Risk & Decision Making Situations Discussion

 

 

Give answers to the following statements.

The definition of risk refers to decision-making situations under which all potential outcomes and their likelihood of occurrences are known to the decision-maker, and uncertainty refers to situations under which either the outcomes or their probabilities of occurrences are unknown to the decision-maker. Risk can be controlled if proper measures are taken to control it. Uncertainty is beyond the control of the person or organization because the future is so uncertain. uncertainty that cannot be minimized. Organizations can combat against uncertainty and risks in many ways such building with flexibility (Forbes, 2020). All decisions need to be made with complete information, staying transparent, embracing ambiguity by preparing, practicing steady communication, and always developing the worst-case scenarios and establish a risk management plan (Forbes, 2020). My organizations actions negatively affect the company when a contingency of risks materialize through not having a risk management plan in place, meaning everyone will be unprepared when something big or small comes up. My organizations actions that negatively affect the company when uncertainty is materialized through not taking the time to make a risks management plan puts everyone at risk. A risks management plan could be the reason a company stays in business, so it is always important.

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Risk can be defined as the case where the distribution of outcomes is known either a priori or statistically through experience, and uncertainty is the case where one cannot quantify probabilities. Risk and uncertainty are heavily weighed in the agriculture sector. The industry faces production risks based on crop viability due to weather conditions, pests, diseases, and soil conditions. Uncertainty with prices, costs, and access to markets also causes risk across the entire industry. Growers make decisions in a context where multiple risks occur simultaneously, which further compounds the complexity of production. Farmers try to mitigate risk by planting crops in various locations within different regions. Climate change has shifted weather patterns, making it much more difficult for farmers to predict growing conditions: uncertainty impacts planting, growing cycles, and harvest, ultimately impacting price and the consumer. Three years ago, the avocado crop was plentiful, and the company developed financial models based on yield and cycle predictions. Nobody could have predicted a double El Nina year that destroyed transportation lanes in Peru and Chile. Lack of transportation lanes and excessive rain delayed harvest by months, causing the company to miss production and sales targets. We did increase fruit procurement in Mexico; however, the cost of goods increased by 15%. Every season brings risk and uncertainty in agriculture is just part of the business. We always have contingency plans and have great intentions, but the unpredictability will never go away and will always impact the best-laid plans.

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The four main areas of financial health that should be examined are liquidity, solvency, profitability, and operating efficiency. (Maverick, 2022). Financial strength is the ability to generate profits and sufficient cash flow to pay expenses, including salaries, overhead and bank and other lending entities. The ability to have sufficient financial strength allows for a company to attract employees, investors and customers. Having that financial strength enables companies to receive better offers from investors or lending terms from banks, thereby reducing overall costs. Investors and banks conduct analyses to determine the risk of putting money into a company and ensuring that the money is recouped with a sufficient return on that investment. Financial strength also signals positive cash flow, which is critical for a company to possess in order to grow, and avoid the risk of leveraging company assets and the reduced cost of borrowing money from banks and other types of lenders. Comparatively, financial weakness can be fatal to a company. Staff turnover begins to occur and recruitment of replacement staff becomes extremely difficult. Banks and other lending institutions determine if they will even lend money to a financially weak company, and if so, what the cost of borrowing their money will be by assessing the financial strength of that company. The financial strength of a company can be measured in three key areas: profitability, liquidity and solvency (Beckert, 2019). In a company with a weak financial position, everything becomes costlier without cash on-hand. There is no ability to grow without cash flow or an ability to raise capital. And in most business, if you’re not growing, you’re dying. And depending on the severity of the financial weakness position, a company can face legal ramifications and even go bankrupt if they are insolvent to the point of not being able to pay creditors and/or adhere to contractual agreements.

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At my present employer, blending and logistical concerns are the cause of a number of workforce-related issues. Due to unexpectedly low compensation increases and the considerable demand for positions at other organizations that provide better pay and benefits, turnover rates have recently been extremely high. The business needs to concentrate on attrition analytics, specifically on figuring out what causes people to leave on their own accord, what might have kept them from doing so, and how to use data to estimate the risk of attrition. The organization can better identify and create solutions that can lessen unwelcome attrition by using predictive analytics. The company is currently developing retention incentives to encourage workers to stick around as they strive to fill open positions and return us to where we were.