100%(8)8 out of 8 people found this document helpful
This preview shows page 10 - 12 out of 22 pages.
unanticipated for Walmart which is a multinational retail corporation as the firm haveto analysis and anticipate macro-economic factors not only domestically but alsointernationally such as higher interest rate and fluctuation of currency exchangesrates. The second factor called operational risk which is influenced by natural disaster, geo-political events and information security as well. For instance, the earthquake maydamage firm inventory and destroy the warehouse. Also, the information security andperformance of technology-based systems must consider as they must meet thecustomers’ expectation and preference. For Walmart, the main financial risk is thevolatility of foreign exchange rates as well as the fluctuation of market price sineWalmart operate in the various country, and those factors may affect the firm financialperformance. The final risk elements were classified as Other risks that includinglegal, compliance and others.10
BFF 5902 Introduction to risk principles4.2 Risk identification of TargetAs the size of Target is much smaller than Walmart, the taxonomy of risks by Target ismore specific in the annual report (2017). According to the annual report in 2017, thecorporation mainly exposed to six kinds of risks. The First one is competitive andreputation risks which were the risk Target considering as the one should be paid moreattention because the reputation of the company was the reason customers choose thiscompany service and their employee choose to work for. The second risks wereinvestments and infrastructure risks which means some project investment does notfully cover from return, which affected the corporation performance. Data securityand privacy risks may course of the government enforcement actions and damage thecompany reputation. Also, Risks come from supper should be considered. The riskfrom regulation may induce the rise of the cost for company. Finally, Target exposureto financial risks as well.4.3 Risks comparing between two companiesAfter comparing Walmart and Target risk taxonomy, it could be said that some type ofrisks they faced is roughly the same such as reputation risk and the risk of date safety.Failure to predict customers taste and poor services experience could hurt firmreputation and then decrease the company revenue. Both of two companies shouldpay attention to Cybersecurity attacks as well. However, the financial risk they face isslightly different. For Walmart, they place particular emphasis on the adverse effect offoreign exchange rate which may increase the cost of good sell and decrease its grossprofit. The higher shares price of Walmart means the higher expectation frominvestors, the delay in meeting their expectation may induce the decline in stock price.