Question

In your professional career give me an example where you identify an issue or risk area. What did you do to combat that issue and what was the end result.

Please be detailed?

Answer 1

Main area of risk in each kind of business is Sales Risk

Sales risk refers to the uncertainty relating to the price and quantity of goods that are available for sale to consumers. Usually, sales risk may result in sales failures, and it can significantly affect the reported financial performance.

Protecting the business against the sales risk can help build resilience in a way that the sales team is able to counter the contributing risk factors. The sales team should be properly trained on how to identify, monitor, and control the risk factors of sales risks.

Few types of sales risk are:

1. Hubris risk: Hubris risk is often associated with successful individuals, such as corporate executives. A sales manager may make decisions without fully thinking of the consequences or considering the opinions of other people in the sales team.

2. Information risk:The failure of IT systems in businesses that rely on technology can cause a security breach, which may result in fraud, theft, damage to physical assets, and even damage to the brand name.

3. Strategic risk:Strategic risk occurs when the business pursues an unsuccessful or wrong strategy.

4. Tactical risk: Tactical risk relates to the present threats that the company faces in the current business environment. For example, when there is a surge in demand for the company’s products, it should be able to improve its productivity immediately to meet the demand.

5. Ethical risk:Issues such as bribery, fraud, abusive behavior and lying to stakeholders are the most common ethical risks present in organizations. While such activities may help the organization achieve its revenue targets, it may corrode the shareholders’ trust on the executive team.

we should verify necessary controls which mitigate sales risk, which are as follows:

1.AUTHORIZATION OF TRANSACTIONS:Specific individuals within the company should have authoritative responsibility for establishing sales prices, payment terms, credit limits, and guidelines for accepting new customers. Only designated employees should perform these authorization functions. These specific people should have a recognized method of communicating when sales transactions have been authorized.

2.Effective Internal Control System: we should ensure that management has implemented an effective internal control system as follows:

a.Environment control: The attitude, alertness, and work-zeal of directors, managers and shareholders are reflected through environmental control.

b.Accounting system: Accounting system means some procedures and recordings with which identification of business transactions, classification, summarization, statement preparation and analysis for timely presentation of correct information are performed.

c.Control procedure: The additional policies and procedures adopted by the business authority for ensuring the achievement of the specific goal of a business organization are the controlling procedures.