Major Risk Drivers Analysis
Globalization involves the opening up of new opportunities and in this case, it is likely to cause new inequalities across the world economies. The economies that have been lagging behind will not have an opportunity to establish themselves because the developed economies are certain to dominate the world market, thus is carries a risk of inhibiting young economies from growth as the economic giants will dominate the global market hence deteriorating the young economies. An example of globalization that carries a risk are the capital investments in the developing countries.
The term complexity is used to explain something that is characterized by having many parts or operations in intricate arrangement. This situation exposes the organization into the problem of risk management because of the mixed reactions that arise from various operations simultaneously. Due to the complexity in an organization, it is difficult for the organization to predict the risks that are prone in complex operations.
The business definition of turbulence is the unpredictable and swift changes in the organization’s external and internal environment which is certain to affect the organisation’s profitability or performance. These changes at times get organisations unaware which can affect an organization’s performance negatively. An example of such a change include changes in the supply of raw materials.
Dynamism implies to the change of doing things from an old way to a new one. Dynamism normally exposes organization to risk, because they are likely to stop doing things in the former way in which they were used to and rather take up a new way of doing things. On taking the new way, they normally encounter with new challenges because they were never used to be doing things in such a way. An example of dynamism is the adaptation of a new technology in the system, which might either work or not. The new technology may also fail from the perspective that the staff may be incapable to adapt the new technology.
Acceleration as pertains to business definition means the rapid growth in a given operation, where operations include production and capital accumulation among other operations of an organization with respect to the uniqueness of each organization. The rapid growth in an operation normally carries a risk if it is not matched well to the purported goals of the organization. For example, the rapid growth of production without considering the demand might lead to a surplus produce that is likely to affect the price of the product and also the production pattern where there is no enough space to store the surplus products for continual production. The products can also expire if they are perishable goods, therefore, acceleration has an inherent risk.
Continuous obsolescence and reinvention
Obsolescence implies to a state in which something that has been of use becomes of less importance. This situation arises when a more superior item comes into the market, which renders the other product useless even if in good condition. Organisations should be competitive enough through invention so as to remain relevant in the market and the invention should be made relevant to the needs of society rather than useless inventions. There is a risk if an organization does not keep reinventing as it will be compelled to close due to irrelevance in the market.
Connectivity in business terms means the link of one organisation with another organization which is related to its operations. Connectivity is an important factor in making the organization competitive enough for it to be relevant in society because its likely to get the relevant updates concerning its operations from specialized organizations. An organization stands a chance for being irrelevant if it happens that its poorly connected thus difficult for it to get relevant information concerning the solving of some problems which are likely to cause crisis.
Convergence implies the tendency of an organization approaching a definite state overtime, which is likely to result into specialization. This tendency exposes an organization to a risk of it becoming irrelevant if the societal requirements changes or if a product arises which is superior over its product. Therefore, organizations should diversify overtime so as to have a wide scope of options in case one of its products becomes irrelevant.
Consolidation implies the merger of two or more commercial entities. The reason for consolidating in most cases is for protection and also the increasing of efficiency. Consolidation of firms carries a risk of transferring one firm’s problem to the other. The possible problems that are likely to be transferable include the managerial problems and also financial problems as they are operated as one after consolidating.
Rationalization implies the reorganization of a company so as to increase its efficiency, where reorganization make take a form of expanding or reducing the size of the firm, change of the organization’s policies or the alteration of a strategy pertaining to a given product. An organization normally takes a risk because most of these re-organizations might have a negative impact on the organization’s performance.