Question

In: Finance

Take a company/business that you are familiar with, and describe the following: a.   Types of risk...

Take a company/business that you are familiar with, and describe the following:
a.   Types of risk they possibly face
b.   The probability and magnitude of loss that might be incurred by the particular company
c.   Methods and instruments to overcome each of types of risk.

Solutions

Expert Solution

I am taking a example of petrol pump business here with which I am familiar :-

a. They face several types of risk during their operation which are as follows :-

i) Physical risks to the business operation as there is higher chances of fire or explosive since their business is to deal with petroleum products.

ii) Technology risk as all the machines used in their operations are machines enabled and cant be operated in case of technology failure.

iii) Hazardous material risk is the risk of accidents where gas,toxic fumes are present.

b. The probability of risk depends how effectively each company and businesses houses are mitigating their risk.Inspite of this their are high chances of facing such risk.

c. Following methods can be used to overcome the above mentioned risks.

i) Installation of fire alarms and smoke detectors in business premises.

ii) Clearly marking emergency exits and awareness among the employees.

iii) Consulting with risk management consultant and formation of strategy,staff training,safety checks in the organisation.

iv) Arrangement of backup facility in case of any technology failure.


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