Jaime Gonzalez _Assignment
Corporate risk management is a mcthod bi ix hich a compare rcdiices thc chanccs of financial loss Along » ith tlic financial loss. a compare› also ei aluate the pres ailing extenial and intenial threat to thc organisation and proi’idc a resistant cni’ironmcnt to initigatc thosc chanccs. Thus. this corporate risk inanagcmcnt is a ncccssan proccdiirc ii’hich influcnccs on the sustainability and coinpetitii e add antage of a company’ in a specific market Sometimes, it can be noticed that by incorporating coherent approaches in order to loci cr the chances risk. a biisincss organisation might take cenain decision ii hich impacts on the financial assets and fluctuation in the financial market lii the current report, the three leading British Blands such as HSBC. British Aim ays. and Tesco hax’e been incorporatcd in order to analj se their strategic incasures to miniinisc corporate risk and achieve the iiiarket sustainability along ii ith competitive add outages. In order to gct a coinpetitix’c adi’antage. these companies hai’e dei’eloped certain stratcgic planning to leading. administration and directing thosc organisation in a stable inanncr. On the othcr hand. besides these strategies, the got ernmeiit of the UK has also incorporated codes and legislation in order to proi’ide a common proccss of risk management for all business sectors ii hich hai’e bcen also discussed in the current report.
lii case of an e-commerce or a bait. the security in the financial sector is the most necessan measiirc. In cnsc of Tcsco Bank. thcy hai’c had a financial risk diic to massif c c; bcr attack Similarly. for Tesco Bank. the breaching of financial profiles of customers proc ides the company a major risk in thc markct. Almost 20.000 bank accounts hni’c bccn hackcd bi another bank of the UK and about 9.000 customers’ accounts hai’e been theft by 2.5 million euro (thercgistcr.co. 2017). According to Bessis (2015). financial security to thc customer is the main aim of a banking scctor and thc doii’nfall of this can harm the reputation Hillson find Murray -Webster (2017) supported and commentcd that, in case of the EU and the UK. a high ratc of online financial fraudulent actin ities can be noticed which nceds to bc inonitorcd. Thus, this is the most significant risk inanagcincnt factors »’hich might bc the most significant conccrn of the bank. Hot ei cr. aftcr this massive cyber attack, Tcsco has enlisted their name in the National Cvbcr Scciiritj Ccntrc (NCSC) and thcy hai’c noticcd the crcdential stuffing of 136.00G currcnt
accounts and a i’cy’ poor login option (thcrcgistcr co. 2G17), As opincd bi McNeil er e/. (2G17) n strong login option consist a unique username and miscellaneous character containing pin passii’ord. This is as totally absent in the Tesco onlinc banking ii’hich has bccn ci’aliiatcd bj chief cxcciitii’c of cj bar-sccurity sT1n’icc (ECSC) Ian Mann
On the other hand. in case of HSBC bank, the issue is quite different than Tesco in »'liich the bank has cngagcd in being a conduit. Along ii ith this king pinning and dealing ii ith drugs has also obseo ed »'Iiich pro ide a reputational and operational risk to the coiiipany. According to Titman e/ oJ (2017). in case of a financial seri’ice sector especially in case of a bank, it is ncccssar; to ci aluatc the profilc of people and to monitor the transaction of the cnstomcrs Adam ct o/ (2015) supported and commented that, in order to notice the antisocial actin ities of people, thc rcpiitcd and big finns can proi’idc cffcctii’c monitoring proccdiirc on thc ciistoincrs and users Ho»’ci’cr. in casc of the HSBC bank. the main issuc has occiirrcd duc to the massii’c roguc transaction among 32 countries (theregister co. 2017) Thus, both thc reputation and ethical practice hai’c bccn fall in case of HSBC for bccoming the money laundcr to the antisocial people As argued by BakLe ct of (2015) that in order to spot these acti itics of antisocial inonctan transactions the got cement has incorporated certain iiieasurcs to cradicate this dcaling. Thus. HSBC has to paj’ about 2 billion ciiro for failing to stop thc criminal actii’ities and antisocial transactions (bbc.com, 2017). Bromilcy ct of. (2015) stated that the high amount of transaction can be ci’aliiatcd duc to thc probability of antisocial actii’itics Similar. in case of HSBC. thc high profile clients arc ini’olx’cd in trafficking of drugs. chequcs of bulk trai’cllcr ii ith a million dollar along ii itli the company lack of reluctance in closing these high profile account xx ith suspicious actii’itics (Stanhopc cr of., 2015)
As per the Risk Management Matrix. the British Aim ays is hat ing a massif e operational risk duc to thcir faulty IT si steln. As opincd by Calomiris and Carlson (2G 16). the IT st stein of an airlinc company is nccdcd to bc strong in order to maintain the opcrational »’orks and rcdiicc the risk of accident. About 5 times crashing of the sj stem in a j ear, the sixth time crash has influenced all British Airline Flight on a global scale and the reputation of the company disrupted (techcrunch.coin, 2017). The company has claimed that there is not any cyber attack that had taken place ii hereas. some of the staffs also claimed for the occurrence of cj ber attack Thus. this issuc made the passengcrs unsatisficd ii’hich floodcd the tii’itter account of BA ii ith
negative comments. Elshandidy and Neri (2015) argued that. this negative publicity impacts on the reputation and future operational process of a company and slower the sustainability %%
Response to risk
Tesco has taken appropriate risk response to the crisis of their financial risk management by enlisting their name in the NCSC, According to Elshandidy et al. (2015). the most significant aspect of a risk management is to search for the probable factors and eradicate the probable issue from the company. As per the Model risk and Regulatory Scrutiny, by evaluating the value at risk limit, the company has strategically changed the online payment method. The default email usernames have been changed by the company and they have asked their clients to provide their unique multi character pin based pass codes. However, due to the breaching of the EU protocol of General Data Protection Protocol. Tesco had to pay a large amount of monetary penalty which is of 2 billion euro under GDPR rules (theregister.co, 201TI. On the other hand Gatzeri and
Mnrtin (2015) nrgucd thnt. in case of a brcaching of financial daia of customcrs. a compare might incorporate the strategy remodel in the intenial management and IT system in order to mitigate the risk of fraudulent actii’itics. Thus. the managcmcnt of the company has chnngcd the cxisting transaction methods and focused on the branding. According to Gcndron er o/. (2010) branding is the correct option to regain the reputation of the coiiipany. Thus. by the social media, dircct contact »’ith customers and ncii spapcr thc company had initiated to rcgain their reputation JRc•fc•r t‹› appc•ndix 2J.
On the contran . the HSBC bank has also taken measures in order to Io» er the antisocial transaction of dnig dcalcrs As opincd by Hoang and Ruckcs (2017). in case of n financial seri’ice sector especially in case of a bank it is necessan to ct aluate the profile of people and to monitor thc transaction of the customcrs. Thc bank has rcstructurcd thcir rules of transaction aboi’c a ccrtain amount ii hich impacts on a lnrgc number of monciay’ exchangcs. In case of thc countrics » hcrc this risk is highest arc segregated and has incorporated spccial rulcs for thciii Among thc countries of Iran. Burma. North Korca. Mcxico. and thc US arc the most thrcatcning countrics » hcrc the high profile clients i ere pursuing high transaction (bbc coin. 2017). On the other hand. Kang and Pflueger (2015) argued that. in casc of fraudulent activities such as transaction of black moncy and antisocial actii’itics. a company nccds to ci’aluatc the prci’ious documents of high let eI of transaction. Thus, in order to analysc thc prci ious suspicious report. thc bank has ci’aliiatcd thc transaction dctails in i’arioiis countries sincc 2G0l to 2007 In this report. the bank has found 25.G00 iindiscloscd transactions ii’orth of 19.7 billion dollars (bbc.com, 2017).
lii case of tlic British Airlines, the scrious level of risk has becn observcd due to the crash of IT si stcin of the company. As for this reason. thc compare had to dismiss each and ci’cy’ flight from Heathro»’ to Gatii’ick Thus. thc company has faccd a inassii’c ncgatix’c fccdback from thc custoincrs and passcngers According to Li ct of. (2018). a sudden ncgatii c fecdback from the uscr loii’cr thc compctitii’c adi’antagc and the rii’al companies proi’idc a trcincndoiis markct ris’aIn to the concenied company Thus. the company has lookcd aftcr the rcgaining of custoincrs attention bj promoting strategic planning of branding. As opincd by Ott and Thciinisscn (2015). thc IT systcm of an airlinc company is necdcd to bc strong in ordcr to maintain the operational i orks and reduce the risk of accident. About 5 times crashing of the si stcin in a j car. thc sixth timc crash has influcnccd all British Airline Flight in a global scale and the reputation of thc company disrupted (Bodnar e/ of., 2014). In thc branding proccss. the company has add ertised for the low price international tram eI option in both economy and business class Along ii ith this. the compare has also proi’ided the customers a free food facility and gained a large number of potential net customers
Managing of risk in thc corporate scctor is a inultidimcnsional ii ork ix hich is thc most significant proccss in the stratcgic business inanagemcnt. According to Rampini ef of. f20l4). there arc ti o major processes in thc risL managcmcnt ii’hich arc the communication channcls and sctting cntirc risk dcfcncc fraincii ork In casc of the Tcsco Company. thc ciistomcr’s or thc liability of the company has lot a significant amount of inonej’ due to the cj ber security issue thus. in order to maintain the security in the online banking and onlinc transaction. thc company needs to proc ide effectii e strategic plan about the generation of passim ord and username. On the other hand, Salter (2014) argued that. in case of any online transaction and payment method. the company nceds to incorporate special security question in casc of each transaction and changing of pass codes. Bessis (2015) supported and commented that along ii ith the security question generation of one-time passim ord (OTP) is necessary in order to inakc a i’ariety. Tesco has a short length of passii’ord ii’ith only thc access of banL. This mcthod is not a good choicc as not much possible combinations can be generated from this. Ho» e er, Hillson and Murray-Webster (2017) opposed that banks need to proi’ide ciistomcr passim ords according to the customer prcferences and it can be of a good strength.
Critically it can bc stated that the HSBC is most ignorant about thcir high amount of transaction. Being a global bank ii’ith branchcs in 40 countries. it is east for the customers to conduct thc or erseas transactions Thus. the bank has promoted a mass transaction method to their customers and this factor ii’idens thc scopc of antisocial transaction and a system to launder money for drug. According to Elshaiididy and Neri (2015). this dnig dealing is a serious offense which the bank could possibly monitor and take effectii‘e measures for them. Ho» ei’er. the bank has failed to rake appropriate aciion and in spite of seizing thc account of criminals. HSBC has alloii’ed their heat›' amount of transactions The HSBC baiiL has also taLen measures in order to louder the antisocial transaction of drug dealers As opincd by Kang and Pfiiicger (2015). in case of a financial servicc sector espcciallj in case of a bank it is neccssan to cvaliiate the profile of people and to monitor the transaction of the customers Thus. in order to get effecti e risk obstructing strategy . the company might incorporate effectii’e rules and regulation and put a limit on the amount of transaction. Along u ith this, HSBC Mexico (H SMX) might regulate the payee
such as the Mexican Dnig Baron ii’hich has rcccii’cd almost 7 billion dollars in 2097 to 2008 (bbc.com, 2017).
Thc opcrntional risk management is coinparatii’cly smoother process ii’hich can be conducted bi the British Airlines company. According to Geiidron ct o/ (2016). up gradation of technology in a company. especially in case of a serf ice proc ider companies like airlines, is necessao Ho»’ci’cr. Elshandidy and Ncri (2Gl 5) argncd that. besidcs the up gradation of technology . the risk management in the soft» are st stem is needed in order to maintain the quality of see Thus. BN needs to build a security among their soft» are and see icing portal. In spite of hat continuous 5-timc crash in thcir softerdid not cffcctii’clisc thc rcason for the crash. Thus. this has infiuenced on the sixth time massi e attack ix hich » as suspected as a ci’bcr hacking. On thc contras’. Hillson and Murray -Wcbstcr (2017) argued that a repctitii’c soft»’arc crash is alia a› s indicating thc issues of cybcr hacking Thus. this disastcr is rcflccting the inability of thc management to proc idc an uninterrupted serf ice and the mismanagement of risk
fi. RisL communications
Aftcr hai’ing the issuc. Tesco has commiinicatcd ii ith their main stakcholders and sharcholdcrs. The main stakeholders are the customcrs. employecs. and got comment. Along ii ith this. the company has also irn’oli’ed NCSC ii hich is thc main cybcrcriinc monitoring organisation of thc UK. Thc compare has also iakcn help from the goi’crnmcnt and thc policies such as Fraud act 2006 in order to mitigate the risL (theregister co. 2017) According to Ott and Theunissen (2015), in case of a financial company . the customer can be informcd about any issue rcgarding their financial status In this communication process, the company has involi ed the social media and direct mailing process in order to reach to the indie idual customers As opined bj’ Salter (2014), the direct communication in a B2B business modcl impacts on the rctention of the customcrs. On
the contra, s Li ci of. (201S) argued that along with the communication i ith customers the
einployecs of any organisation need to clear about the issue and risk Thus. Tesco needs to irn’oli’c their customers in managing thc risks in order to eradicate the further chances of risk and fraudulent actin ities.
On the othcr hand. in casc of the HSBC the company is quite liable to make their offense. This. the employees can be in a trouble due to the unethical practice in the company. The HSBC is most ignorant about their high amount of transaction Being a global banL ix ith branchcs in 40 coiintrics. it is easj for thc customers to conduct thc oi’crseas transactions Thus. the bank has proiiioted a mass transaction method to their customers and this factor ii idens the scope of an antisocial transaction and a sj stem to launder money for thc drug. According to Elshandidy and Neri (2015), this drug dealing is a serious offense which the bank could possibly monitor and take effectii‘e measures for them. Thus, the coinpai» has taken the strategy to put a barrier in a high amount of money transfer above 50GG dollars (bbc.com. 2G17). On the contras . the HSBC bank has also taken measures in order to lo» er the antisocial transaction of drug dealers. As opincd by Hoang and Riickes (2G 17). in case of a financial scrvicc sector especially in case of a bank it is ncccssan' to cvaluate thc profilc of people and to monitor thc transaction of the custoitiers /ft‹/‹r fu app‹•ndix 3]..
The global IT failure has a trcmendous impact on customer outcoinc of British Aiini’ai s. Along u ith the cancellation of a fight, the ongoing flights had also created trouble for the customers. In this case. the company has failed to pro ide good communication to the customers and has lost
thcir potcntial customers. According to Ott and Thcunisscn (2015). the communication ii’ith employee and management is necessan in order to mitigate the chances of misconception Ho»’ci’cr. as for this reason. somc of thc siaff mcmbcrs spread thc rumour to thc passengcrs about ci bcr hacking in thc softii’arc sj stem of BA (tcchcninch coin. 2017). Thus. this impacts on the custoiiier outcome as they thought the company does not possess effectii e strategic managcmcnt in ordcr to mitigatc this iss@. This issuc impacts on the loss of markct sustainability and competitii e ad outages in the iiiarket In the branding process, the company has advertised for the Io» price inteniational tram el option in both economy and business class Along ix ith this. the company has also proi’idcd thc ciistoincrs n frcc food facility and gaincd a large number of potential nc» customcrs. Thus, this communication has reinforccd the retention of potcntial customers in thc company .
6. Finilings and conclusions
Thus. there is a similarity betw een the three case has been noticed u hich are prevailing to proc ide corporate risk This factor is the lack of strate s c ink • s• inent among these coiiipanies In case of Tcsco, the company has not taken cffcctii’o measures such as unique pass» ords. useniame, security questions and iiiulti-character one time passi ords. As for this reason, the company has faced the trouble of account fraud. On the other hand, in case of the HSBC banL, the lack of stratcgy has led the company to mark as a launder of antisocial monGy , If the company implement a proper monitoring strate , the company might at oid this risk Along ii ith this. the company should incorporate strategic plan to proi’ido a limit to the account transaction, In case of British Amis ai s. nftcr 5 tuncs software crash, the company must taLc the additional backup sj stem in order to smooth their customer sen ice.
Henceforth. it can be concluded the operational management strategy in these companies arc disputed. As for this reason. certain risks have occurred and the companies hat e faced se ere issues in order to mitigate the risks Sometimes, it can be noticed that bj incorporating coherent approaches in ordcr to lo»’cr thc chanccs risk. a business organisation might take a ccriain decision »'liich impacts on the financial assets and fluctuation in the financial market. Thus. along ii’ith the inanng@ncnt of thcsc companics might incorporatc stratcgic plans in ordcr to