5612038 Enterprise Risk Management Final Paper

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School

Chamberlain College of Nursing *

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1510

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Management

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Nov 24, 2024

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docx

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1 Enterprise Risk Management Final Paper Student's Name Institutional Affiliation Course Instructors' Name Due date

2 Enterprise Risk Management Final Paper Risk Factor 1: The global scope of our business subjects us to risks that could negatively affect our business. McDonald's global nature of its business makes it vulnerable to various risks that could harm the company. These risks arise from economic, geopolitical, regulatory, and cultural variations across the company's countries. Moreover, challenges meeting customer expectations and operational disruptions due to hostilities and governmental actions may disrupt the company's operations. Failure to manage these risks effectively could negatively affect McDonald's overall business and financial results. McDonald's can implement the risk-sharing approach to deal with the risks associated with its global operations. For instance, collaborating with other corporations in war or political unrest areas would help the company mitigate legal, political, and employment risks. This approach is the most efficient one since it allows the company to share risks with other parties instead of absorbing all the negative impacts of the risks. McDonald's global scope of business exposes the company to risks that could adversely impact its operations and financial results. Factors such as war, terrorism, government actions, economic volatility, social unrest, crime, corruption, and political instability can adversely affect McDonald's by disrupting operations and creating price volatility. These risks arise since the company is exposed to varying economic, geopolitical, regulatory, and cultural environments. One potential solution to mitigate McDonald's risks associated with its global operations is to form partnerships with local communities and organizations. These partnerships could help the company better understand customer preferences, local culture, and regulatory environment, identifying potential risks and establishing targeted risk mitigation strategies that consider the

3 local communities (Walker & Schenkir, 2018). This approach will help reduce the risk of errors that could cause customer dissatisfaction or lead to negative perceptions regarding the company. McDonald's can turn the risks associated with its global operations into an opportunity by using its extensive global reach to promote sustainable development. One potential strategy for the company is to invest in sustainable sourcing practices, such as responsible farming, to address the risks associated with environmental degradation and climate change. Risk Factor 2: Food safety concerns may have an adverse effect on our business. McDonald's success in sales and profits highly depends on the company's ability to meet customer expectations for safe food. The company is also expected to effectively manage any potential issues regarding food safety and food-borne illnesses. While McDonald's prioritizes food safety, the company is still susceptible to actual or perceived instances of food tampering and contamination, which could adversely impact the company's reputation, brand, and financial performance. McDonald's can use the risk reduction approach to mitigate the risks associated with food safety concerns. This is a proactive approach that helps prevent risk events from occurring and helps mitigate them effectively in case they occur. This can be achieved by identifying potential risks, taking measures to prevent them, and implementing measures to respond to the incidents in case they occur (Miccolis, 2003). Concerns regarding food safety at McDonald's may arise due to several factors, including inadequate supplier monitoring and inadequate employee training regarding food safety. These factors could cause food tampering, contamination, or food-borne illnesses, negatively affecting the company's brand and reputation.

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4 One potential solution to address food safety concerns in McDonald's is by enhancing employee training in food safety procedures and practices. Enhanced training would include sanitation procedures, personal hygiene, and proper food handling. The company can also conduct regular audits on its suppliers to ensure they comply with food safety standards. Furthermore, the company can work with food safety experts and organizations to establish new food safety standards and practices. McDonald's can turn the risk of food safety concerns into an opportunity by promoting its food safety practices and using them to differentiate the company from its competitors. For instance, the company may communicate its food safety practices to customers through social media websites and marketing campaigns. This approach would strengthen McDonald's brand image and reputation, leading to increased revenue and profits. Risk Factor 3: Our business is subject to an increasing focus on ESG matters. McDonald's faces risks associated with increased attention on ESG (Environmental, Social, and Governance) issues by stakeholders, including investors, suppliers, customers, and employees. McDonald's faces increased scrutiny regarding its efforts on ESG initiatives such as responsible sourcing, climate action, and sustainability. Failure to address ESG matters could lead to related risks such as legal and regulatory complexity, changes in commodity costs, consumer perceptions of the brand, consumer behavior, supply chain interruptions, and labor availability. McDonald's can use the risk reduction approach to mitigate the risks associated with ESG issues. This risk management approach involves identifying potential risks, analyzing their likelihood and impact, and developing strategies to mitigate or avoid them. McDonald's can form a sustainability committee that ensures that ESG initiatives are implemented and align with the

5 company's overall strategy. This approach enables the company to anticipate problems and find solutions (Sidorenko & Demidenko, 2016). Factors contributing to the risks related to ESG issues include the rise in stakeholder expectations for the company due to the growing concern for sustainability and social responsibility. This increasing stakeholder concern for sustainability leads to a significant increase in consumer demand for sustainable practices and products, increasing the pressure on companies to show their commitment to ESG matters. To address this risk factor, McDonald's can implement a system to minimize waste and pollution by regenerating natural systems. For instance, the company can source its ingredients and products from sustainable suppliers and also recycle packaging. This approach would help McDonald’s improve its reputation as a socially and environmentally responsible company. McDonald's can turn the risk regarding ESG matters by improving its sustainability and social responsibility brand image. The company can demonstrate its dedication to sustainable practices throughout its operations, improving its reputation as an environmentally responsible enterprise. This approach would help McDonald's attract eco-conscious customers and develop a more sustainable future.

6 References Miccolis, J. (2003). Implementing enterprise risk management: Getting the fundamentals right. International Risk Management Institute, Inc . Sidorenko, A., & Demidenko, E. (2016). Guide to effective risk management 3.0 . Walker, P. L., & Schenkir, W. G. (2018). Enterprise Risk Management: Frameworks, Elements, and Integration. Institute of Management Accountants .

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