Strategic Risk Management Essay Paper

Strategic Risk Management
Strategic Risk Management

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Strategic Risk Management

Strategic risk management has been effective in promoting stability and mitigating risk within an organization. Specifically, international corporations are exposed to a different forms of risk from internal to external factors. In this relation, the need to adopt a suitable strategic risk management process is mandatory. This will be useful in ensuring continuous business operation as well as offer a tool for risk analysis and opportunity discovery for an organization operating in international markets.

The two method of risk management that can be used by the overseas organization to counter their risk effective are external risk management and human resource risk management (Frigo & Anderson, 2011, p. 22). Each of the two categories is specific to the nature and type of risk that they mitigate for the organization. They also offer various alternatives and opportunities in solving risk faced by the organization.

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External risk management

External risk management focuses on the competitive risk and market changes risk that an organization experiences while conducting business overseas. International markets are very competitive, and companies adopt a more elusive method of tackling external risk. Foreign companies operating in overseas market face external challenges such as economic factors, differences in market performance and preference, competition from local corporations and political constraints.

External risk factors can be minimized through increasing capital efficiency and support decision making. These strategies will help a company maintain its competitiveness in the new market and identify new forms of business operation. Companies have prospered through building investors’ confidence and establishing good working relationship to protect them from external risks such as competition and market changes.

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A case example of external risk management factors can be observed on a Thai non-profit organization, Wikimedia Foundation, Inc, operating in ICT which conducted a risk management on their company through analysis the external factors (Dana, 2011, p. 505). They are faced with poor technological competitiveness and market influence from other ICT companies operating in the international market.

Therefore, through validating and finalizing their risk the company developed a build alternative method of tackling the competitive risk. They also developed investor cooperative relationship with the local organization to tackle the external challenge.

Human resource risk management

This form of strategic risk management focuses on the relationship between the foreign company and the level of staffing coordination and employee theft being experienced. This kind of risk encountered by an organization can be managed through having a well-structured human resource management system (Frigo & Læ, 2012, p. 27). A strategy that is capable of taking care of the company staffing procedure and avoids employee theft in international markets is considered highly useful.

International companies face challenges in maintaining their staffing process and having a reliable team of workers. This, in turn, affects the development and strategic performance of the company. Accordingly, the adoption of human resource risk management can be imperative in controlling risk allocated by employee relationship and staffing

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International companies are advised to identify and evaluate their location and acclimatize with the local to ensure the stable relationship with the locals (McConnell, 2012, p. 115). Favorable employee relationship is effective in increasing business performance in various sector of the organization. The benefit of conducting a human resource management scheme is to guide the company in the pattern or performance among their staffing and have a reliable team to work within the business environment.

A case study of Black CAP, a volunteering international non-profiting organization that faced challenges in their workplace through the balance of fund and their staffing process is a good example (Cooper & Winsor, 2015, p. 34). Through adopting the human resource risk management strategy, they improved their annual operation through identity with the local employee to balance the cost of operation.

Reference List

Cooper, T. & Winsor, B. 2015, “A Practice Approach to Addressing Strategic Risk and Uncertainty for Management Consultants”, Journal of Management Policy and Practice, vol. 16, no. 1, pp. 31-44. Retrieved from http://search.proquest.com/business/docview/1726800835/42051F6C6D2A41E7PQ/3?accountid=45049

Dana L.K. Hoag 2011, “A strategic risk management program for agriculture”, China Agricultural Economic Review, vol. 3, no. 4, pp. 505-517. Retrieved from search.proquest.com/business/docview/912292275/42051F6C6D2A41E7PQ/2?accountid=45049

Frigo, M.L. & Anderson, R.J. 2011, “What Is Strategic Risk Management?”, Strategic Finance, vol. 92, no. 10, pp. 21-22,61. Retrieved from http://search.proquest.com/business/docview/885149857/42051F6C6D2A41E7PQ/7?accountid=45049

Frigo, Mark L, C.M.A., C.P.A. & Læ ssoe, H. 2012, “Strategic Risk Management At The Lego Group”, Strategic Finance, vol. 93, no. 8, pp. 27-35.retrieved from http://search.proquest.com/business/docview/928760551/42051F6C6D2A41E7PQ/5?accountid=45049

McConnell, P. 2012, “Strategic Risk Management – A Tale Of Two Strategies”, Journal of Risk and Governance, vol. 3, no. 2, pp. 83-117. Retrieved from http://search.proquest.com/business/docview/1627151526/42051F6C6D2A41E7PQ/6?accountid=45049

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