Risk Assessment and Management, Essay Sample

Risk is a vital part of any corporate. Appropriate risk management is critical to the success of Almarai. Almarai developed a policy called Risk Management; this policy offers a well-defined framework for the infrastructure, process, and approach for managing its potential risks. The company defines risk as the likelihood of an event happening that will have an effect on the business or the strategic objectives of the Company. The following are key risks that Almarai faces categorized according to the ISO 31000 security framework.

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Operational Risks

Product risk

The operations of Almarai are subject to risks related to the possible contamination of dairy components by external attackers. Contamination risk could have a negative effect on sales and profitability.

Almarai manages this risk by applying the ISO 31000 Security risk assessment framework to find the solution. The first phase, the Almarai manages the contamination risk of testing and monitoring dairy products intake frequently during and at the completion of the production process. The second phase, the Almarai conducts external audits of operating systems by the SASO (Saudi Arabian Standards Organization) in compliance with ISO 31000. The third phase, the company maintains an insurance cover against any contaminators. However, the prospect of such product risk cannot be eliminated.

Unexpected Business Interruption Risk

The company relies on effective operations of its infrastructure and systems. Integral risks include failure of computer equipment and critical machinery, and natural disasters. The company has put in place refined security and protective measures to reduce the effects of such unexpected business interruption risks. Nevertheless, there is no guarantee that its business operations would not be affected or interrupted should these risks occur. Almarai maintains appropriate insurance policies in case these risks occur.

Protection of Intellectual Property Risk

The risk of the inability to protect and retain control over or the need to take necessary actions to safeguard companys intellectual property may have a negative impact on Almarais business. The company maintains a strong brand which is sustained by its Zady, Almarai, and Al Youm trademarks. They are registered in several nations in compliance with the international trademark classification system. The Almarais ability to continue utilizing these trademarks in the jurisdictions of their market countries and to protect them from violation determines its competitive position. However, the company may not always be in a position to prevent unauthorized use or violation of its trademarks or register its trademarks. This may adversely affect the brand, thus affecting the Companys operating results.

Almarai enters into negotiations with or initiate proceedings against the companies it believes have violated its registered trademarks.

Strategic Risks

Market Share for New products

The Almarias failure to detect, anticipates or reacts to consumer preferences change, could result in reduced sales and profitability. The success of new product will depend on the companys ability to anticipate the dietary habits and tastes of the consumers. The solution to this risk would be to offer products that appeal to consumer preferences, Dependence on Key IT Personnel

Almarais financial condition, sales, results of operations, and business could be negatively affected if it does not retain qualified IT employees or replace them with equally qualified staff. Almarai depends on the abilities of executive IT officers for security of business information. The company has implemented strategies to reduce the risk of staff loss and minimize the effect of any key staff loss.

Insider Threat

The insider threat occurs when the employee acts either knowingly or unknowing, in a counterproductive way to cause a damage to the Almarai. It is driven by the access those employees have to critical business information as the company become more and more connected. To solve the insider threat, Almarai employ good security people, use of IT systems, and monitoring tools that produce alerts.

ISO 31000 Security Risk Assessment Frameworks

ISO 31000 frameworks comprises the four phases of risk management in Almarai.

Risk governance and Assurance

Risk governance phase ensures Almarai business area executives have relevant information to oversee and manage the companys risks. Risk assurance offers feedback to the management that quality controls and processes are in place and effective. An Internal audit is conducted to review risk management framework.

Risk Management Policy

This phase ensures that everyone actively manages risk within their area of responsibility and they foster a culture where risk is identified, assesses and managed appropriately.

Implementing the Risk Management Process

This phase involves the activity of choosing and implementing the proper control measures to modify the risk. Also, it extends further to risk avoidance, financing, and transfer. Implementation phase offers effective and efficient internal controls whereby the risk will either be reduced or eliminated.

Measuring and Monitoring

This phase involves monitoring the effectiveness of the existing controls and the implementation of additional controls. Also, it includes an evaluation of the management framework and the risk aware culture, and the assessment of the extent to which risk tasks are aligned with other corporate activities.