Risk and Strategic Management Risk Essay
- Length: 12 pages
- Sources: 12
- Subject: Business
- Type: Essay
- Paper: #34489262
Excerpt from Essay :
Some of the older employees will however retire in the near future and they will have to be replaced. This will not only generate financial investments with the recruitment and training of new staff members, but it could also materialize in a failure to integrate and attract newer employees. To better explain, the process is difficult and tedious and a young candidate may not feel at ease with working with it. Consequently then, this would lead to two possible situations. The first one refers to Tetra Tech's inability to hire news staff members to replace the retiring ones, and the second one relates to the organization's difficulties in retaining the newly hired employees, meaning then increased employee turnover and high costs of continually replacing the human resource.
Generically, the human resource risks can be divided into six categories (PK-RH, 2008), all with high chances of becoming present within Tetra Tech. They refer to the following:
fatigue and exhaustion relative to the professional activities - continuous change is tiring and employees may want to switch employers or retire early accidents incurred at the work place or employee illnesses, which could be determined by uncertainties and errors in the system the outdated skills of the older employees may no longer be useful in the contemporaneous context; this is even more risky as the older the employee is, the least eager he is to gain new skills (McDonnel, 2008) disputes between employees or employee and employer on personal or professional grounds, which could easily occur doe to dissatisfactions related to the difficulty of comprehending, implementing and constant modifications to the process given once again the complex nature of the TIP, it is extremely likely that human errors occur, further reducing the efficiency of the Tetra Tech operations due to their dissatisfactions and professional frustrations, employees may come to divulge professional secrets to Tetra Tech competition
The risk of reduced operational efficiency high operational efficiency is the key to organizational profits. The aspects of the operational efficiency are multifaceted and refer to areas such as increased profitability, efficient resource allocation, maximized outcomes, adequate use of technologies and ultimately, minimal costs. Otherwise stated, "operational efficiency is - what occurs when the right combination of people, process, and technology come together to enhance the productivity and value of any business operation, while driving down the cost of routine operations to a desired level. The end result is that resources previously needed to manage operational tasks can be redirected to new, high value initiatives that bring additional capabilities to the organization" (ENSYNCH, 2007).
Given the extended understanding of operational efficiency, its achievement requires optimum functioning parameters at all organizational levels. Considering however the high operational costs, the potential costs with the personnel and the constant interruptions and changes to the processes, Tetra Tech could find it rather difficult to achieve an increased operational efficiency.
The risk of damaged relations with the stakeholders
Given the internal problems faced by Tetra Tech, it is only expected that they will become matters to be revealed to the public. This could happen through a failure in satisfying a customer or through the inability to comply with the terms of a contract signed with a partner. Whichever the case, once the public becomes aware of the risks Tetra Tech is facing, their perception will be significantly reduced as the stakeholders will lose trust in the organization. A negative market perception and reduced trust from other categories of stakeholders would easily materialize in a reduced demand and consequently, reduced profits.
However all risks threatening Tetra Tech are serious, this particular one deserves an increased attention simply because stakeholder relations are difficult to repair and once a damage has occurred, the business would be seriously affected. To avoid this from happening then, the leaders at Tetra Tech should develop a stakeholder risk management program. This would be built in three steps: identifying risks, analyzing and quantifying the risks and finally, developing a suitable response (Articles Base, 2008).
The necessity of the first step is explained by the fact that an organization can only deal with those stakeholders it is aware of. Numerous organizations make the mistakes of only considering stakeholders their own customer and other few groups they directly work with, impact or are impacted by. In fact, they should also consider the customers of their customers, regulators or end users of their products and services. Therefore, in identifying them, Tetra Tech should be "creative and energetic" as to make sure that not a single category is left unaddressed.
The analyze and quantify stage of the process refers to categorizing the stakeholders in accordance with their ability to influence organization's project, as well as by the interest manifested by each stakeholder group. Finally, the third stage will allow the managers at Tetra Tech to make the best informed decisions.
The risk of improperly identifying a process
Several executives have stated that the proper identification of a business process, with the aim of improving it, is generally a challenging chore. It becomes even more difficult to achieve when the internal process are not as efficient as they could be. The answer then resides in what exactly makes the process identification so troubling for the management. "The quick answer is that definitions don't define, names don't identify, examples aren't exemplary, and an organization's processes are essentially unknowns (but, thank goodness, not unknowable)" (Fletcher and Newel, 2007).
This particular type of risk is only limitedly dealt with by the specialized literature and a reason for it could be that the definition of a process simple cut and clear. Thomas Davenport (1993) for instance defines the process as "a structured, measured set of activities designed to produce a specified output for a particular customer or market." In Reengineering the Corporation, Michael Hammer and James Champy (1993) state that the process is "a collection of activities that takes one or more kinds of input and creates an output that is of value to the customer."
However the above mentioned definitions are correct and logic, the actual identification of a business process is more challenging that one could initially believe. This risk is relevant as it means that significant improvements could not be achieved, or they could at least be delayed. Below are some specifications which could help the managers at Tetra Tech better identify their processes, as they were presented by Fred Nickols (2003):
Business processes are portions of streams of activity that contribute to business results
Results are the effects of actions taken; business results are always external to the business; they are "out there"; business results are measured on the input side of an organization, not its output side
An order or a payment received is a business result; a product or service produced is not to define is to establish boundaries; boundaries must be set, not simply discovered or identified
The way to begin is to jump in; the place to begin is with results
Many business processes take the form of loops, cycles of events that are initiated, carried out, and, upon closure, reinitiated
Some business processes are transformational; others are transactional; transformational business processes are concerned with converting organizational inputs into organizational outputs; transactional business processes are concerned with exchanging outputs for new inputs to continue the cycle of events of which any given process is a part"
The contemporaneous business community is more dynamic that ever, meaning that that it has to face more risks. The specialized literature on the field of risk and risk management is rather broad. The most simplistic definition of risk is that it represents a possibility that an undesired event may occur, resulting in a loss or a negative distribution of gains. In order to cope with the increasing risks, organizations implement a wide series of strategies, processes and policies to identify the risks early on and to reduce either the possibility of their occurrence, or the negative effects their would generate. These measures are organized under the umbrella term of risk management.
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