Risk management techniques

Risk management techniques

Introduction

As a concept, risk management dates back to approximately 2400 years ago. The age-old approach to planning continues to develop rapidly into a scientific field through the 1900s. The method involves critical analysis and assessment of ideas to the detail. The application of the concept varies with the organization’s context and requirements. Therefore, risk management is an essential process at all management levels within commercial and non-commercial fields. The industrial areas may include product manufacturing, marketing, distribution, product design, and introduction. The gradual advancements in risk management approaches have faced an array of challenges such as non-optimal decisions arising from inaccurate data collection, macroeconomic dynamics, and insufficient training leading to poor execution of plans. However, the risk management concept helps formulate new ideas, frameworks, functional principles, business models, and appropriate management tools for various projects. As a result, the paper aims to focus on a risk management plan for an existing proposal to introduce a new range of hatchback automobiles for a company specializing in commercial production of sports cars. The product expansion plan arises from multiple requests for small budget maintenance cars as well as the recently accelerated environmental conservation requirements. The design is an 85 percent improvement based on a previously discontinued model.

Risk Management Techniques

Risk management techniques refer to the approaches employed to treat possible adverse occurrences that are uncertain but have a significant possibility of occurring during the project execution process. The methods include preventive, adaptive, and risk transfer plans depending on the type of risks facing the investment. According to xxxx (xxxx), the resilience in an organization’s structure is determined by its risk management strategies and their capacity to restore basic operations efficiently, and within a short period. Firstly, are the risk preventive measures that will be set to avert possible regular and irregular threats likely to happen. These measures include qualities such as thorough analysis of past incidences, conducting relevant pliability supportive studies, as well as identification and grouping of resilience (xxxx). The main emerging risks in the motor vehicle production industry include corporate espionage, design and assembly faults leading to technical malfunctions, lack of compliance to carbon dioxide emissions requirements, marketing, and distribution lapses, and the cost-effectiveness of the car in terms fuel consumption, car insurance premiums, and maintenance. Risk preventive strategies require a set of company policies to protect the company from corporate spying and replication of creative information by other companies. Also, setting design verification procedures to prevent eventual faults and court orders from clients for compensation of injuries from road accidents.  Additionally, clear guidelines will be formulated to ensure compliance with the carbon emissions regulations, which will be achieved through the construction of a hybrid propulsion system due to its minimal fuel consumption derived from the combination of the electric fossil fuel engines. The proposed guidelines will also cater to ideal maintenance costs for the car.  Moreover, the marketing and distribution procedures will be set consisting of a comprehensive plan concerning the target market to promote sales, ensure consistent product availability at the dealerships, and facilitate optimum return on investment.

Secondly, adaptive risk management strategies will help the company continue operating despite the risks, even after unexpected dangers that may include macroeconomic factors such as international currency fluctuations and emerging pandemics, which are beyond the company’s control. The control measures adopted involve a budget created to cater for production costs, and prolonged storage needs before breaking even. Additionally, all customer preorders will be required to remit a deposit for commitment. Through comprehensive studies and analysis of past incidences, viable contingency plans will be identified to support the structural integrity of the venture in case the occurrence of unforeseen threats compromises the system’s resilience. A significant number of companies historically have endured economic recessions as well as negative changes in international currency value. As a result, a case by case examination will provide a compatible survival strategy to mitigate possible subsequent losses.

Thirdly, the risk acceptance and transfer strategy treats some uncertainties as eminent but within the company management control. Dealing with the threats requires a selection method to identify threats known as the risk acceptance and tolerability criteria xxxx (xxx). Both tests are based on the principle of adaptive analysis, which entails decision making supported by dynamically tracked and practical precautionary measures and alternatives. In a study on the aspects of ideal risk acceptance and tolerability criteria in the United Kingdom,   Xxxx ( xxx) states that a risk acceptance criteria created by the industry is aimed at the serving sector as opposed to society interests, and therefore, must be created the national authorities. As a result, the company will formulate structures that encourage adherence to the federal criteria for risk acceptance and tolerability policy. This will help manage risks that can be transferred to insurance companies. The recognition and transfer of these risks enable a company to solve damages caused by the company, employees, or members of the society as a result of its commercial activities and improve relations with the local communities.