PART 1
Risk is defined as a measure of future projections on uncertainties that affect the set goals, achievements, objectives and performance of business, project or organizations. Risk is often associated with programs such as technology failure, threat, design maturation, supplier capability and performance plan analysis. The mentioned programs are managed through integrated master schedule (IMS) and Work Breakdown Structure (WBS). Industry risk assessment addresses potential variation in market capability, accessibility, cost structure, profitability, substitutes, cyclicality, and regulations. Therefore there are key elements that must be evaluated during risk assessment (Weagley, 2014). They include a root cause or risk projections that are yet to occur and if eliminated would prevent negative consequences from occurring, a likelihood or probability occurring currently can be assessed in order to avoid future failures and the effect or consequence of that future occurrence.
It is important to note that future root cause or projections are the basic reasons that risks are present in any given entity such as the industry or market. More often, industries that operate in developed world work under a Standard Industries code (SIC) and other classifications such as National Statistics Socio-Economic and Standard Occupational (Warhurst, 2005). Risk factors affecting the industry or the market are analyzed critically to eliminate any uncertainties that could come as a result of environmental, governmental or economic changes.
During industrial risk analysis, customers are compared with industrial code that already exists. Definitely, procedure must be followed to the latter in order to complete the entire assessment with formidable results that can help the industry grow. The procedure is continuous due to the existence of market changes and completions that are diverse in nature. The figure 1.1 below illustrates how this procedure is structured.
Figure 1.1 Industrial Risk Management procedures
For industry or market risk assessment, it is necessary to include suppliers, customers, and business stakeholders. They are the beneficiary of the market in case risks are mitigated in good time. It is also important to note that they aid in identifying risks based on customer requirements, item prices and quality of products being sold. The stakeholders are fully aware of their products in terms of durability and quality. In this case, necessary action can be taken immediately issues are raised regarding the product items being marketed (Fitzmaurice, 2015). When the industry has new employees, new work process, new projects, new work area and the introduction of new products, it is necessary to diversify risk assessment.
PART 2
Developed nations have market standards that must be adhered to more so when packaging food items. Since ABC food Nigeria group are a reputable industry that has been successful in their market operations for a while now, it is necessary to take time and analyze markets in both North America and Europe first before commencing their operations in those new locations. There are necessary steps that are followed as listed below:
Study the market and consider existing food stores and industries that provide the same services in Europe and North America.
Consider codes and market regulation standards set for the market in Europe and North America.
Take customer response with regards to existing and new products
Take note of the product costs in local and foreign currencies
Take note of transportation and storage factors
Consult the existing industries on any other requirements that exist in those new locations.
The above factors determine whether it is possible to identify and analyze the risks of setting up a new business in those two locations. It is possible that the risks might not be big, but the products are not necessary or are not in demand in those two locations hence bad for business (Weagley, 2014).
Financial Facilities Recommended
Forward Contracts
Performance Bonds
Acceptance Credit
Document Contracts
The above-mentioned facilities are distinct from each other. A forward contract is meant for prior arrangements between the exporters and oversea supplier. In this case, no such arrangements have been made for ABC Food Nigeria; therefore it will not be relevant in this case. Performance bonds are eligible if there are guarantees that the products being exported to Europe and US are sold. For ABC food, it will take quite a while before such a guarantee is achieved therefore they are not eligible for performance bond currently (Obenland, 2014). Acceptance credit, on the other hand, will be good if there is an agreement with an oversea importer who will be ready to receive products from ABC food Nigeria and sell the same on their behalf abroad. In this case, such arrangements take time, and the facility will not be good.
Therefore, the recommended facility, in this case, is the document credit that will be beneficial for ABC food. ABC has been performing well, and their returns are quite impressive. Making them have a better chance of securing the facility. Using their previous documents in Nigeria, The bank would consider their total turnover and past performance in Nigeria to act on behalf of ABC food products being exported oversea. The oversea credit facility would be the best option for ABC food Nigeria in this case.
Bibliography
Fitzmaurice, M. and French, D. eds., 2015. International Environmental Law and Governance. Brill.
Obenland, W., 2014. Corporate influence through the G8 New Alliance for food security and nutrition in Africa. Misereor.
Warhurst, M., 2005. Environmental regulation, innovation, and competitiveness-making the link. HESA Newsletter, 28, pp.28-32
Weagley, D.R., 2014. Essays on the Weather Derivatives Market (Doctoral dissertation, Dartmouth College)
