Risk Management - Paper Example

Introduction

Risk refers to a process involving either an opportunities or a misfortune. It is the potential of circumstances or events to affect the attainment of a firm's specific goals and objectives. These mishaps are a typical result of financial-related issues, environmental issues, changes in administration, and political instabilities. This paper aims at answering the following case study question.

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Risk Management

Risk indicates future uncertainty about deviation from anticipated earnings or predicted outcome. Risk measures the anticipation that an investor is willing to take to realize a gain from an investment. The uncertainty of any given venture is measured using risk. While risk management is a process that anticipates, identify, assess, and control uncertainty to a tolerable level. These uncertainties range from a wide variability of sources, including accidents, legal liabilities, financial delays, natural disasters, and management errors. Risk management assists in screening and mitigating the uncertainties threat from further misfortunes. Risk management helps to mitigate unfortunate from inside and side’s source or anything that hinders a firm from attaining its goals.

Risk Assessment

For this case study, 1 Samsung corporation was selected. Probably everyone in the technology arena has heard of Samsung either by buying or using Samsung gadgets. Samsung Electronics Corporation is an information technology and an electronic company based in South Korea. Globally Samsung is known to produce the best television and stereo systems. Recently the company joined the mobile devices market when it launched the Galaxy Tab and Samsung Galaxy S series of which competed with Apples' iPad and iPhone (Allan, 2012).

In August 2016, Samsung launched the Note 7, which could be the best smartphone. However, that all went into vain when the gadgets developed significant issues that could even result in serious accidents. Before phones are released in the market, they undergo hardware and software test thoroughly to give out all its possible defect to the firm. And allow it to address those issues before circulating the gadgets to the market to give the users a great experience, but this was not the case as there was a loophole that leads to problem development. Those issues further caused the corporation to split into an operating firm and holding firm. The company's splitting was designed to develop more profits for the stakeholders (Tuttle, 2016). The company was threatened by its large-scale operation that offered improper management techniques that provided a low return on investment.

Potential Risks

Samsung had to recall all phones ‘Note 7’ sold in just a month after launching. Samsung blamed its subsidiary Samsung SDI for the default battery. The company started replacing the default battery with another manufacturer, but it was not successful as the gadget exploded to an extent of causing a fire. It led to a total of using mobile phones in gas stations or inside a plane.

Conclusion

A lot of the Samsung Company’s success is credited to the company's vertical business integration. Initially, a components manufacturer, the firm designs and makes its gadgets and most of the individual components; this has helped mitigate several risks associated with the traditional supply chain (Tuttle, 2016). It has also developed necessary exposure to the low risk inherent that is obvious in vertical business integration, hence creating the predicament a good case study for companies operating in other areas.

References

Allan, R. (2012). Samsung Electronics and Apple, Inc.: A Study in Contrast in Vertical Integration in the 21st Century. American International Journal of Contemporary Research, 2(9). Retrieved from http://www.aijcrnet.com/journals/Vol_2_No_9_September_2012/9.pdf

Gibson, D. (2014). Managing Risk in Information Systems, 2nd Edition. Jones & Bartlett Learning.

Tuttle, H. (2016). Risk Management – Samsung's Vertical Integration Challenges. Retrieved from Rmmagazine.com website:
http://www.rmmagazine.com/2016/12/01/samsungs-vertical-integration-challenges/.