Question

Business risk management
Samsung Company Question: gather information on its loss exposures, loss history, after loss activities, or anything that may help you understand its risk and risk management strategies. Finish a Risk Audit Report for your target company.

Answer 1

Let us first understand what is risk. Risk refers to the presence of any possibility of loss in the near future. Risk is an element which cannot be ignored and every company have to face the risk element while competing in the market.

Samsung as well had to face risk and incur losses in the market while positioning its products. A summary is given below:

LOSS EXPOSURE TO SAMSUNG

• It is facing challenges in capturing the market after its failure in effective running of batteries of its product, Galaxy Note 7.
• Its facing losses in generating enough revenue for its operations and facing tough competition from the Chinese products.
• The arrest of one of its leader have also added on to its loss profile and downfall in its market shares.

LOSS HISTORY

• Samsung, after Apple was ruling the mobile market and making huge profits out of it.
• By the year 2014, the company faced huge downfall in the profit generation in the mobile market.
• Samsung blamed the rise in competition in meeting up the challenges and hence its loss in profit making.
• The struggling economy again added on to the loss being incurred by the company.

RISK MANAGEMENT STRATEGY

• Samsung in order to meet up the losses and cover up all the risks, is trying to formulate various risk management strategies for the betterment of its operations.
• The company is following the proactive approach to manage the risks and taking actions and formulating rules even before any contingent risk arises.
• The company tries to figure out all the internal as well as external sources which can be a reason for the occurrence of any kind of risk in future.

RISK MANAGEMENT SYSTEM FOLLOWED

• The company have formulated various teams to manage risks internally and cope up with any contingencies in future.
• All the departments are well engaged into the risk managing process and the three major business divisions review any kind of risk beforehand.
• The chief financial officer (CFO) also works as the company wide chief risk officer (CRO) and is responsible for regular operations of the risk council.
• Regular review from the legal, HR, public affairs, partner collaboration centers and product innovation quality teams is taken about any upcoming risk sensed by them.

The company tries to manage the risks by working on the risky factors even before the risks arise. It manages the risk with the help of its committees framed to reduce the risks and various risk related councils set by it. The risk management strategies helps any company to cope up easily in hard times and save its operations from any downfall due to any contingent risky factor.