Baloloy, Heralynn A.

Sat/ 4-7PM
Ma. Guerrero, Michael Prof. Lasian
Tapanan, Camille
Risk Management

1. Paramount Construction Co. just beginning to show signs of reemergence from a

construction downtown and expects to have a breakout year. But the company lay off key
talent during the downturn and is now struggling to find the personnel to help it take
advantage of the improving economy. Talent shortages in safety management and bidding wind
up undermining the company’s ability to stay competitive. At renewal time, the company faces
increased retention and collateral demands from carriers. What looked like an opportunity now
looks like a disaster.

 Identify 2 types of Risk

 Operational-Includes day-to-day business challenges across all functional platforms,
including the strive for efficiency, optimal use of outsourcing and business continuity

 Strategic-Includes organizational planning, such as the strategic response to

changing customer preferences, competition, reputation/brand, innovation, etc.

 Analyze the Risk

The process to comprehend the nature of risk and to determine the level of risk
Risk analysis involves consideration of the causes and sources of risk, their positive and
negative consequences, and the likelihood that those consequences can occur.
Risks to be monitored Low (<P500,000) 5 to 10 years

 Evaluate the Risk

The decisions should take account of the wider context of the risk and include
consideration of the tolerance of the risks borne by parties other than the organization
that benefit from the risk.

 Risk Treatment
Selecting the most appropriate risk treatment option involves balancing the costs
and efforts of implementation against the benefits derived, with regard to legal,
regulatory, and other requirements such as social responsibility and the protection of
the natural environment.
2. A terminated employee becomes unhinged and exacts revenge on his employer, injuring five
people with a softball bat. Unfortunately for the employer, Minnick Engineering is as vulnerable
as its employees, prospective employees and contractors were the day of the attack. It is
revealed that the terminated employee presented a potential threat that hadn’t been
adequately addressed by company leadership. Hefty Litigation expenses take a serious chunk
from the company’s general liability policy. There is nowhere for Minnick to run and hide and
come renewal time.
 Identify 2 types of Risk
 Legal/ Regulatory-Incorporates liabilities for employment, defamation and other
allegations, including regulatory change and governance requirements
 Human Capital-A growing area of exposure in today’s labor market including
employee selection, retention and turnover, absenteeism, compensation and labor
relations

 Analyze the Risk

Provides the basis for risk evaluation and decisions about risk treatment. Risk analysis
includes risk estimation

Risks to be observed Medium (<P2,500,000) 3 to 5 years

 Evaluate the Risk

The decisions should take account of the wider context of the risk and include
consideration of the tolerance of the risks borne by parties other than the organization that
benefits from the risk. The risk evaluation can also lead to a decision not to treat the risk in
any way other than maintaining existing controls

 Risk Treatment
The possible solution to address the risk
Risk treatment itself can introduce risks. A significant risk can be the failure or
ineffectiveness of the risk treatment measures. Monitoring needs to be an integral part of
the risk treatment plan to give assurance that the measures remain effective.

3.
 Identify 2 types of Risk

 Legal/Regulatory risks- because it illustrates employment liabilities

  Human Capital risks- because it illustrates employee selection , retention,
compensation, and labor relations

 Analyze the Risk

The Blue Mountain Regional Medical Center plans to expand its borders to have greater
income. When they hired these physicians they failed to check on their background and
negotiate the option regarding liability issues. As it turned out, some of these hired physician
imposed legal liabilities from their prior acts and they were facing legal suits in which the
hospital must cover. The financial and reputation of the Blue Mountain Regional Medical Center
was at stake because of this event.

Before hiring an associate the management of Blue Mountain Regional Medical Center
should have first took time to fully understand the professional liability risks carried by the
physicians in the practices it was acquiring. It is also evident that Blue Mountain Regional
Medical Center did not have a risk management integrated into its acquisition and growth
strategies

 Risk Evaluation
Level of risk Evaluation Management action required
criteria
High risk May threaten  Involvement of senior management of Blue
the event. Mountain Regional Medical Center
Likely to  -The management needs to tailor its coverage in
threaten acquiring regional practices to better mitigate
ongoing potential professional liability risks. The
financial management should impose an individual limit
security of instead of covering all prior acts of the physicians
stakeholders involved in the legal battle.
 In hiring professionals, the management should a
thorough background check and if they’re found
out to be involved in such hiring them should be
examined with extra care
 Risk must be reduced or activity modified

 Risk Treatment
Since the risk scenario belongs to the high levels of risk, it will require a careful
administration and management, as well as the preparation of specific plans in order to
manage and remedy possible consequences.
 Mitigation: this strategy seeks either to reduce the likelihood of occurrence of a risk or
to reduce its consequences, or to achieve both objectives at the same time. The likelihood of
occurrence of a risk can be reduced through management controls, organizational
arrangements and procedures designed to reduce the frequency of an error or the opportunity
for an error to occur. The consequences can be reduced by ensuring or guaranteeing that all of
the controls are in their proper place in order to minimize any adverse consequences.

4. The Pinecrest Food Markets are facing financial and reputational risks because they thought
that there was a cyber-breach in the company. This is a big blow on their reputation because
getting information from their customer data will lead to mistrust, confidence and security. And
also this immediate action to prevent this problem leads to financial expenses which cause the
company to spend pointless payments.

 Identify 2 types of Risk:

 Financial risks
 Reputation risks

 Analyze the Risk

Based on these risks that were determined, and from the situation that occurred in the
company. They should improve their security on their information technology department
because even the management does not have full confidence on their system. Moreover, the
management should also conduct an in-depth review of their cyber coverage policy. Applying
these solutions will help prevent mistrust on the part of the customers and also the security
they want.

 Evaluate the Risk

Level of risk Evaluation criteria Management action required

Medium risk Unlikely to threaten the  Manage by specific monitoring and
event Stakeholder response to risk
organization may suffer  Risk should be reduced as soon as
some threats to financial possible
security

 Risk Treatment

The treatment is to accept and mitigate the identified risks. Investigate the causes of failures,
consider the possibility of replacing current information systems with other more modern
systems, principally in this case where the system may be obsolete or failures are repetitive
5. In this situation Human Capital risk and Operational risk are seen. Mr. Jon Fried clearly made
a mistake of having Wanda a CAT 4. He then realized that Wanda was a flood event and not a
wind event which is needed for his policy. Not to mention the contradicting fact that his
insurance covered a sublimit amount for the flood policy. And for that the company suffered
great loss in finance and he also has a dent on his superiors because of what happened.
Because of this the trust that was given to him by his superiors was gone and they have doubts
to whether he can complete the job in the future business matters.

 Identify 2 types of risk

 Human Capital risk
 Operational risk

 Analyze the Risk

The best thing to do is to investigate on what went wrong on the said event. And see the
deficiencies of the preparations made by the manager. And then prevent those mistakes from
happening again.

What happened in this scenario is a clear mistake on the employee’s part to execute the
plan. Because of this his plans to carry out contingent business interruption insurance have
failed. And not only that, he also endangers the trust that has been to him by his superiors and
put the whole company on a financial toll. Also, Jon Fried also rely too heavily on insurance as a
strategy.

 Evaluate the Risk

Level of risk Evaluation criteria Management action required

Medium risk Unlikely to threaten the  Manage by specific monitoring and
event Stakeholder response to risk
organization may suffer  Risk should be reduced as soon as
some threats to financial possible
security

 Risk Treatment
The risk treatment is to accept and mitigate the identified risks. The management should
include training its personnel involved in risk management plans, and they should also be
assertive and involved in decision making policies designed to minimize liabilities arising from
the organization’s activities. Moreover, the management should be more assertive on their
policies.