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Mgmt311 Final Paper On Risk Management

870 Words4 Pages

Risk management
Mark Peter
MGMT311 B004 Sum 14
George Hale
09/29/2014

Risk is inherent in every business and managers today have to be well-equipped to eliminate or reduce risk significantly. The advancement of international trade and linkages of local with international financial markets has also increased the level of risk exposure for companies. It is this trend that has forced large companies to hire professional risk managers. These are people that can assess the risks that a company faces in its operations and the best way to minimize the exposure level. A risk manager also analyzes potential investments for the company and gives an opinion on their suitability (Kapila & Hendrickson, 2001).
Management Scenario I worked for …show more content…

First, the management has ruled out the use of rain-water to support crop growth. Instead, the company used irrigation and production was possible all-year round. Further, the company's management has people dedicated to surveying the international market conditions with an aim of projecting demand for the coming months. The company can then match the production levels with the expected demand levels. With time, it became possible to tell the peak months of the year as well seasons when the demand would be …show more content…

As a result, the company began getting more for every transaction they received in terms of dollars (Kapila & Hendrickson, 2001). This can be quite frustrating especially for a manager that has never dealt with foreign exchange risk before. This is because even though demand has not reduced, the company is realizing less money than before. This trend began to make shareholders uncomfortable because they too did not understand what has going on. Worse still, the company could not transfer risk by asking its customers to pay for the exports in Kenyan currency. This would be not only risky but also for them and they would rather get produce from another seller because competition is quite stiff in the international horticulture

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