There are many forms that risk can take in any organization. Risks can take simple approach or rather complicated turns. As organizations face many challenges, ranging from environmental, to managerial, it is important to have ways in which the risks can be managed and so that there will be minimal losses in case the risk will happen. Risks have to be managed as an entity and not as a generic item. Every organization has their own unique challenges that they should handle on their own. It is for this picture that it is important to have a unique way in which risks will be managed. Enterprise risk management is a significant component that should be integrated as it helps to have continuous assessments of the potential risks that are associated within an enterprise. This paper will focus on the enterprise risk management of United Grain Growers. It will focus on the various aspects that will have to be considered while undertaking the risk of the organization.
Risk management is a significant component in any organization. With reliable and sufficient management of risks in enterprises, it will be possible to reduce the cost of the expenses in an organization. Even if an organization has no risk that is associated with it, it will still be in order to assess the risk management capabilities that they have put in place. It will be important to understand the risk management plans that have been put in place and have additional features in case there are changing trends in the business. It will be important to have these issues put in place in order to have the necessary aspects in this case.
Enterprise Risk Management for United Grain Growers
United Grain Growers have to put in place the risk management plan that will help them to have a way in which they will manage the risks that will be associated with the business processes of the various aspects of the business. One risk component that they have to assess is the relationship between the grain shipment between the company and that of the industry. At all costs, there should be a relation between these two parameters. The industry should not supersede the shipment of the company while the pace of shipment of grains from United Grain Growers (UGG) should be proportional with that of the industry. The two should match and flow together so that there will be sufficient flow of the two components. If there will be proportional shipment of the industry and that of UGG, it will mean that the company will experience losses in the industry. They will not be able to have the necessary aspects and management components for the two components.
Another component that will have to be assessed is the crop yields of the company and the shipment of the company. Even though they are the same in terms of the issues and the industry analysis that should be done, it is important to have measures and parameters that will be used to measure how the two correlate. The capacity of grain that is produced should be proportional to the capacity that is to be shipped in the industry. If there is some out of proportion in the two components, it will bring some form of risk that will either result in enormous losses or will result in surplus of the grains which might result in losses for the company. On the other hand, if the company will produce less grains and yet the market demands huge amount of grains, it will mean that they will lose on the market. They will not be able to reap on the already waiting market for the issues that have to be achieved and enhanced in the entire process. One of the requirements is to have a way in which to have measures to be put in place.
It is beneficial for the company to have a balanced portfolio. The owners of UGG have invested in various components, which makes it easier in the management of weather risks. If there is poor weather, the services that they offer to livestock owners will be beneficial and will give the company another source of income. They will still be able to have the income and the capital that is required to manage the losses that could be obtained in the company. One of the requirements in this case is to have various sources of income. In poor weather conditions, the livestock will make it in the case and will bring a lot of revenue in these times. There will still be running capital that will be used to manage the running costs of the business. This process will be beneficial in this case as it will be useful in the entire case to have benefits in the company. The well diversified portfolios of the company makes it simple and easier to have benefits that will be useful in the company portfolio.
I believe that the unique ownership portfolio of UGG should not be the case that weather risk management should be reduced. I risk that still lurk in the company that will have devastating effects to the company in case they will occur. It is important to manage risks even if the risks are unlikely to occur in a given sector. All risks should be assessed and analyzed in a given case. It is important to have these procedures that will enable the risks to be managed well and have a well-researched analysis and aspects within a company. In the case that has been given, one of the issues that need to be taken in place is to assess the risks for all the portfolios the business areas of the company. It will help to understand these aspects and have a better way in which the risks will be enhanced and managed in a given case.
The owners will have to put in place a procedure and way in which they will be able to have the risks managed and reduced in all the sectors that have been identified in the given case analysis. There could be a derivative that will be done in order to have the weather to be managed in the event that there is some issue and risk that will take place. One of the derivatives is to have some other unrelated business, like sale of farm equipment and have a sizeable portfolio that will be able to enhance the management and enhancement of the case. In order for this to be possible, there will have to be some business started with the capital that has been put aside in order to have a strategy that will enable the company to come above the risks that will take place in the future. This will be a push risk. This is because the new derivative will be pushing the capital that has been invested in the company. It is a significant process that has to be put in place in the entire case. The contract will enhance the entire business so that there is minimal risk. It will also require that there will be a need to assess the other business that will be useful in this entire case to ensure that the company will not suffer great losses in the future. All risks should be assessed and analyzed in a given case. It is important to have these procedures that will enable the risks to be managed well and have a well-researched analysis and aspects within a company. In the case that has been given, one of the issues that need to be taken in place is to assess the risks for all the portfolios the business areas of the company. It will help to understand these aspects and have a better way in which the risks will be enhanced and managed in a given case.There would be a need to have a grain volume insurance that will be useful in the event that there is crop loss in the company. One way in which this will be achieved is to have an insurance that will cover the loss of stock. A percentage of the stock will be put in the insurance cover. This will enable the company to have secure volume of the grains in case there are devastating events that might take place in the company. These are the measures that will be taken into consideration to manage the risk of UGG.
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