Risk management for the firm
Anticipation is the second stage and the firm acts to connect and systematize various procedures’ to minimize dismissals and improve the implementation of ERM. Thirdly, the firm sets requirements for enactment by adopting technology that collaborates with the different execution procedures. The final stage is orchestrating where the business is affiliated to the enterprise-wide objectives where there is reliable and corresponding risk management. Many organizations experience challenges adopting a comprehensive enterprise risk management program due to numerous challenges faced while doing so. One of the main challenges is defining risk consistently. In uncertainty, the firm lacks information completely regarding the background of an event even though it is identified. Since some scholars define uncertainty as unknown risks, uncertainty is never an unknown risk.
3) Types of risks Companies face numerous types of risks that can lead to serious profit loss or even bankruptcy. Large companies comprise of extensive risk management departments while smaller firms handle the process of risk management systematically (Nocco, 2006). The following are different types of risks; Strategic risk: This is the risk that an organization strategy becomes less effective forcing it to struggle for its goals as a result. Reputational risk: No matter the type of industry a business is operating in, reputation matters a lot. When reputation is damaged, the company is likely to experience an immediate loss of customers which will eventually lead to loss of revenues. These may demoralize employees who might also decide to leave. Reputational risk can result from high criticism of company products or services, negative publicity or an embarrassing product recall.
Main risks faced by Sandridge The main threats facing Sandridge are debt and faltering stock price which threatens its listing on the New York stock exchange, the earthquakes and the new regulation set forth to slow the shaking. One of the strategies is drilling dry holes. While finding the new oil and gas reservoirs, the firm should advance to the 3-D seismic technology that significantly reduces the dry holes drilled by the company (Olson, 2015). The company operations the thought to cause the earthquakes since saltwater disposal wells are believed to increase the seismic activity. However, the new regulations address the seismic activity and restrict the company ability to dispose of saltwater and hydrocarbons produced by the company which hinders its oil and gas production economically.
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