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Here, this particular assessment has been analyzing the risk management credentials based on the particular company name Equitable Funding Ltd in UK. Thus, it identified that the impact of risk management as well as the high risk activities in the overall economic sectors in this in particular organization. After that, it can be focused on the business risk to analyzing the role of risk management function in this particular organization. Therefore, analyzing the factors of vulnerability in this organizations for measuring the terms and conditions of crisis management by business continuity planning. Moreover, the next step is identifying probable risk to analyzing the potential impact. Thus, focused on those impact suggested the mitigation strategy for justification of evaluation the benefits.
This assessment will be focused on the Risk management based on the sector of Equitable Funding Ltd in U.K. Thus, it can be focused on the several parts of risk management for analyzing the impact of risk in this particular organization. On the other hand, it can be observed the high risk activities depending on the economic parts in this particular organization. Another task will be discussed about the business risk factors as well as identifying the role of the risk management factions in this particular organization. Task 3 will be describe the vulnerability of organizations along with the crisis management depends on the business continuity planning. Task 4 will be focused on the probable risk factors in this particular organization and the potential effects of identified risks by analyzing the mitigating strategy. After that, it will be considered with the specific justification as well as evaluated scientific benefits.
It is important to understand the different kinds of risks that apply to an organization. In this case, the organization is Equitable Funding Ltd. which is a U.K. based financial organization. It has been observed that the main risks within a financial organization can be categorized into four parts. They can be termed as Market Risk, Credit Risk, Liquidity Risk, and Operational Risk. It is important to understand that market risk helps in the process of understanding and analyzing the external financial market (Galli and Kaviani, 2018). In the present scenario, it can be said that the market risk analysis is the transformation of consumers from physical stores to online shopping platforms. Market risk is delivering challenges in the present scenario and can be analyzed by observing market trends. The next most important Risk is credit risk, as analyzed by the organization's Enterprise Risk Management (ERM). The ERM functions as a body within the organization to identify the credibility of the organization.
In the case of a financial organization, it is evident that the organization does have to procure out multiple funds on a credit basis. It is important that the organization does p[osses the security of retrieving back those funds at a profit. Failure in such an aspect detains the profitability of the aspect and turns over to credit risk. According to the audit report, the organization has suffered a notable credit risk in the fiscal year (Munro, 2019). Committee of Sponsoring Organizations of the Treadway Commission (COSO) is a conglomeration of five organizations that helps in understanding the risks within an organization. Operational Risk is the process by which there stands a potential for organizational loss during the workflow. It refers to the Risk from the business activities of the organization. It generally includes legal issues and financial problems.
In terms of high-risk activity, it can be said that the process involves major parts of the organization. The most important part is data integrity issues; this may happen due to system failure or a security attack that results in data loss or data manipulation. Apart from data-related threats, financial theft is also an important part (Terenina et al. 2019). In the present data, financial theft is most obvious in the case of credit management or in the case of security issues. The other part of social Risk under the high priority category falls under the section of mental health issues and manual handling of funds. In the case of mental health issues, it can be said that the employees are often not able to abide by the pressure of the intricate financial funds. This may lead to the delusion of the employee on a calculative basis, resulting in data loss or manipulation. In the case of manual fund handling, it can be said that fatigue and tiredness are a factor that may cause the employee to commit imminent breakdown.
Liquidity is another factor that falls under the high-risk areas of Equitable Funding Ltd. The aspect of fund liquidity is directly related to the asset optimization of the organization. It includes asset liquidity and operational functioning liquidity. High-risk adversity pertains because the loss of assets for the organization is not only a loss of business for the organization but also moving towards a non-deliverable future (He et al. 2020). The aspect of these kinds of high-priority risks can be balanced by the process of implementing good practices amongst the employees. Records play an important role in the maintenance of accounts within the organization. Hence, it is important to spread awareness that keeping a record of every piece of data may help diminish risk procurement. Today, technology plays an important role in the process, and with proceeding innovation, record-keeping and access are simplified. It is an effective step on the part of the organization to provide their employees with the benefits of health and safety processes. It provides the employees with backup and motivation. Protection of assets is also an important part for the organization in order to deprive itself of the liquidity of assets.
Another step for the organization is to ward off imminent Risk in the management of the product and services produced by the organization (Li and Vermeulen, 2021). It is important for the organization to closely analyze their products and services so that they don't incur losses on it with changing market conditions. Updation of conditions is an important factor to cope with the market trends in order to attract consumers as well and reduce risks. Financial products are liable to be customized products and need to be highly competitive; otherwise, popularity will not be achieved.
It can be said that Business Risk is the phenomenon of the exposure of organizations towards the intrinsic and the extrinsic factors that can lead to the reason for revenue loss of the organization. The concept of business risk not only stops the organization from achieving financial goals but also leads to the solvency of the organization by the liquidity of assets. There is specific procedure for the identification and solution of business risk that is mostly handled by the senior management of the organization. The Risk is of two kinds; the one that relates to the internal factors of the organization are known as intrinsic risks (Fiedler et al. 2021).
The one that is related to the external aspects of the business environment is known as extrinsic risks. In the case of a financial organization, it can be said that the business risk can be divided into five categories. They can be named economic Risk, financial Risk, reputational Risk, operational risk security, and fraud risk. The economic Risk relates to the fluctuations in the market economy. In some cases, it does turn out as a positive aspect as it promotes purchase for the organization, and on the other hand, it turns as a negative aspect for the same reason also. Financial and Reputational risks are also intricate factors that may lead to unhappy customers and financial losses on credit criteria (Polinkevych et al. 2021). Reputation is also related to product failure and negative legal risks.
It can be said that before the risk management function, it is important to understand the two different categories of business risk. Firstly the intrinsic business risk refers to the interpersonal risks of the organization. The Risk involves the scarcity of labor within the organization. The loss of employee morale is another aspect that affects the internal and implementation of technology and its attributes relate to the intrinsic risks. The aspects of intrinsic risk management can be overcome by the implementation of progressive work culture (Guo et al. 2020). The decisions of the higher management are the sole steps to overcome this aspect.
It is important to understand the leadership aspect within the organization helps in uplifting employee morale and implementation of rightful technology. On the other hand, it can be said that the extrinsic risks do not hold the accountability of the organization's cultural and social aspects. It is mostly based on natural systems like disasters and market fluctuation. Observation of the external environment is another factor that helps in overcoming the extrinsic business risks.
According to the process of risk management, it can be said that the adoption of specific functions on the part of the organization helps in estimating Risk. It can be said that the steps that are undertaken by the organization are identification of the Risk, development in previous policy, and maintenance of hierarchical risk management procedures. In the initial process of risk identification, it can be said to categorize the Risk in the criteria of financial, economic, and other business risks mentioned (Sumiyati et al. 2018). It is important to identify the trait of the Risk in order to study the properties of the Risk and evaluate its potential harm to the organization. It can be said that the process involves measuring the potential of the Risk and the level of its adversity.
In the case of strategy implementation by the organization, it can be said that the major factors are determined within the strategy that relates to Horizontal and Vertical Integration, Market penetration or expansion along with diversification of the aspects. The present-day situation also deals with the digitization of the process leading to Social media engagement and Search engine optimization. Apart from this the structural hierarchical aspects also involve the process of cost leadership and cooperative strategy partnership (Chunsheng et al. 2020). The business functions like the formation of new policies also tend to deviate from the incoming Risk of the organization. The policies implement the aspect of product and service analysis as well as implementation. The formation of new extrinsic policies with time and the updation of the sales structure helps in the avoidance of risks with time. In this section, it can be said that risks are mainly tackled by avoidance, control, retention, and transfer. Strategizing policies is essential for controlling the risk factors and retention of organizational resources is prime to the formation of a Risk transferring environment.
During the assessment of the vulnerability of the organization Equitable Funding Ltd., it has been observed that the vulnerability appears on multiple factors. The factors can be segregated as the direct physical impact, human impact, interruption of lifeline services, and increased cost repatriation. In the case of the direct physical impact, it can be said that the organization may suffer severe damage to its facilities. From the financial point of view, it can be said that the liquidity of the asset values can be lost with the involvement of the Risk (Moon, 2021). This is known as assert contamination and does have the potential to dismantle the organization's market value.
Human Impact refers to the loss of important staff to the organization. This is not a direct effect and is implemented through the process of revenue loss or demotion of position. Loss of key staff on the basis of organizational accessibility leads to impact of resource loss as well as revenue impacts. In case of natural issues like life loss to disasters or deterioration in medical condition due to issues of the health and safety policies. Interruption to lifeline services is the aspect that deals with the loss of financial resources due to market conditions (Tamimi, 2021). Lack of investment towards the organization and discrepancy from stakeholders is also a deep issue.
In order to understand the approach of crisis management for the organization, it can be said that the factors of the size of the business, operating environment, and physical environment play an important part. The relation of the size of the business lies with the fact that the bigger the organization will be more effective due to Risk. It can be said that the organizational policies hold the first point of crisis management within the organization. In the case of crisis management in terms of the physical and financial environment of the organization, it can be said that the process of anticipation is most important (Saeidi et al. 2019). It helps in analyzing the crisis and reacting according to the situation. Next to it, running a test environment is also necessary in order to understand the scope of the solution in terms of a crisis management range.
The aspect of the operating environment is evitable by the analysis of the business environment and the structuring of the proper modes of communication in all the sectors of the organization. It is observed that within an organization, all departments are interrelated, and the Risk affecting a single department spreads like a chain reaction (Yang et al. 2018). The maintenance of nodal check valves is necessary for reducing the impact of the Risk and handling the crisis. In the process of crisis handling, monitoring plays an important role, and it is the necessity of the organization to implement a data-driven tracking system. Prior to the crisis management process, it is important to analyze the organization's financial conditions and asset values. It is known as post-crisis analysis.
In the case of the organizational crisis management of Equitable Funding Ltd., it can be said that the process involves the aspects of employment practices, fraud prevention procedures, health and safety policy implications, and protection of physical assets. It is with the advent of the use of proper guidance and monitoring systems that the employment practices of the employees can be changed. The practice lays emphasis on the fact of leaving no loose ends. In the case of the financial organization, it can be said that the keeping and updating of records are the prime factors to avoid risk impacts (Lu et al. 2019). The implementation of technology helps hugely in the process of track keeping and enabling accurate work. It is also part of the organizational policies that help in the movement of the employees towards focusing on the organization's crisis prevention technique.
The next issue to the situation is Fraud prevention methods, and it can be said that the process of fraud prevention deals with the deligence3 of the employees. In the management aspect, it can be said that proper motivation and understanding of the organizational policies help in the fraud prevention process. The policies of the organization also play an important part (He et al. 2020). The reciprocation of the organization to maintain a healthy social and cultural environment within the organization reduces such risks. Considering the external environment, it can be said that the monitoring system and the strictness of the external policies help in the fraud prevention of extrinsic aspects. The strictness of information passing and deliverance of accessibility is important to protect the organization's physical assets. It is important for the organization's management to restrict the accessibility of the assets to specialized people with proper safety measures. The concept of benchmarking and disaster management has been precluded by the use of loss prevention techniques and the stabilization of assets.
The identification of the probable risks for the organization is based on the legal, environmental, market, and regulatory factors of the organization. It has been observed that the probability is experienced in these factors because the risks do not depend on any stagnant factor. In the case of the environmental aspect, it is important to understand the fact that environmental disasters are liable to disruptions in an unprecedented manner. Hence the organization's financial incursions should be managed in a stable manner to uplift the tragic conditions. In the case of market risk factors, it can be said that the aspects mostly delves financially. It is with the advent of the pandemic that the market structure changes. People started focusing on essential needs rather than maintaining luxury (Xi and Tseng, 2018).
The potential impact of the identified Risk is that the organization suffered a financial loss on the part of the advent of the pandemic. In order to counter the act and maintain the expenses of the organization, they have been bound to cut down their employee's strength. In this way, the accessibility of the organization moved away from the resource. It affected revenue generation and organizational growth in a cyclic manner. The operational risk regulatory risk all have involved in the potential Risk in the business. The business depends on the legal Risk. The business growth can increase or decrease through the potential Risk such as production cost. Moreover, the business's potential Risk includes fashion, trends and many more. The organization can identify their potential risks in order to improve their business such as the product's rate decrease, the product's quality being low, and poor production. The Risk in the business can be identified with the potential losses. In order to achieve organizational goals, the business needs to have more potential. Moreover, Risk is divided into two factors such as internal and external. The Risk is an alert where the organization can understand their Risk and can take good steps for the future development of their business.
In order to reduce potential Risk, planning is required where companies can understand their role and implement their role and can challenge its negative impact. In order to create a better business, the companies need to make a plan where they can mitigate the Risk. At first to start a business, the organization needs to know the method for mitigating the Risk such as sharing, transferring, and reduction (Okudan et al. 2021). Moreover, it can help to grow their business through maximizing their Risk in business. The organization needs to prepare for all risks such as risk avoidance, risk limitation and many more. The organization can achieve this through their risk mitigation plan.
In order to mitigate all risks in the organization business, the organization can focus on the strategy in the risk management plan such as risk acceptance, risk transference, risk avoidance and risk reduction.
Risk acceptance
This Risk has been involved in the business such as economics markets, credit risk, project failure and many more.. A reducing strategy cannot be called risk acceptance. Insurance not recovering a risk is the motto of risk acceptance (Tserng et al. 2021). When the organization business has a low chance of Risk, then the organization can accept risks.
Risk transference
The Risk has not been accepted through the organization when the cost is increasing.
Risk avoidance
The organization can avoid Risk by completely eliminate the possibility. . the organization can the affected whether the organization treat their Risk.
Risk reduction
The organization's most common strategy is known as risk reduction where the organization can take risks that are manageable.
Forecasts Probable Issues:
One of the important advantages of an effective risk management system in an organization is to change the culture of work within the organization along with making the organization more proactive as compared to the other organization of the market.
Avoiding Catastrophic Events: Effective risk management supports the organization through strengthening the organization to face all kinds of shocks. The managers of the risk management team concerts about the smaller shocks that affect the organization on a day-to-day basis (Guggenmos et al. 2020). Moreover they also maintain focus on the catastrophic events that have a low probability rate of occurring.
Enables Growth:
Risk Management often sounds like the defensive activity in the execution of the business. It comes up with the negative connotation along with the assumption of performing the activities in order to avoid losses.
Business Process Improvement: The regularized process of Risk management provokes the organization for collecting maximum information about the operational procedures that are practiced in the organization.
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