Risk management is an essential aspect of running a business. The process can be divided into two main stages – risk assessment and risk treatment. The first part includes the identification of the risks, their analysis, and evaluation (International Organization for Standardization, 2018). The second part deals with choosing the most appropriate solutions and developing the specific risk treatment plans (International Organization for Standardization, 2018). Monitoring, reviewing, and documenting the implementation of the programs is crucial to ensure the efficiency of risk management strategies.
Walmart, one of the largest retail chains in the world, has invested significant resources into developing its Enterprise Risk Management (ERM) system. They distinguish strategic, operational, financial, legal, reputational, and other risks (United States Securities and Exchange Commission, 2020). A team of over 550 professionals works to identify, prevent, and manage those (Gonzalez, 2019). The company is often praised for implementing new technologies to improve its risk management.
According to Gonzalez (2019), the most notable improvements are “instant closed circuit television access, case manager scorecards to better identify, emulate, teach and reward best practices, a mobile app for a more efficient accident intake”. However, there is always room for improvement, especially in such big corporations.
Despite significant investments in risk management, Walmart’s audit system has not been working perfectly in the past few years. For example, Walmart reviewed their deal with the Indian company, which was reportedly selling low-quality cotton to Walmart and Target, only when the Wall Street Journal published the results of their investigation (Fox, 2016).
Such cases can have a significant negative impact on the reputation of the company and affect customer loyalty. Hence, Walmart should improve on audit and research as a part of their supply chain risk management program to avoid similar situations in the future.
References
Fox, T. (2016). Target and Walmart show that supply chain risk is everywhere. Compliance Week. Web.
Gonzalez, G. (2019). RIMS names Risk Manager of the Year, honor roll inductee. Business Insurance. Web.
International Organization for Standardization. (2018). ISO 31000:2018 Risk management – guidelines. Web.
United States Securities and Exchange Commission. (2020). Form 10-K Walmart Inc. Web.