Section II: Establishing Acceptability
The acceptability of the project uses a lot of risk for the stakeholders of the organization. The risk management requires the continuous and ongoing movement of the entity. The approach requires the risk management to be controlled by all individuals in the organization. The management is required to assess the best ways of formulating the best strategy setting activities, (Abraham, 2011). The risk management is designed to identify the different risks offered in the capital purchase decision. The organization can assure the provision of the entity’s management and board assessment. The approach gears the achievement of objectives for the separate but overlapping categories. Capital purchase project presents business, legal, operational, market and credit risks
The specific aspects of the capital purchase risk are the following. The first risk that can emerge is on the provision of the unacceptable performance variability. It will help in the offering of the Hazard and Financial risks for the internal control. The variability of the prices for the required commodities can affect the state of crisis management and systematic processes for new or emerging risks, (Mitchell, 2011). The impact of the capital purchase can drastically affect the attitudes and decision of the employees. The risk avoidance of the variability risk is through the development of the mechanisms to prevent the variability from occurring, (Abraham, 2011). The management can be forced to form contracts with suppliers in order to control the state of producing a certain product. The anticipation of the variability will reduce the possible hiccups emergent from the market conditions. The management can avoid the risk of variability through the management of the key performance indicator.
The second risk of capital purchases is on the integration of views. The risk poses the need of protecting the enterprise value after the capital purchase. The insight from the different individuals in the organization tends to affect the state of insurable risks, treasury and IT. The risk can lead to the inhibition of the efficient allocation of resources for the capital purchase. The chief risk officer will be required to assess the state of managing the individual’s role, reporting lines and authority assessment. The management can implement the following risk avoidance strategies. The supporters of the capital purchase should link the risk management to the efficient capital allocation and integration for the state of risk transfers and decision making, (Mitchell, 2011). The other risk avoidance strategy will be on the increase of the transparency and development of the qualitative and quantitative measures. The last issue is the aggregation of the common risk exposure that is across the multiple business units. An assessment of the future threat will help in rallying the necessary support for the performance of the organization.
The third risk is on mistrust or building of confidence for the stakeholders and the investment communities. The accountability issues can crop up in the assessment of the capital purchases. The management should be able to comment to the investors on the different issues operating in the assessment of the procedures offered for the assessment and analysis of the organizational activities. The risk avoidance strategy for the risk is on the improvement of the organizational transparency. The assessment of the organizational transparency will help in the management and assessment of the activities affecting the state of managing the risk. The improvement of the level of the transparency will increase the level of trust among the different members of the society and the stakeholders.
The fourth risk is on neglect of corporate governance. The issues of selecting the risk areas, processes and units will be required to be identified. The rise of pressure to succeed the capital purchase can avert the organization from its mission. The capital purchase can shift the focus of the management to the control of the state of corporate governance and assessment of activities. The ERM allows the management of the business model management and the assessment of the sense of effectiveness in the analysis of the operational achievement of activities, (Mitchell, 2011). The setting up of the boundaries and risk management responsibilities can divert the attention of the firm. The management can avoid the risk through the alignment of the risk appetite for the entity’s opportunity-seeking behavior. The second risk avoidance strategy is on the understanding of the risk management capabilities.
The other possible risks inability to align the capital purchase to the organizational corporate culture. ERM can help in the management and creation of the risk awareness for the open and positive culture. A lack of respect to the risks can lead to the fear of retribution. The identification of the priority risks helps in the improvement of the organizational capabilities. The risk avoidance strategy will be the training and educating of the employees on the possible issues that are required to be management in the provision of the capital purchase.
The management of the organization has different roles required for the assessment of the state of Risk control compliance. The role of the risk management can focus on the setting up of policies and strategies for the risk management. The management has the role of championing for the risk management at operational and strategic levels. The awareness and support should emerge from the strategic appeal of the organization to effect the changes, (Abraham, 2011). The employees will have respect for the risk management strategies in the event of the proposed requirements. The third role is on the risk awareness culture. The management is required to offer the best risk awareness requirements for the organizational push for appropriate education.
The other roles are on the establishment of the internal risk policy and structures. The capital purchase can affect the state of performance for the organization. The offering of the policy will reduce the state of confusion within the different individuals of the organization. The coordination of the various functional activities will affect the advice offered for the management of issues in the organization, (Wade, 2011). The co-ordination of the various functional activities offers the advice of individuals on the various state of management within the organization. The other strategy is on the development of the risk response processes. The inclusion of the business continuity programs and advice should be offered in the management of the tasks for the organization.
In conclusion, Capital purchase project presents business, legal, operational, market and credit risks. The capital purchase increases the chances of different risks occurring in the organization. The management has a role for managing the different issues occurring in the organization. The business risks can be seen on the risk of competitors following the firm’s same ideas. The market risks can be experienced in the assessment of the market conditions. The operational risks can be associated with internal system failures for mechanical problems. The legal risks are on the possibility of the contractual obligations.
Section III: (excel Document)
Reference
Abraham, J. (2011). A proportional analysis of risk administration strategies in European unification and United States pharmaceutical directive: Journal on Health, Risk and Society, 13, 5, 413-431
Mitchell, O. (2011). Longevity Risk organization in Singapore’s National income System: Journal on Risk and Insurance, 78, 4, 125- 132
Wade K. (2011). Bringing Risk administration to Capitol Hill Dodd-Frank and the SEC brought risk administration to Washington: Journal on Risk Management, 58, 4, 13
