Prudential Insurance Practice and Benefits - Assignment Example

? Prudential Insurance Case Internal Environment Before Ryan took over leadership at the Prudential Insurance Company, the company had been experiencing significant growth in revenue every year, making it the largest insurance company in the whole of North America, and also among the leading in the whole world. Being one of the biggest insurance companies in the world, Prudential Insurance Company has various resources that play a critical role in its operations to ensure that the provision of financial services is done to high standards. In addition, we find that the company had both intangible and tangible resources that facilitate its delivery of the services to its esteemed customers who were the targets. The company’s tangible resources are financial, human and physical resources. It had in its possession several physical resources that she managed; they include equipment and buildings. The strong financial position of the company ensured that it had very stable financial resources for conducting its duties or operations without substantial problems in terms of shortages of money. This considerably put it in a position of avoiding unnecessary debt financing. Nevertheless, the company also ensured that it maintained a workforce that is highly motivated; which has been a major driving force in ensuring that it achieves its intended goals of service delivery to its clients. Furthermore, the company invested heavily in the development and training of its employees as this is a critical factor in making sure the employees that are fully involved or fully engaged in the service provision deliver work or services of high quality, and those that deal with matters marketing or promotion make sure that the potential clients are made aware.On the other hand, the intangible resources of the company included, goodwill, intellectual and technical (Hopkin, 2012). The company had for a very long time enjoyed the technical resources that greatly facilitated its goals. Events identified by the management The most critical events that were identified by the management were fraudulent practices on the side of the sales agents. This was reported by the internal auditors of the company in the year 1982. A failure by the management of the company to ensure that consumer protection regulations and laws are enforced was also detailed during the early 1990s by the internal audits of the regional offices and individual divisions. At first, we can say that the management did not take the events seriously, which means that they considered them as opportunities to continue their fraudulent practices until when matters got out of hand as the reputation of the company started going down significantly, when they were again seen as risks that called for drastic actions or solutions. Management’s primary risk response The management cannot be commended wholly for identifying the risks that were facing the company as they were revealed but no drastic measures were taken, instead they were viewed as opportunities; this can be said so as it failed to enforced the consumer protection laws and regularities, meaning that there was no goodwill to seal the loopholes. The management did not react immediately when it was realized that there were serious fraudulent activities on the side of the agents, which was turning out to be the biggest undoing or problem of the company. When a report was released by the internal auditors to the board of directors of the company, they continually insisted that the management was aware of the problems and was taking the necessary measures in ensuring that they were solved amicably and completely (Hopkin, 2012). When matters got worse, the board of directors found it necessary to ensure that there is a change of guard, whereby a new manager in the name of Ryan was brought in to try his part even though he was largely untested. However, when Ryan came in, he deemed it necessary to overhaul some of the company’s structures by first changing the business approach of the company from being a series of stand-alone silos, freewheeling subsidiaries operating at cross-purposes with disjointed game plans to ‘one prudential.’ This means that his strategy would be facilitation of team work and cooperation. Nevertheless, to improve efficiency in the company’s operations, the management decided to bring in fresh blood and those who were considered old guards were sent home. ERM framework within the company The information that concerned the company’s operations was collected through feedback from the clients who either complained or praised the work done, and then communicated to the agents through memos. In monitoring the enterprise risk management within the company, the upper management used one tool or concept which is reduction. In doing this, the upper management, through the board of directors decided to reduce the impacts of the risks that had been identified within the company by changing the management almost entirely as Ryan was brought in, and consequently sent home some of the workers who had stayed in the company for long. The provision of sales quotas provokes the scam of churning and refinancing, which has a low dollar significance as a lot of money is generated or brought into circulation (Hopkin, 2012). Nonetheless, the occurrence or the risk is high as the agents would want to make a lot of sales in order to meet the threshold and make a lot of money in terms of commission. When the sales agents do not receive adequate training in their field of operation, we find that the dollar significance is high as there will be incompetence on their side and this would consequently lead to low sales, hence little money. When the agents are not trained well, the likelihood of the occurrence of the risk of incompetence is high as they might not know how to deal with the clients, and what they are supposed to do to win a lot of them and maintain honesty, which is fundamental to any business. It is also true that the incentives system, which include bonuses and commissions largely leads to churning and refinancing as this is perhaps the only way that the sales agents receive their rewards and would be tempted to do everything possible to get more, thus the likelihood of the occurrence of the risk is high. Lack of correction practices such as punishment and rewards does not stop the wrongful sales practices, and the likelihood of the occurrence of such risks is very high since those involved are not afraid to do so because they would not be held accountable, or even would not rewarded for their good work. In this case, the dollar significance would be high as a lot of money is generated through unhealthy practices, as the sales agents would want to capitalize on the opportunities presented to them. The dismissal of the complaints of the clients by the company in a wrongful manner, it means that there will be low sales as the clients will have lost faith in the insurance services provided by the company (Hopkin, 2012). This only means that the dollar significance will be low as there will be low sales by the agents and the likelihood of the occurrence of the risk is very high as there is still no correct measures to deal with the problem before it reaches unmanageable or uncontrollable state. The new leader of the company, Ryan has actually put in some measures to ensure that the listed risks are dealt with sufficiently. The first measure taken by Ryan in mitigating the risks was to change the business approach of the company to ‘one Prudential’ to make it easy to manage. He also hired some fourteen chief executive officers who would report to him directly; this means that he is almost involved directly in the day to day management of the affairs of the company, which makes it difficult for the employees to mess around. Furthermore, the scaling down of the workforce by Ryan means that it is now easy to offer adequate training to the small number of sales agents to increase competence. The introduction of reward system by the new leader has also ensured that the sales agents are discouraged from engaging in wrongful practices of making more money (Hopkin, 2012). It is a fact that Ryan is successful in restoring or reclaiming the status and integrity of the company by putting in necessary measures. The comments that have been received so far since taking over of the company have been positive, which is an indicating factor that he has been successful in his quest to bring sanity into the company. The number of clients has also surged, which has made the number of sales high, consequently leading to high revenues for the company. References Hopkin, P. (2012). Fundamentals of Risk Management. 2nd Edition. Kogan-Page. Read More