Risk Determination Scenario

Your organization’s best customer (23 per cent of sales) is approximately 500 miles from your manufacturing location. The product you sell must be received by the customer on a “just in time” schedule that, as of late, has only been met 73 per cent of the time. The customer is unhappy. The primary cause of the problem is that your existing fleet of trucks is on average seven years old, resulting in frequent breakdowns even though the company routinely engages in an aggressive preventative maintenance program.

You are part of a team that is developing a solution. The group narrowed the possible solutions to the following.

• Purchase a new fleet of trucks, or
• Subcontract the trucking function to an external company.

Based on the readings and commentary in this lesson, what additional considerations might you raise to help determine which of the alternatives might best serve the company’s interests?

Write an essay of at least 500 words addressing the following issues:

• Identify one possible risk in adopting each of the potential alternatives.
• What is the probability that each risk will occur?
• What is the potential severity of each risk should it occur?
• How should the organization manage each risk?

In responding to the question concerning the management of risk, identify one or more ways you believe that HR could assist.

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