Risk Management: Trends and Developments
As time evolves organizations must continue to grow and evolve.The demographics and territories of organizations change as time evolves.As a result the risk management trends and developments become extremely important to the long-term success and survivability of organizations.
Risk management trends exist at the corporate, business, and project levels of organizations. At each level of the risk management process stakeholders are identified and encouraged to actively participate in the process (Merna & AL-Thani, 2008).
This has a positive effect on any future challenges that may arise and helps insure that the risk mitigation of trends and developments are beneficial to everyone involved. In this assignment three new trends and developments such as technology, culture, and government regulations will be examined, along with their future challenges. Each trend, development, and challenge will be summarized and the pros and cons and implications of each in the business environment will be discusses as well.
The use of technology and e-commerce has become widespread especially for organizations that conduct business over the internet. Many organizations have adapted to selling their products to consumers and distributors through the internet. This helps businesses grow by reaching international customers or customers in different territories. Online sites such as PayPal have created a faster and safer way to pay bills online virtually at any location and at any time. This feature has allowed consumers and organizations to pay their bills in a more efficient way.
More consumers have adopted e-commerce to pay for personal bills such as car payments and utility bills. The benefits of this technology perk are the efficiency and convenience of having the ability to transact anywhere, anytime, and in any way, it saves consumers time and fees. The immediate transfer of funds benefits businesses because buyers are more willing to make purchases if the process is quick and easy. The downside of paying bills online is the security hazards. Businesses will not be able to protect themselves against all the security threats when creating an online payment system.
Businesses should be aware of malware and other various hacking attempts that can track their keystrokes stealing usernames and passwords to access financial information. This trend could lead to challenges for risk management because of the security threats the trend poses. The challenge for risk managers would be keeping up with security threats and keeping their systems secure from hackers. Every business strives to be successful, and keeping up with the ever-changing cultural habits is an important risk management trend businesses should take into consideration while working on international projects.
Globalization has increased the importance of cultural risk management, and if this trend is not taken seriously it could prove to be very costly for organizations. Cultural differences can affect many parts of an organization. One example is the difference in managerial approaches between an international and domestic management team. A proactive approach in the beginning of an international project will help mitigate the differences in managerial approaches. Networking and negotiations are two main issues that should be taken into consideration when deciding on an international project.
Networking is a critical stage for organizations looking for international business opportunities. The process of bidding for potential projects worldwide seem to be similar, the difference is in the lead-time given to bidders in certain countries. Domestically projects are advertised openly, giving anyone interested a fair opportunity to bid on the project. Projects in some international cultures are first spread by word of mouth, giving some bidders time to prepare and research their bid.
This would give international bidders a heads up on potential future projects and would give them adequate time to prepare before the bidding became public. Negotiations were found to have different meanings in different cultures, the styles were culture dependent. Different cultures may perceive the definition of negotiation differently so it is important to risk managers to understand the different cultures and how they perceive the term negotiation in business. Understanding cultural differences will help businesses become successful when operating internationally.
On the other hand if risk managers are not aware of the cultural differences it may lead to misunderstandings and could have negative effects on the business. The U. S. government sets business regulations to hold organizations accountable for the amount of power they have; they also protect employees and the environment. Businesses are expected to abide by governmental regulations and should do so to stay out of trouble. Business regulations are different for different industries. It is important for organizations to be aware of the business regulations affecting their industry.
Government regulations should always be considered when running a business. There are regulations for state, local, and federal taxes as well as financial reporting requirements presented by the Securities and Exchange Commission. Business regulations for international organizations include an additional range of rules regulating international trade. Importers must deal with regulations relating to import quotas, tariffs, and prohibition. Business regulations could be a challenge for businesses that do not which regulations to follow; they could be faced with costly fines if they do not comply.
Because of business regulations consumers can feel safe about the products they are purchasing off of store shelves. If there is a product that could be a threat, government regulators would take quick action to remove it from the marketplace. Government regulations can cause disadvantages for both consumers and businesses. If businesses do not comply with government regulations they could be faced with large fines, and because of the increased cost of doing business consumers would be affected by paying higher prices.
Businesses may not always be able to manage every risk they run into but being aware of the trends and developments will help eliminate most risks. For those involved with managing risk, risk management should be used to generate new ideas and to promote good business practices. The business trends and developments discussed in this paper relating to technology, culture, and business regulations are just a few business trends that should not be ignored.