Risk management Assignment Example | Topics and Well Written Essays - 1500 words

Risk management - Assignment Example Therefore, in order to reduce the effects of risks so as to maintain the functioning of the organization in an effective way, risk management practices are extremely essential. It is because; it is the most synonyms term associated with each and every business organizations. What is risk management? Risk management is recognised as the process to identify, assess and control varied types of business risks by implementing various strategies and policies. However, in spite of implementation of varied types of strategies, some of the risks are entirely unpredictable in nature and so it’s beyond one’s control. Therefore, it might be stated that risks management is one of the most essential requirements of any organization, operating successfully or desiring to enter into a new foreign market. This paper is divided into four parts highlighting the significance of risk management processes. Along with this, it also describes about the most essential risk management decisions of an organization entering a foreign market. Side by side, it also describes the importance of direct costs and its benefits for an organization, while entering a new market. ... Side by side, any organization desiring to enter into a foreign market also tries to enhance its brand image and equity in the market among other contenders. However, prior entering any new foreign market, an organization desires to make an evaluation plan to analyse and identify the upcoming risks or challenges. It is done so that the members of the organization might plan for the strategies that might resolve those risks. Therefore, the risks that might be faced by an organization in entering a foreign market are described below- Political risks- this type of risks arises, when the government of a country suddenly changes its policies and strategies. However, such changes in the policies create high level of risks mainly for the new entrants (Khatta, 2008, pp. 457-469). This is because, as the organization newly entering a foreign market is entirely unaware about the policies and regulations so it affects negatively over its operations and functions. As a result, it reduces the tot al sale and profit margin of the organization among other contenders. Therefore, in order to stabilise the operations, management of the organization tried to implement the strategies according to the rules and regulations of that country (Tarantino, 2010, pp. 467-489). Legal risks- this type of risks arises due to changes in laws of the country such as tariffs and quotas etc. Due to which, it affects significantly on the operations and profit margin of a new entrant thereby declining its brand image and reputation in that market among others. Therefore, in order to cope up with such dilemma, the organization desires to enhance its profit margin and product lines to attract more customers. Social risks- the changes in the customer habits and preferences