reflection on ERM, how technology, and governance affects enterprise risk management in Apple Inc

reflection on ERM, how technology, and governance affects enterprise risk management in Apple Inc

Introduction

Enterprise Risk Management (ERM) is a structured, consistent, and continuous process that focuses on individuals, systems as well as procedures that work together within an organization to systematically manage a series of risks impeding business from accomplishing its goals and opportunities. Accurately identifying risks, and subsequently taking action to prevent the occurrence, can save lives, money, effort, and time. In today’s uncertain world with limited resources and capital, ERM strives to understand the risks associated with opportunity, improves the likelihood of achieving objectives, and minimizes the impact of events for which the company cannot control. There are several critical steps to a successful ERM process, and all of them have to be evident for the program to be successful. These steps include management buy-in, effective communication and consultation, clear and concise policies as well as procedures, adaptive education, and employee training, efficient and effective structure, RM applications in practice, review, and continuous monitoring. The first element of a successful ERM system is to have an executive commitment. The administration must understand ERM, be part, encourage leadership, provide a robust governance organization with responsibility, and, most importantly, build an influential culture throughout the organization. To understand enterprise risk management, this essay discusses Apple Inc., which is a global company dealing with manufacturing of electronics accessories and has globally contributed to the growth of technology. Apple Inc. deals with hardware as well as software systems, implying that the company faces a lot of risks, and challenges in its effort to meet the fast-changing technology, and also from the competition of other great companies like Samsung. The essay focuses on the reflection on ERM, how technology, and governance affects enterprise risk management in Apple Inc.

Background Study

Enterprise Risk Management Policy

Enterprise risk management is the approach to organizing, sorting out, managing, and driving activities of a firm to limit hazardous impacts on the organization’s income and capital investments.  The critical significance is to engage the relevant efforts as well as knowledge to prevent operational risks and any unpredicted misfortunes.

Apple Inc. defines risk as anything posing hindrances in the accomplishment of the company’s set goal. The risk for that matter is not everything impacting on the business. Instead, those risks are as well likely to happen to the organization. The technological threat is one of the most significant risks that Apple has been facing in recent years (Soh and Najihah, p.16, 2019). The uncertainty has been likely more than impact. However, with the rise in competition, there have been several impacts on Apple with the technological risk, which has affected areas such as customers, market, and sales meaning that operations have been affected.

The first role of organization risk management is identifying the areas that dangers lay. Risk, in this case, is categorized in its ability to tamper with the operations of the organization. Therefore, the more significant the impact, the bigger the priority. When the risk is identified, an analysis is done. This stage is usually critical as it identifies and categorizes the risks appropriately. It decides on the best way to handle the danger and, eventually, how to respond to it. Lastly, the response is made (Giannakis and Papadopoulos, p. 458, 2016). Different organizations respond to various risks differently. Factors such as the level of the organization, management, culture, and operations determine a lot how to react. For instance, a low-level organization cannot respond by investing a lot in risk management.

To make sure that all risks that are predictable and unpredictable are adhered to, a team is set to overlook issues in place. All practices involved in the risk management processes are executed and controlled by the team leader. Specific risks are prioritized than the others (Lam, p. 17, 2017). An example is the risks related to the production as well as customers as they have a direct impact on an organization’s goals. Chances are thus given more attention by the risk management team depending on their nature and implication on the company’s objectives.

In the recent trends, external factors have rendered more enthusiasm by firms in ERM. The industry, as well as government administrative firms, just as economic specialists, have observed organizations’ hazard the executive’s approaches and procedures and in a growing number of industries. Sheets of chiefs are required to survey and cover the simplexes of hazard the board forms in the associations they oversee (Lockamy, p. 177, 2017). Organizations can profit through transforming the firm’s culture from a given spotlight on achieving information technology continuous commitments to ensure reduced general hazards. Imperceptibility into the organization’s general security assumes a significant work in setting up the new exchange.

The board selected is responsible for ensuring that all the key policy is aligned

• Integrity about risk management issues is followed
• The board adheres to all the requirements and responsibilities that are assigned
• Position of the risk effectively
• The building of a substantial risk culture
• Facilitating the appropriate incentives to manage the risks
• Formulation of a useful Enterprise Risk Management Framework

Problem Statement

There is a need to orchestrate and as well to correctly control enterprise involved risks. There is also a lack of understanding of company goals to know what and how to protect the entities from a given risk. Apple is aimed at offering high-tech products. The organization wants to remain a trendsetter. It intends to innovate as well as give technology a different direction via its outstanding products, expand worldwide to win a significant market share, and increase brand popularity. The aims can be achieved by keeping up with the changing risks technologically and physically.

Literature Review

Role of Technology in Enterprise Risk Management

Apple relies more solely on its IT underpinning, IT risk, and continually tends to be a focal part of operational dangers. Firms are turning more to formalizing IT risks and persistently managing and incorporating them into their standard enterprise risk management program.

The unpredictability of the modern commercial activities condition in which organizations rely on external information technology and procedures shows that companies face several related risks. Expended responsibilities, as well as management oversight of the Apple Inc. information activities, indicates that the companies are committed to adopting an

Apple is working to ensure it utilizes innovation to offer dashboards, business process, and insights boards, control frameworks as well as condition check improvements to identify and oversee opportunities continually. In these limits, IT will empower Apple Company to move from chance obliviousness to hazard mindfulness and control, and it will run from dealing with its dangers to being the fundamental vital part that makes endeavor chance administration a reality.

The Role and Impact of Governance in Apples Inc.’s Enterprise Risk Management

Apple Inc. has a team of executives who plainly defines enterprise risks audit. The risk monitoring is done regularly. Since the board of directors of the company must be monitored, there is a set non-management team kept in place to give it the necessary freedom.  The top management staff has a definitive duty concerning the enterprise risk of the company, being responsible to investors as well as to different partners

Through managing enterprise risk management methods, Apple Company can fulfill customer needs. The company has developed several methods for assessing enterprise risk management:

(Bromiley, McShane, Nair & Rustambekov, 2015)

1. Internal environment- The internal condition builds up the tone of the Apple Company, affecting danger craving, mentalities towards hazard the board, and moral qualities.
2. Set objectives – Apple Inc. has ensured that it is setting goals concerning risk identification and how to manage the risk. The objectives refer to what it aims to achieve at the end of the whole process. This is related to the organizational general objectives and goals.
3. Identification of the risk – identification of the risk is done through orchestration of a system that identifies all the risks in all aspects of Apple Inc. All departments and activities of the organization are considered in this stage.
4. Assessment of the risks – Assessment of the risk comprises categorization of the uncertainty in the best probable manner to categorize the risks in the way of criticality. The most critical risk is given more attention and listed first.
5. Risk response – responding to risks is done by considering all the available control measures. As well, all the risks that appear to lack control measures present are prioritized, and the appropriate measure brought out and implemented.
6. Information and communication -Control activities refer to the measures put into place. Every risk has a different measure and attention given to it. The control measures are implemented and assessed from time to time to improve them according to the level of the risk and the impact it is creating.
7. Monitoring – this is an insight that is given to the environment, which ensures that they well-articulated. A change in the risk impact of factors facilitating the risk is noted and more critical measures taken to control the risk even better.

Role of Enterprise resilience in Apple Inc.

Enterprise resilience is essential to successfully discover as well as capitalize on an awareness boggling risk and opportunity prospect. Organizations can respond rapidly to a troublesome event in a method that secures partner welfares, makes opportunity as well as fabricates long-haul upper-hand.

Compelling inventiveness, management, and prearrangement with Apple’s business organization are central in setting up a resilient business. Control risk acts as an accomplice to understand your perils and business goals and subsequently amasses the supportive forte and threat of the executive’s configurations. Apple has positioned high-performing assemblages that support these arrangements in the organization. It is noteworthy for Apple’s management to set employees’ pace. This rejuvenates the entireness of your kin to embrace a proactive strategy to risk and opening, and reinforce the cross-work synchronized effort. The best projects length the responsibility, communicable, and integrating comprehensive risk management as well as moderation exercises to warranty maintainability and intensify influential efficacy.

Apple’s nonexclusive approach of expansive diversity embraces the upper hand through making the corporate resilient. Differentiation in product capacity, as well as configuration, underpins the organization’s goal of driving the market via mechanical growth. Expansion is at the core of the company’s business. Besides, to advance the utilization of the conformist system for the upper hand, the company must compellingly enter markets. This recommendation is predominantly pertinent in making nations where the corporation has limited market go after its facts innovation products as well as ventures.

Apple Inc.’s dominant development approach is the advancements of its brands. Market infiltration, as well as advancement, contains fewer requirements in innovation enterprise. The company’s concentrations on product development bolster the nonexclusive approach. The firm is keen on its brand improvements through quality enhancement.  Nevertheless, to enhance implementation, the company has to emphasize highly on the market entrance as well as advancement. These two major development strategies may strengthen the organization against its rivals like Samsung. Similarly, Apple Inc.’s operation management can enhance this development viability and the full separation of the conventional system for the upper hand.

Discussion

Control of Apple Inc. Risks

Various risks are approached differently. The techniques applied are dependent on the risk type as well as the outcomes of utilizing a specific method.

Risk reduction – in most activities undertaken, Apple finds itself in risks that it is difficult to avoid. Some of these risks are labor-related issues, which pose a significant threat to productivity. Since it is challenging to eliminate labor, the organization designs measures that will result in a reduction of measures. For instance, the inadequate production of Apple products in China can be reduced through high supervision.

Acceptance – The type of risk reduction approach is rare. Nevertheless, in some instances, where risk is unavoidable or not easily eliminated, it is accepted. An example is a possible risk existing in the market of a company. Generally, the risk is coined with a considerable amount of expense but fewer returns. Considering marketing is critical for Apple Company, it may accept such a risk.

Transfer of risk – risk transfer entails involving another business, which may lead to the incurred outcome of the risk. The type of risk solved through outsourcing. A significant known outsourcing practice that apple Inc. has managed is manufacturing (Weldon, p. 275, 2017). The company outsources to such industries as Foxconn and Wistron, which produces its products like the iPhone. Through outsourcing, the company avoids incurring risks involving a tremendous amount of money. For example, reliable manual labor is Apple’s challenge that it is facing. Therefore, it transfers the risk of labor to other companies through outsourcing.

Risk avoidance – The organization has a diverse endeavor that increases the chances of risk occurrence. Production of varying products like Mackbook, ipads, and iPhones raises the probability of risks. Risk avoidance is implemented in the event of increased threats of the danger to the organization that is not worth facing (Saeidi et al., p. 94, 2019). An example is the introduction of products with low quality, but lots of risks to the company can be evaded as it may affect its performance. Risk avoidance may be orchestrated via divestment, activity ceasing as well as project objectives changing.

Conclusion

Apple is among the most significant organizations globally, with enterprise risk management. It has been able to accumulate more return on investments by ensuring to avoid unnecessary loss through proper risk management practices. The achievement has been made possible via good governance and application of expert risk management systems as well as techniques.

References

Bromiley, P., McShane, M., Nair, A., and Rustambekov, E., 2015. Enterprise risk management:    Review, critique, and research directions. Long-range planning, 48(4), pp.265-276.

Lam, J., 2017. Implementing Enterprise Risk Management: From Methods to Applications. John    Wiley & Sons.

Lockamy III, A., 2017, July. An examination of external risk factors in Apple Inc.’s supply           chain. In Supply Chain Forum: An International Journal (Vol. 18, No. 3, pp. 177-188).        Taylor & Francis.

Saeidi, P., Saeidi, S.P., Sofian, S., Saeidi, S.P., Nilashi, M., and Mardani, A., 2019. The impact of enterprise risk management on competitive advantage by moderating the role of information        technology. Computer Standards & Interfaces, 63, pp.67-82.

Soh, N., and Najihah, N., 2019. AN ANALYSIS OF AN EXPLANATION OF APPLE INC.

Weldon, M.N., 2017. Corporate Governance, Compliance, Social Responsibility, and Enterprise

Risk Management in the Trump/Pence Era. Transactions: Tenn. J. Bus. L., 19, p.275.