Risk Assessment

In: Business and Management

Submitted By candy832
Words 4331
Pages 18
Abstract
Over the past years, and as a result of high profile firm failures, the economic crisis, and increased regulatory pressure, many organizations have placed a large emphasis on financial risk assessments. The risk assessment process is needed to identify risks that need to be treated within an organization, as well as to provide strategies and methods that are most appropriate to treat these risks. Because many organizations are poorly aligned between their risk exposure and their risk appetite, it is important to engage in the risk assessment procedures. These procedures can help an organization prevent risk exposure and determine if their current operations will result in an increase or decrease of market value and owners’ wealth. As a result of the economic crisis, and the recent increase in corporate failures, organizations can now learn from the mistakes of others. This paper will discuss the mistakes that lead WorldCom, a telecom company that was once the fourth-ranked in Fortune 500, to bankruptcy in 2002, in an effort to demonstrate the importance of successful risk assessment and alignment implementation.
Keywords: corporate failure, risk analysis, risk assessment, risk management, WorldCom

Over the past years, and as a result of high profile firm failures, the economic crisis, and increased regulatory pressure, many organizations have placed a large emphasis on financial risk assessments. Risk assessment is the process where risk managers analyze the risks of an organization and identify risks that need to be treated (Tarantino & Cernauskas, 2011, p.47). In addition, a risk assessment provides strategies and methods that are most appropriate to treat these specific risks (Tarantino & Cernauskas, 2011, p.47). Although conducting a risk assessment and ensuring that the organization is attempting to minimize risks should be a…...

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