Case Study Phase 2

Potential Risks and Risk Assessment

The world is presently vulnerable to multiple forms of risks or hazards that ultimately affect human activities, properties, or institutions. In essence, a risk is the possibility or probability of an uncertain event occurring, which on several occasions has an adverse hazardous influence on society, project, or organization (Elkins et al., 2009). In other words, a risk is a possibility or probability of an incident occurring, which ultimately bears adverse health or economic effects on people or property, hence, influencing the achievement of individual or organizational objectives. Consequently, it is necessary to conduct a prior risk assessment and institute prompt risk mitigation measures to prevent their occurrences and reduce their adverse effects significantly. Concisely, risks tend to threaten and destabilize the status quo of individuals and societies whenever they occur, thus worth assessing and preventing.

Many organizations are today susceptible to various types of risks, of which General Motors Corporation is inclusive. Indeed, the risk assessment conducted on this organization revealed various things that expose the multinational to risks or prove hazardous to its daily operational activities. They include exchange rate, inflation, labor, supply risks, markets, and much more that fundamentally threaten its overall operations, bearing in mind that it has a global presence (Baum et al., 2017). Usually, exchange rates keep fluctuating in the global market where GM Corporation operates in line with frequently changing taxation rates. This proves risky to the organization since it considerably affects the prices of imported raw materials and export prices of finished products, thus affecting revenues and profitability needed for sustainability, general growth, and development.

Apart from the exchange rate, inflation is a significant risk factor to GM Corporation’s sustainability, overall growth, and development. During inflationary periods, prices of goods and services rise abnormally. For instance, during the Great Recession period, prices of goods and services dramatically rose to unexpected levels, affecting previous financial plans of this organization. With perceived higher prices, clients reduce the quantities or units purchased because some customers reschedule their previous financial plans to withstand the inflationary period (Elkins et al., 2009). Eventually, this proves financially and economically risky.

Aside from inflation, labor is a considerable risk factor that sometimes affects GM Corporation's activities and operations. Smooth or harmonious labor relation is essential for enhanced productivity, sales revenues, and profitability required for its improved growth and development. Unfortunately, for multiple reasons such as inadequate staff motivation, labor unrest sometimes creeps in, affecting its routine operations as witnessed in the US in 2019, thus, risky to its operations and objectives (Lim, 2019). Honestly, the labor unrest witnessed in 2019 proved risky and costly to the organization and its primary stakeholders.

In addition to labor, supply risks are significant hazards that usually affect GM Corporation's operational activities. With the global sourcing practices in place in this organization because of its worldwide presence, supply chain risks sometimes jeopardize the organization's operating activities, hence, risky (Baum et al., 2017). In other words, raw materials and finished products en route to customers are vulnerable to transportation or shipment risks or disruptions that fundamentally affect its financial and economic plans whenever such unfortunate incidences occur.

In summary, today's globe is awash with all manner of business risks that usually affect operational activities, programs, and objectives necessitating the need for risk assessments. Consequently, a risk assessment exercise conducted on GM Corporation revealed many hazards threatening its general sustainability and survival. Honestly, an exchange rate, inflation, labor, supply risks, and many more risks affect its commercial activities, as elaborated above.

References

Baum, C. F., Caglayan, M., & Rashid, A. (2017). Capital structure adjustments: do macroeconomic and business risks matter? Empirical Economics, 53(4), 1463-1502.

Elkins, D., Handfield, R. B., Blackhurst, J., & Craighead, C. W. (2009). A “to-do” list to improve supply chain risk management capabilities. Supply Chain Risk Management-Minimizing Disruptions in Global Sourcing, New York/London. Lim, W. Y. (2019). Liquidity of General Motor Company due to their Internal and External factor.

Lim, W. Y. (2019). Liquidity of General Motor Company due to their Internal and External factor. Retrieved from https://ideas.repec.org/p/pra/mprapa/97257.html