The Risk Management of Flayton Electronics - Assignment Example

Flayton Electronics project progress Flayton Electronics project progress Flayton Electronics has an obligation to protectthe private data of its customers. This is in accordance with the trade commission that protects the public from inferior trade practices. The FTC act states that every organization must handle the information of the consumers with consistency to the privacy policy. It is the responsibility of every organization to practice proper security that assures the customers that under no condition will their data be used wrongly or given to other people. The organization is also expected to comply with federal laws that have an effect on data security. The cases of identity theft and information un-safeness have increased in many countries and hence the passing of laws for citizen protection. Organizations are expected to create risk management plans that will take precaution on data security and prevent occurrences that threaten the private data of their customers. Information is important to all stakeholders(Gray & Larson,2008). Flayton electronics has recently been involved in digital purchasing by providing the service of purchasing using credit cards. They have failed in protecting the customer’s data and cases of fraud using the credit card information were reported. With this happening, the company exposed its failure to fulfill their legal duty to protect the customer information. The company was expected to have a self-sufficient risk management plan that would analyze and access risks of any project that they are involved in. This would ensure that they design specific responses to any anticipated risk. The risk management manager did not analyze the risks involved in the new business trend and hence the risk occurred hitting the company by surprise. The number of bad cards purchased was above average and hence many goods were purchased wrongly. This means that the company lost a lot of money through purchases made without real or using accounts of other people without their knowledge. The company has not lost only in terms of product reduction but also in terms of capital. This is a draw back to the company since it impossible to retrieve back the goods and is expensive to compensate the customers. The company will also suffer in terms of losing the loyalty of the customers(well-stam,2004). The customers had entrusted the company with their bank information that they failed to protect. It is the expectation of all the customers that their information is kept private and free from being damaged by other people. The customers whose information was wrongly used will definitely not purchase any more goods from the company. Losing the customers will reflect on the company’s profits and its growth rate will reduce. Most of the customers will move to court in an attempt to be compensated. Legally, they have a right to be compensated on any loss they encountered. The company will therefore incur unplanned costs, which will further reduce the working capital of the company. It is expected that if the capital reduces by 40% the company will not be able to continue working and may eventually fail. However, this will not be the end of the company and they require to continue existing in the market and make more profits from the new trend of credit cards. The company is expected to invest more on employee training on risk occurrences. They should be more careful with the data of the customers and any card being used should be checked well. The company should also improve on their information security systems to ensure no data will be lost. The data of the customers who will continue being royal to the company should be highly protected since they are the people who will lure others to continue trusting Flayton electronics. The company should not loss hope in their new project but should fight back the challenges with better strategies. Laurie, the person in charge of the security of information is supposed to carry out extensive research on the project. This will help identify other potential risk as well as provide solutions to the already existing risks. The CEO should be supportive on the risk research to avoid any risk occurrence situations in the future. Mitigation activities are required so that the company avoids future occurrence any risks. It is a business norm to avoid any risks that are not worth taking(Custom Book,2011). However, the risk involved in credit card payments is un-avoidable since it is the new trend in the market due to its ease in use and security. The company should perform a research to be able to differentiate between the fake and genuine credit cards. More funds should be spent in the research on risks involved when using them. The organization should also establish harsh consequences to any employee found facilitating a risk or any member of the public trying to fraud the organization with the fake cards. New improvements on data storage with better security should also be implemented. The company should also think about transference of risks through insurance firms. It is cheaper paying premiums all through the project life than suffering the cost of loss due to occurrence of a risk. Each company sets aside some funds to be spent on risk management. Flayton electronics have selected the union century bank to check on the security of the business. Payment of such a company is very high but to some extent worth the price. Although it seems expensive paying the company whereas risk do not occur often, the manager should realize that on occurrence of any risk the company suffers economically and this can be avoided. The budget should of the organization should be reviewed to ensure that more funds are directed on risk management(Gray & Larson,2008). From a nonprofessional’s eye the cost of maintaining a risk management program may seem unnecessary and even expensive in situations of low cost risk occurring. However, the occurrence of large risks may lead to closure of the firm(well-stam,2004). The risk assessment schedules should be changed to reduce the probability of risk occurring. Currently, Flayton electronics evaluate their risks annually but it is important to increase the schedules especially during this time that they are trying out new business trends. Changes happen in the market on a daily basis and the same should be done on the risk registers of each organization. Failure to update the risk register oftenly poses a threat to the company since some unexpected risk may occur(well-stam,2004). A risk register records various risks and how they should be handled and shows the implication they have in cost. The risk register of the Flayton electronics should be updated such that it gives priority to the risk of fraud by credit cards. With modern technology taking course, the use of credit cards is not expected to stop and hence dealing with any, risk that comes up because of it is paramount. The risk register should also cover the risk caused by the carelessness of employees(Gray & Larson,2008). Some of the customer information on their bank accounts might have been lost due to the carelessness of employees or them not been keen. The risk register should also be updated on the mitigation activities discussed earlier in this paper. In conclusion, Flayton electronics have not lost it all and there is still a chance to continue existing in the market and make profits. Implementation of the mitigations and the updates in the risk management register will be beneficial in helping the company to continue running and maintain its customers. References Custom Book, (2011). BUS 519: Project risk management: Casepack 2011. New York: John Wiley & Sons Gray, C.F. & Larson, E.W. (2008). Project management: The managerial process. Boston, MA: McGraw-Hill Companies, Inc. Well-Stam, D. (2004). Project risk management: An essential tool for managing and controlling projects. London: Kogan page Read More