Risk Assessment - Case Study Example

Running Head: RISK ASSESSMENT Risk Assessment School Fast Distribution Inc. faces serious challenges basing on the current politicalclimate within the firm. The C.E.O’s quest to outsource network and IT services to a service integrator and the slashing off half the staff places FDI at a challenging position. Boardroom issues involving the C.O.O., Don Jacobson and the C.E.O., Jamie Pierce concerning my appointment is also a bone of contention. From research of market trends, current business trends, and analysis of FDI’s problems possible recommendations are derived. This research analysis sprouts out possible changes which improves the efficiency of the IT department and also at the same time cutting down on operational costs. From the analysis, it is possible to achieve IT efficiency without the need of outsourcing the whole IT department to an external service integrator. Introduction Fast Distribution Inc. (FDI) deals in warehousing, transportation, staging, and also wholesaler-VAR relationships for their customers. FDI’s services are distributed in North America and covered countries include Canada, Mexico, and the United States. FDI has recorded improved growth in both profits, market share, and customer base. Current growth has enabled FDI be listed in the NYSE and also mentioned in the FORTUNE magazine. The company’s incumbent CEO Jamie Pierce wants to outsource the whole IT department based on her business plan that she claims cuts on cost. Organizational Assets Knowledge is one of the vital organizational assets that sets an organization on a new level. Ability to possess knowledge about the needs and desires of clients is necessary in a firm. (Rebitzer & Taylor, 2007, p. 204). As a fundamental asset, knowledge enables managers to determine the market strategies in application so as to attract customers and also ‘read’ their minds. With knowledge, FDI has attained a good market share over the years. Knowledge has enabled FDI identify market needs and trends. It is also possible to arrest the concurrent challenges affecting FDI’s market share and profits in general. Policies are also an asset in the success of an organization. Formulation and subsequent implementation of policies yields up to growth of a firm. Focused, achievable, and practical policies are required in a firm. FDI has implemented past policies of improving technology in the firm which has set it at a better place in the recent years. Technologies are changing fast nowadays and it is important that firms adapt quickly to the technological trends. Establishment of remote facilities that link up with data centers in the firm enables easy communication and efficiency in service delivery. Current technologies have enabled FDI adapt the business world and also improve sales. Business processes are assets of FDI. In order to attain success, FDI set goals enabled it move occupying a larger market share. Processes enable the firm achieve set goals within the set period of time. Processes such as distribution, transportation, and staging among other processes enables FDI drive to the set goals. Procedures which are organizational assets show how the firm is performing. Procedures enable managers and staff understand how the business runs and its performance. Procedures include management flow from the COO to the CEO and to other workers. Organizational Risk Organizational risks assessment enables the firm access the various risks associated with working and also the risk ratings. Identification of business activities in FDI is necessary as a first step of risk assessment. FDI activities include staging, distribution, and transportation among other activities. FDI faces a financial risks with the high cost of doing business which has resulted in slashing half of the workers. Other financial risks include interest rates that banks impose whenever money is borrowed, amount of savings that FDI invested in the bank. Loss of revenue as a result of market trends has also occurred as a financial risk to FDI. Operational risks include possible damage to physical assets such as the remote facilities. These damages are also attributed to natural disasters such as earthquakes, floods among other natural calamities. Terrorism is an example of a human calamity whereby businesses are prone to destruction and demolition of buildings. Internal fraud whereby transactions are not reported or marked results in loss in profits and also decline in business revenue. Fraud also includes theft, embezzlement, forgery, and theft among other fraudulent activities in the business. Employee health and safety concerns is also an operational risk in carrying out of the business. It is necessary that the health and safety conditions of the workers are necessary in order to keep people at safe side. Breach of privacy, lender liability, and confidential information are among risks during FDI’s activities. These risks can occur anytime and possible precautions are required for implementation. Business disruptions also hamper operations and are operational risks. Occurrences such as system failures, hardware failure, and software crushing are examples of disruptions. It is important setting up backups especially software failure during these occurrences. FDI faces reputational risks. This is attributed to when a business faces loss of revenue, cases of fraudulent activities, and loss of investors among other risks. Organizational security posture Organizational security posture involves attaining security concerns in the firm together with client infrastructure confidentiality. Security state of a firm is necessary. Security breaches jeopardize the firm’s reputation and also results in loss of revenue in addition to losing trust of shareholders. The IT department of FDI is responsible for ensuring data is well kept private and confidential. At the same time, it is important that employees in the firm do not sell out the firm’s data. Employee breaching of data in firms is a common practice offence. Attaining trust and confidentiality from employees is critical because it minimizes issues of data security breaches. Insecurity in a firm also includes theft of resources such as system servers, workstations among other physical assets. Currently, FDI faces a security risk when outsourcing of the IT department occurs. Outsourcing of the department leads to loss of jobs of the IT employees. The move also makes some of the servers responsible for particular jobs that are outsourced become not so effectively used. This leads to temptation of possible theft and also at times breach of confidential data. It is necessary to restore employees’ confidentiality and reassurance of their job security. From the previous slashing of employees by half, the remaining lot are a critical number important to the firm. Security posture assessment is necessary so as to mitigate possible loopholes in the IT department. This assessment includes penetration into the firm’s system test, hardening of the OS, and vulnerability testing among other tests. These tests are critical to clear possible weak links in the system that is the backbone of the firm’s data. With the fast-changing technology, these tests and the whole assessment are necessary being carried out on often basis. The tests implementation in FDI can minimize these possible threats. Problems facing FDI There are significant problems with some of the 81 warehouses which drive the firm. The remote facilities display low performance, network latency, and application timeouts. All these characteristics depict unmaintained servers and network facilities. From these problems, possibility of system failure are high because some of the warehouses are failing to work. The rest of the warehouses are also prone to failure. This is attributed to overload of work from the failing warehouses. This results into low performance and inefficiency in FDI. Financial pressure is also a significant problem within FDI. The Chief Executive Office’s move to cut down annual budget by 30 percent resulted in minimizing on expenditure whereas keeping up to the goals of FDI. The cut into IT annual budget means that some of the maintenance expenditure are also affected. In this case, some of the 81 warehouses that require maintenance faces shortage of finances for the same. The CEO is also on a pressure of ensuring the firm makes profits and maintains growth of profits and market share. This has led into cutting of costs on IT department and also slashing off staff. Political fights in the firm also hinder proper management. The CEO wants to outsource the entire IT department whereas the COO does agree with the same. The COO feels a little more time is needed before considering a complete outsourcing of the department. This is because of the fears that outsourcing the department possibly places the firm at a position whereby they have to depend on vendors. According to Jacobson, at this position the firm is easily held hostage in cases of data security breaches. The pressure on the IT department especially the head to turn the IT department into a convincing investment of FDI. This is to be done with consent of underlying factors such as slashing off staff by half and also reduction of annual budget by almost 30 percent. The management looks forward into seeing the IT department an investment and also reduction of its cost of operations. Mitigation strategy The problems facing FDI are solvable with a number of measures and policies put into practice. The issue of remote facilities failure can be replaced by cloud computing. Cloud computing gives an opportunity for multiple people work on multiple files at the same time on different geographical regions. This platform proves to cut down on expenditure costs since the need of expensive hardware and software is not necessary. Cloud computing enables FDI save data over cloud servers with the use of cloud’s software interface software. (Michael, 2008) With the use of this platform also enables FDI save large amounts of data and also data security is assured with the data backups which are created. This platform also enables customers anywhere in the world geographically access their data via Internet access. Cloud computing offers tons and tons of space over the expensive external drive space purchased by companies. With emerging technologies, cloud computing is picking up quickly with the need of reliable computer services. Implementation of this idea reduces greatly on the IT budget and the need of extra software and hardware. (John, 2009)This platform also eradicates the need of an external service integrator. Outsourcing the IT department places FDI at a possible risk of data security breach. In this cases, an external service integrator has access to all data in the firm which can be easily sold out to a competitor. An external service integrator also may also require more time to learn and understand the system which consumes time and at the same time expensive. The service integrator may also not have the necessary skills to address network failure emergencies than in-house network engineers. With the current economy, most companies have sort to outsourcing. This has also resulted in the problem of the priority a company is given. In this case, outsourcing FDI places it into a long list of companies which can lead to lack of proper services With the above challenges, it is not advisable outsourcing the IT department. Cloud computing is the solution to host data over cloud computer servers. Political fight within the managerial circle attributed to differences on the IT department is also addressed. Based on the cost of cloud computing and the cost of outsourcing the IT firm, cloud computing proves a necessary and effective measure to settle the wrangles. CEO Jamie Pierce is to be convinced of the benefits of cloud computing over outsourcing business strategy. The CEO is also to be convinced on the shortfalls of outsourcing the IT department. With these factors placed together, conclusive decision can be arrived to settling the bone of contention. The financial pressure on increasing sales, minimizing costs, and also seeing growth in profits is achievable. Embracing newer technologies gives FDI an upper hand over other companies that do not do the same. Advanced technologies means increased efficiency, faster service, increased transparency in accounts, and also increasing efforts of keeping at bay theft and fraud cases. FDI is on the verge of increased growth with the implementation of the above researched proposals. FDI has displayed growth over the recent years and it necessary to maintain this trend. In the above, embracing technology is the way to go in business today. Storage, transmission, and sharing of data over cloud computing server saves on cost by a significant margin. According to Klein the Intel Data Centre Group Leadership Marketing Director, it is possible that by 2015 $25 billion is saved with the implementation of cloud computing technology. Therefore it is fundamental that FDI implements cloud computing technology fast in order to brace for better times in future. References Rebitzer B. James & Taylor J. Lowell (2007). "When Knowledge Is an Asset: Explaining the Organizational Structure of Large Law Firms," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 201-229. Zeeshan Omair(April 16th ,2011) Cloud Computing might cut down IT spending by $25b. The Express Tribune, page 4-12 Miller Michael (2008) Cloud Computing: Web-Based Applications That Change the Way You Work and Collaborate Online. New York: Que Publishing Rhoton John (2009) Cloud Computing Explained: Implementation Handbook for Enterprises. New York: Recursive Press Read More