(A SURVEY OF SELECTED MANUFACTURING COMPANIES IN PORT-HARCOURT)
Complete Material Cost #3,000
This study determines the Risk Management Strategy in the manufacturing Industry (A Survey of Any Selected Company in Port Harcourt). However, various methods of which this risk can be identified, evaluated and equally controlled have been discussed in this study. Data collected from the respondents were analyzed and the hypothesis tested using statistical tools such as chi – square (x). Also, the alternative hypothesis was accepted as it met stated decision rule condition. The findings showed that proper risk management contributes, positively to the growth of manufacturing industry and that risk management is all about creating in each individual employee the do’s and don’ts at all time. Risk enters all aspects of business life. But, in the manufacturing industry, management policy will determine its level of occurrence. Risks enable wealth to be created. Again, from the findings, it has been observed that risk with higher frequency of occurrence has low severity and that with high severity has low frequency.
1.1 BACKGROUND OF THE STUDY
There is no risk free endeavor in life; life is all about taking risk. It is common knowledge that there is no week or month passing in a year which we do not hear on television or radio of some major fire, explosion or earthquake in a part of the world, even in Nigeria.
It is also common to read a newspaper about fire, oil spills and many similar incidents. We may also see factories destroyed by fire and valuable goods stolen.
All these events mentioned build up a great anxiety among the people involved. But, what many others do not know is that there is a mechanism, which handles events. This mechanism is known as insurance and risk is always at the centre of insurance.
However, the risk management strategy is a new activity in an organization setting. The increasing hazard created by science and technology have all led to more risk for corporate entities and individuals which threaten profitability, success and continuity in business.
A lot of modern organizations especially manufacturing companies have recognized the need of risk management department within the organization.
However, the risk management department would be given the responsibility of identifying, evaluating and controlling risk capable of threatening the operations of the organization.
1.2 STATEMENT OF THE PROBLEM
In most manufacturing industry where risk management department have not been realized, there is unwanted fire explosion, oil spill and other incidents or accident occurring as a result of the management not recognizing the need for risk management department.
However, all these events mentioned above may cause hold – up in business operations, profitability and even continuity in business, which may in effect lead to liquidation.
Therefore, all these mentioned are some of the problems, which can affect manufacturing industries where risk management has not been recognized and risk management department has not be established.
1.3 OBJECTIVE OF THE STUDY
The purpose of this research is to educate or highlight manufacturing industry of how important risk management is and the advantage of establishing risk management department in an organization and how risk could be identified, evaluated and the economic control to enhance continuity and profitability in an organization.
1.4 SIGNIFICANCE OF THE STUDY
Taking a comprehensive view, risk management industry often requires an ingrained culture of risk management with its employees and this will lead to the integration of quality risk management in the industry and organization. Control should be proportional to the significance of the risk.
However, the significance of knowledge management in the business sector, industry or firm innovate more extend such that the manufacturer and suppliers to the industry shall benefit from membership in the warming labels should enhance the risk management efforts of members (employees).
1.5 RESEARCH QUESTION
The problem under investigation is centered on the following questions:
- Can all risk be insurable?
- How would someone identify risk?
- To what extent can someone manage these risk?
An attempt to answer the above questions will enable the researcher to proffer solutions to some of the problems affecting manufacturing industry.
1.6 SCOPE AND DELIMITATION OF THE STUDY
This piece of work is focused on risk management strategies in the manufacturing industry.
However, since risk that have not been identified can never be managed, this work will also include risk identification, evaluation and control and the various methods by which someone can identify, evaluate and equally control these risks.
1.7 DEFINITION OF TERMS
Risk is the chance of damage or loss.
- a) UNCERTAINITY: This is a term use to express doubt. That is things that cannot be factual.
- b) FINANCIAL: The term financial is importance to the definition of risk in insurance to the extent that any whose outcome cannot be expressed, in monetary term cannot be regarded as a risk in insurance companies.
HARZARD: Is seen to be the characteristic of risk, which influence the frequency and severity of it. It is a condition or event that can increase or decrease a risk.
PERIL: The primary or possible source of loss which gives rise to the loss or damage.
RISK MANAGEMENT: The protection of assets earnings liabilities and people of an organization with maximum efficiency and at minimum cost.
RISK MANAGERS: They are the set of people employed as experts to handle the risk exposure of organization.
RISK IDENTIFICATION: The process of identifying all possible events that could cause losses.
RISK AVOIDANCE: The process of avoiding a situation or activity that produces the risk.
RISK REDUCTION: Measure which reduce the frequency or extent of losses.
RISK RETENTION: Where the organization decides to be the risk itself, rather its transferring them to an insurer.
RISK TRANSFER: It is the transfer of the responsibility for paying losses by way of insurance.
RISK MEASUREMENT: Assessment of the impact of losses on the organization.
CONTINGENCY FUND: It is the money set aside by a company from, which unexpected losses are paid.
INSURANCE: Insurance is an arrangement by which an insured transfers his risk (uncertain tendency to loss) to the insurer at an adequate fee called premium, on promise that the insured shall be indemnified or compensated upon the occurrence of the insured event.
INSURED: Insured is a person (or corporation) purchasing insurance policy with the hope of being indemnified or compensated whenever any loss event occurs.
SPRINKLER ALARM SYSTEM: Is a device insured in a building, which sounds on alarm whenever the surrounding temperature exceeds a pre – set figure and also sprinkles water to put out the fire.
PURE RISK: Pure risk are risks whose occurrence to a loss but non occurrence does not lead to a
SPECULATIVE RISK: Speculative risks are those risks, which arises if either beneficial or adverse outcomes could stem from a specific event. And it is also as business risk and is not insurable.
PARTICULAR RISK: It is referred to those risks which from individual acts. Thus, it can be controlled by individuals and is insurable.
FUNDAMENTAL RISK: Fundamental risk is a risk which affects either the society in general or a group of people and cannot be controlled even partially by anyone person, and it generally borne by the government and is not insurable.
FREQUENCY OF LOSS: This is the regularity with which an event occurs within a given period.
SEVERITY OF LOSS: This is the extent of a loss when once it has occurred.
LOSS: It is the fact or action of losing something or someone.