Risk management - Essay Example

An assessment for each risk in terms of impact of the risk and probability of occurrence was made that prompted the formulation of strategies address the risks, to take advantage of the opportunities, or to control the identified threats. BAT’s main strategies basically facing the risk head on and go on with combatting the illicit trade and the increasing excise taxes or shock the may come from government initiate to raise taxes. For finance risks, hedging was the better strategy than not hedging.

For the market risks which include inability to obtain required price increase, geopolitical tensions and major climate chance separate strategies at the corporate level were done and should give priority to those with high-level risks which include competition from illicit trade, excise shocks from tax rate increase or structure changes, and management of cost base. This paper aims to identify major risk factor faced by British American Tobacco plc (BAT) using appropriate models/classification.

A discussion of possible opportunities or threats would follow the identification. This would be followed by a structure assessment, using a risk map or risk matrix of the impact of the particular risks and the likely occurrence of these risks. The third part would be to formulate strategies for taking advantage of the opportunities, or strategies for controlling the identified threats. The last part of the paper before the conclusion would be to respond to a statement hypothetically made by an executive of saying something about the uselessness of corporate governance.

The respond would focus on the relevance of the corporate governance regulation. Illicit trade is defined as proliferation of illegal competition in the form of counterfeit products (Ortiz &. Tajes, 2009; Dandeker, 1992), genuine but smuggled products and even those of locally manufactured products on which applicable taxes are evaded (British American Tobacco, 2011). The