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CASE ANALYSIS: Risk Management Strategies

The document presents case analyses of four companies employing different risk management strategies. ABC Company uses risk mitigation to address potential losses from insufficient sales, United Paradise adopts risk reduction to minimize financial impacts from bad weather, Jack Dawson engages in risk sharing with third parties to lessen individual risk, and Davao Pacific utilizes risk retention to manage customer cancellations while still operating. Each case illustrates a tailored approach to managing specific risks associated with their business environments.

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Kate Galanida
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72 views2 pages

CASE ANALYSIS: Risk Management Strategies

The document presents case analyses of four companies employing different risk management strategies. ABC Company uses risk mitigation to address potential losses from insufficient sales, United Paradise adopts risk reduction to minimize financial impacts from bad weather, Jack Dawson engages in risk sharing with third parties to lessen individual risk, and Davao Pacific utilizes risk retention to manage customer cancellations while still operating. Each case illustrates a tailored approach to managing specific risks associated with their business environments.

Uploaded by

Kate Galanida
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

BM2001

CASE ANALYSIS: Risk Management Strategies

Case 1: ABC Company


ABC Company, a clothing store, is planning to open a new store in Pasig for year 2X20. The company is
worried about certain risks involve in opening a new location such as possible loss due to insufficient sales.

In the case of ABC Company, they shall employ a mitigating risk strategy, in which they consider as
many dangers as are conceivable for ABC Company to confront. They will devise measures to mitigate the
risks after they have identified all of them. The cost and repercussions of such disasters will be reduced
because of this method of planning or recognizing potential danger, ABC Company's risk of loss will be
reduced by using a risk avoidance plan.

Case 2: United Paradise


United Paradise, an outdoor amusement park that acknowledges that their business is completely weather
dependent. There is a risk of a large financial hit whenever there is a bad season for possible damages due to
natural calamities.

United Paradise can employ the risk reduction method. While the risk of possible damage due to
natural calamities cannot be eliminated, the risk of possible losses can be reduced by adopting the risk
reduction strategy. They will think of a plan to help prevent possible losses during bad seasons, such as
developing a marketing strategy that will encourage customers to visit the amusement park even if it is
raining, such as offering discounts or freebies, or building an indoor amusement park area, which will help to
increase sales during bad seasons.

Case 3: Jack Dawson


Jack Dawson, an investor, buying stocks in an exciting new company with a high valuation, is also exposed to
the risk that stock could significantly drop.

Jack Dawson seems to be a third party in a risk-sharing approach in which the potential risk is shared
among third parties such as vendors, business partners, and investors such as Jack Dawson. As a result, the
company's risk is reduced because the potential loss is shared among them and the third parties. If the risk
sharing approach fails, the corporation will not be responsible for all costs and damages.
Case 4: Davao Pacific
When Davao Pacific faces unforeseen cancellations that exceed their capacity, there is a large risk of losing a
customer.

In the case of Davao Pacific, a risk-retention technique is used, in which they keep the potential risk in
exchange for a high probable income or return. Davao Pacific is still receiving cancellations, but they are
continuing to operate and bear the risk of losing clients due to unforeseen cancellations. The risk of losing
customers due to a cancelled flight is not seen as a risk in that strategy, but rather as an opportunity to keep
operating since there is a high likelihood of still having customers to check the cancelled flight, for instance,
those passengers who did not book a flight before arriving at the airport can fill those available slots that are
being decided to cancel.

Required: Use a management strategy to prevent the risk involved in each case. Justify your answer using no
more than three (3) sentences (4 items x 5 points).

Rubric for grading:

CRITERIA PERFORMANCE INDICATORS POINTS


Content Provided pieces of evidence, supporting details, and factual scenarios 3
Organization of Expressed the points in a clear and logical arrangement of ideas in the 2
ideas paragraph
TOTAL 5

08 Task Performance 1 *Property of STI


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