chemical reaction that irritates the skin, the workers use plactic glove.
3. Risk transfer
Insurance is the most popular technique for risk transfer in which only the potential financial consequences of a risk are transferred and not the responsibility for managing the risk. So in another words, this risk transfer is sharing the impact of the risk that being taken by the company with the third party. Sometimes the shared risk is about the financial impact of the certain accident.
4. Risk retention
In the case of planned risk retention, this involves the complete or partially assumption of the potential impact of the risk. In final, this risk reduction may only be cost-effective up to a point, thereafter becoming more costly than beneficial.
Rabu, 01 September 2010
Type of Risk
Type of Risk and the Analysis
1. Dynamic risk
It is concerned with maximizing opportunities which also means that there will be potential gains as well as potential losses. Because the purpose of business is gaining the profits, the owner of the business is risking its money and capital assets in buying-selling the goods and assets. Thus the differences between the buying price and selling price will determine whether it creates profits or not. But it’s not the only determinant in deciding the business is creating profit. The time value of money is also important. If we can sell the goods is a very short time lag after we buy it, the profits are mentioned as higher and also better. Higher because it creates profits as soon as possible, better it term of the profit received can be used to buy another products or assets.
2. Contingent risk
This risk happens when the company is affected directly by an event in the area beyond its direct control but on which it has a dependency (I.e. weak suppliers). As a reseller company, this company relies on the distribution system which is taking the main issue. Because the fastest the delivery takes places, the better performance the company possess in fullfilling the demand from public.
3. Customer risk
. The dependency on one client creates vulnerability because that client can take its business away or be taken over by a rival. This risk can be managed by creating a larger customer base (having more than one customer). As a reseller company, this type of risk is having a very small chance to be happen because the customers vary in a widespread kind of handicraft makers.
4. Purchasing risk
many businesses are designing and implementing new performance measurement systems and finding a particular challenge in developing measures for some key elements of purchasing contribution which are now regarded as strategic but which have not been historically analyzed and measured in any serious way.
5. Reputation risk : this type of risk arise as a consequence of another risk, such as fraud, a building destroyed, failure to attend to complaints, lack of respect of others.
1. Dynamic risk
It is concerned with maximizing opportunities which also means that there will be potential gains as well as potential losses. Because the purpose of business is gaining the profits, the owner of the business is risking its money and capital assets in buying-selling the goods and assets. Thus the differences between the buying price and selling price will determine whether it creates profits or not. But it’s not the only determinant in deciding the business is creating profit. The time value of money is also important. If we can sell the goods is a very short time lag after we buy it, the profits are mentioned as higher and also better. Higher because it creates profits as soon as possible, better it term of the profit received can be used to buy another products or assets.
2. Contingent risk
This risk happens when the company is affected directly by an event in the area beyond its direct control but on which it has a dependency (I.e. weak suppliers). As a reseller company, this company relies on the distribution system which is taking the main issue. Because the fastest the delivery takes places, the better performance the company possess in fullfilling the demand from public.
3. Customer risk
. The dependency on one client creates vulnerability because that client can take its business away or be taken over by a rival. This risk can be managed by creating a larger customer base (having more than one customer). As a reseller company, this type of risk is having a very small chance to be happen because the customers vary in a widespread kind of handicraft makers.
4. Purchasing risk
many businesses are designing and implementing new performance measurement systems and finding a particular challenge in developing measures for some key elements of purchasing contribution which are now regarded as strategic but which have not been historically analyzed and measured in any serious way.
5. Reputation risk : this type of risk arise as a consequence of another risk, such as fraud, a building destroyed, failure to attend to complaints, lack of respect of others.
The Risk Identification
Before we discuss further about the risk management applied in the company, first we have to know the definition of the risk. Because without knowing what risk is, we cannot understand further and being lost in gaining deeper explanation.
The term risk is variously defined as:
• The chance of loss
• The possibility of loss
• Uncertainty
• The dispersion of actual from expected results
• The probability of any outcome different from the one expected
Clasification of risk:
• Financial and non-financial risks
• Static and dynamic risks
• Fundamental and particular risks
• Pure and speculative risk
According to Merna and Al-Thani in Corporate Risk Management (2005), the term Risk management can be defined as any set of actions taken by individuals or corporations in an effort to alter the risk arising from their business. And according Meulbroek (2002) the goal of this risk management is to maximize the shareholder value.
There are some steps in the Risk Management:
1. Identification of risks/uncertainties.
2. Analysis of implications.
3. Response to minimize risk
4. Allocation of appropriate contingencies.
Risk management is a continuous loop rather than a linear process so that, as an investment or project progresses, a cycle of identification, analysis, control and reporting of risk is continuously undertaken.
Risk identification
It consist of determining which risks are likely to affect the project and documenting the characteristics of each one. This risk identification should address both the internal and external risks. By applying this theory to the company, we can track down what are the sources of the risk for the reseller company. here are the list below.
There are several sources of risk relate to this certain type of business;
1. Political : change in government policy, public opinion, disorder
2. Environmental : contaminated land or pollution liability
3. Planning : permission requirements, policy and practice, land use
4. Market :demand, competition, customer satisfaction
5. Economic : taxation, interest rates, exchange rates
6. Financial : margins, insurance
7. Natural : weather, earthquake, fire or explosion
8. Technical : design adequacy, reliability, operational efficiency
9. Regulatory : changes by regulator
10. Human : error, incompetence, tiredness, communication ability, culture
11. Criminal : theft, fraud, corruption
12. Legal : changes is regulation
The term risk is variously defined as:
• The chance of loss
• The possibility of loss
• Uncertainty
• The dispersion of actual from expected results
• The probability of any outcome different from the one expected
Clasification of risk:
• Financial and non-financial risks
• Static and dynamic risks
• Fundamental and particular risks
• Pure and speculative risk
According to Merna and Al-Thani in Corporate Risk Management (2005), the term Risk management can be defined as any set of actions taken by individuals or corporations in an effort to alter the risk arising from their business. And according Meulbroek (2002) the goal of this risk management is to maximize the shareholder value.
There are some steps in the Risk Management:
1. Identification of risks/uncertainties.
2. Analysis of implications.
3. Response to minimize risk
4. Allocation of appropriate contingencies.
Risk management is a continuous loop rather than a linear process so that, as an investment or project progresses, a cycle of identification, analysis, control and reporting of risk is continuously undertaken.
Risk identification
It consist of determining which risks are likely to affect the project and documenting the characteristics of each one. This risk identification should address both the internal and external risks. By applying this theory to the company, we can track down what are the sources of the risk for the reseller company. here are the list below.
There are several sources of risk relate to this certain type of business;
1. Political : change in government policy, public opinion, disorder
2. Environmental : contaminated land or pollution liability
3. Planning : permission requirements, policy and practice, land use
4. Market :demand, competition, customer satisfaction
5. Economic : taxation, interest rates, exchange rates
6. Financial : margins, insurance
7. Natural : weather, earthquake, fire or explosion
8. Technical : design adequacy, reliability, operational efficiency
9. Regulatory : changes by regulator
10. Human : error, incompetence, tiredness, communication ability, culture
11. Criminal : theft, fraud, corruption
12. Legal : changes is regulation
The Company Profile
The Company Profile
Name : Aneka Kulit
Address : Parangtritis St #23 Yogyakarta, Indonesia
Phone number : 0274-371446, 379638
Owner’s name : Lim A Liang
Operation time : Open daily from 08.00 am till 16.00 pm.
Type of business : Reseller of raw material goods for handicraft.
Length of business : 1979 – present
Reseller market: buyers who purchase with the intent of selling those products to others. The reseller market includes wholesalers, retailers, and distributors. Resellers may restrict their purchases to one product or brand or offer a variety of products and brands.
This company is a family owned business which is still owned by its 1st owner, Lim A Liang. Aneka Kulit was created at 1979 with the hard work and goodwill of Mr.Lim and his wife. This company was selling the leather (cow, goat, and lamb) and the paint for leather at the first time. But as the leather industry keeps reducing its profitability and activity by years, this company nowadays is selling the paint for leather, vinyl, plastic, and accessories for leather bag or sandals.
Name : Aneka Kulit
Address : Parangtritis St #23 Yogyakarta, Indonesia
Phone number : 0274-371446, 379638
Owner’s name : Lim A Liang
Operation time : Open daily from 08.00 am till 16.00 pm.
Type of business : Reseller of raw material goods for handicraft.
Length of business : 1979 – present
Reseller market: buyers who purchase with the intent of selling those products to others. The reseller market includes wholesalers, retailers, and distributors. Resellers may restrict their purchases to one product or brand or offer a variety of products and brands.
This company is a family owned business which is still owned by its 1st owner, Lim A Liang. Aneka Kulit was created at 1979 with the hard work and goodwill of Mr.Lim and his wife. This company was selling the leather (cow, goat, and lamb) and the paint for leather at the first time. But as the leather industry keeps reducing its profitability and activity by years, this company nowadays is selling the paint for leather, vinyl, plastic, and accessories for leather bag or sandals.
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