Managerial Accounting You Must Identify

¶ … Managerial Accounting

You must identify the nature of risk assessment in the organization and how the costs of various risks are evaluated prior to the decisions and after decisions have been implemented. Discuss the strengths and weaknesses of the cost/accounting procedures applied to risk taking.

For any business, risks are a part of the process of building and expanding over the long-term. As no one knows, what will happen in the future and they will often engage in ventures that can provide them with some kind of benefit. This is provided that everyone is working together to: address the various threats and there is an effective strategy in place to deal with them. In the case of Master Card they are facing their own unique hazards. To fully understand the threats that they are dealing with requires examining: the nature of risk assessment, the costs and strengths / weaknesses of the accounting procedures that are being utilized. This is the point that we can see how these factors are impacting the kinds of decisions that are being made by Master Card.

The Nature of Risk Assessment in the Organization

The biggest threat that is facing Master Card is the potential of having their website breached. This is because the company is so large that they can become a target for organizations' that are lashing out against the system. A good example of this can be seen in how the security of their website was breached two times in 2010 and 2011. The reason why is Wiki Leaks had released hundreds of thousands of classified U.S. government cables. In response to these actions (which the company considered to be illegal) they withheld any kind of donations to Wiki Leaks. This is when Master Card became a target of hackers, who wanted to seek out revenge against the actions of management. As a result, this is illustrating how the company needs to improve their overall monitoring procedures for these risks. (Schroeder, 2011) ("What you can and must do to stay Secure," 2011)

How the Costs of Various Risks are evaluated prior to and after Decisions have been made

The way that costs are evaluated is based upon the total expenses to the company and the impact that it will have on their profit margins. This is achieved by conducting a cost basis analysis and then determining if this procedure will help to directly address the various risks facing the business. Once this occurs, is when everyone can see how a particular action will help the firm to realize its operation goals. (Schroeder, 2011) ("What you can and must do to stay Secure," 2011)

After this is when, the management will have a series of different reviews conducted that will determine the overall nature of the threat. At which point, there will be specific recommendation and adjustments made to the company's strategy. Over the course of time, this will help to limit the kinds of information that could be compromised during these types of events. (Schroeder, 2011) ("What you can and must do to stay Secure," 2011)