Premium Essay

Operational Risk Assessment of Pilgrim

In: Business and Management

Submitted By yolliu
Words 4457
Pages 18
INTRODUCTION
The following report provides a detailed assessment of formal operational risk disclosure in relation to the vertically integrated poultry producer Pilgrim’s Pride Corporation (PPC). Overall PPC establishes fair reporting of operational risks, however, these disclosures will be evaluated based on the risk related information formally disclosed in the company’s financial statements in contrast with evaluation of risk present considering bias of company risk measurement as well as assessment of risk applicable as determined from informal and third party sources. This report will specifically analyze risk in this way in regards to market risk, supply chain risk, country risk and environmental risk applicable to and disclosed by PPC.
MARKET RISK PPC experiences significant to market risk in its operations. The following analyzes this risk in regards to its three main components: competitive rivalry, segments and seasonality.
Competitive Rivalry PPC recognizes competition as a significant risk to its operations in its 2012 10-K. The company notes that the market remains fairly concentrated, with the four main chicken producers accounting for over 50% of the US industry’s market share. The company also discloses that it operates as the second largest in the US with a market share of 17.4%.1 As a result PPC discloses this market concentration and competitive rivalry as significant risk factors to the company. PPC does not disclose any additional data for the analysis of this risk in its 10-K. This is not uncommon, however given a company’s financials focus primarily on that company. According to informal company disclosures in PPC’s 2012 fiscal year-end earnings the company has seen significant improvement recently in its competitive positioning. According to Bill Lovette, COE of PPC, the company achieved its operational goal of attaining…...

Similar Documents

Premium Essay

Risk Assessment

...Risk Assessment Approaches 1. Estimate the risk of bringing the project to completion: * On time: little to no risk because the project would be developed and fully operational within the time limit of the contract. * One month early: this would give us more time to develop test and bring the network into full production with ample time to fix minor issues if there are any. * Two months late: there is a risk associates with a reduction to the company overall contract by 4% (2% for each month late). If we cannot get the whole project up in production, then the risk would be the contract is being transferred to another bidder. 2. Estimate the risks of bring the project to completion: * On time, but not with the require security: technically the project is done but there is a security risk that may violate the contract because technically the company did not finish the required services stated in the contract. * One month early with the require security requirement: there is no risk. The company completed the project early with the required services indicated within the contract. Therefore, the client can continue with normal operation much sooner than expected. * Two months late, without the required security requirement: depending on when the company can implement the security requirements is directly correlated with the contract and its guidelines; the contract may be ultimately transfer to a different bidder. 3. The company has met most...

Words: 280 - Pages: 2

Free Essay

Operational Risk

...Operational Risk measurement This is defined as “the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This includes legal risk, but excludes strategic and reputation risk”.9 Such risks are likely to be significant in Islamic Banks due to specific contractual features and the general legal environment. Specific aspects that could raise operational risks in Islamic banks include the following: (1) The cancellation risks in non binding murabahah and istisnah[’a contracts. (2) Problems in internal control systems to detect and manage potential problems in operational processes and back office functions. (3) Technical risks of various sorts. (4) The potential difficulties in enforcing Islamic Finance contracts in a broader legal environment, (5) The risk of non-compliance with Shariah requirements that may impact on permissible income, (6) The need to maintain and manage commodity inventories often in illiquid markets, and (7) The potential costs and risks in monitoring equity type contracts and the associated Legal risks. In addition, increasing use structured finance transactions – specifically, Securitization of loans originated by banks to manage risks on the asset side – could47 Expose banks to additional legal risks. The three methods of measuring operational risks proposed in Basel II would need considerable adaptations in Islamic Banks owing to the...

Words: 1662 - Pages: 7

Premium Essay

Operational Risk Management

...≈√ F M A G u i d e l i n e s on Operational Risk Management These guidelines were prepared by the Oesterreichische Nationalbank in cooperation with the Financial Market Authority Published by: Oesterreichische Nationalbank (OeNB) Otto-Wagner-Platz 3, 1090 Vienna, Austria Austrian Financial Market Authority (FMA) Praterstraße 23, 1020 Vienna, Austria Produced by: Oesterreichische Nationalbank Editor in chief: Günther Thonabauer, Communications Division (OeNB) Barbara Nösslinger, Staff Department for Executive Board Affairs and Public Relations (FMA) Editorial processings: Chapter I and III: Roman Buchelt, Stefan Unteregger (OeNB) Chapter II and IV: Wolfgang Fend, Radoslaw Zwizlo, Johannes Lutz (FMA) Design: Peter Buchegger, Communications Division (OeNB) Typesetting, printing and production: OeNB Printing Office Published and printed at: Otto-Wagner-Platz 3, 1090 Vienna, Austria Inquiries: Oesterreichische Nationalbank Communications Division Otto-Wagner-Platz 3, 1090 Vienna, Austria Postal address: Post Office Box 61, 1011Vienna, Austria Phone (+43-1) 40420-6666 Telefax (+43-1) 40420-6696 Austrian Financial Market Authority (FMA) Executive Board Affairs & Public Relations Division Praterstraße 23, 1020 Vienna, Austria Phone (+43-1) 24959-5100 Orders: Oesterreichische Nationalbank Documentation Management and Communications Services Otto-Wagner-Platz 3, 1090 Vienna, Austria Postal address: Post Office Box 61, 1011Vienna, Austria......

Words: 50825 - Pages: 204

Premium Essay

Risk Assessment

...Security Management RISK ASSESMENT Information systems have long been at some risk from malicious actions or inadvertent user errors and from natural and man-made disasters. In recent years, systems have become more susceptible to these threats because computers have become more interconnected and, thus, more interdependent and accessible to a larger number of individuals. In addition, the number of individuals with computer skills is increasing, and intrusion, or “hacking,” techniques are becoming more widely known via the Internet and other media. Arisk assessment is not about creating huge amounts of paperwork , but rather about identifying sensible measures to control the risks in your workplace. You are probably already taking steps to protect your employees, but your risk assessment will help you decide whether you  have covered all you need to. Think about how accidents and ill health could happen and concentrate on real risks – those that are most likely and which will cause the most harm. For some risks, other regulations require particular control measures. Your assessment can help you identify where you need to look at certain risks and these particular control measures in more detail. These control measures do not have to be assessed separately but can be considered as part of, or an extension of, your overall risk assessment. Although all elements of the risk management cycle are important, risk assessments provide the foundation for......

Words: 3691 - Pages: 15

Free Essay

Risk Assessment

...Risk Assessment The city council of Genericville faces a challenging decision that could impact the city both economically and environmentally for years to come. Genericville’s main source of income is from tourism, which is being threatened by the increasing mosquito population and the West Nile Virus. The councilors have been asked to vote on a proposed plan to deal with this increasing threat. On one hand, the decision can be made to spray a potentially harmful chemical on the neighboring wetlands to reduce the threat of the spread of the West Nile Virus; on the other hand, a plan can be enacted that calls for a thorough educating of the Genericville population on how to avoid contact with mosquitoes and reducing their breeding grounds. After performing a risk assessment for human exposure to malathion, the proposed chemical, the risk of not taking action against the mosquito population was much higher than the risk associated with spraying malathion. Based on the information presented by the Agency for Toxic Substances and Disease Registry, malathion has no direct links to be a carcinogen. Malathion is not known to cause birth defects in humans under common use (Agency for Toxic Substances & Disease Registry, 2005). In laboratory tests, the chemical has been proven to cause some minor irritations of the eyes and skin as well as complications with respiratory and gastrointestinal systems. These effects are a result of contact with airborne vapors,......

Words: 712 - Pages: 3

Premium Essay

Risk Assessments

...Risk Assessment Tammie Clayton SCI/275 June 17, 2015 Richard Dunsheath Risk Assessment The case study I chose was “Asbestos: How great a Danger”? Asbestos is the generic name for several naturally occurring silicate mineral fibers. These fibers which are used as a heat insulator can easily be dislodged and may be inhaled in the lungs, where they remain for life (Bateman, 2011). They produce three disorders: pulmonary fibrosis, lung cancer and mesothelioma. Asbestos is referred to as a unique fiber. Asbestos is used as a heat insulation on ceiling and pipes in factories, schools and other buildings and sprayed on walls. It has also been used in things such as brake pads, brake linings, hair dryers etc. Everything we do puts humans and the environment at risk. The acceptability of risk is also influenced by perceived benefit. Asbestos underwent a complicated road from being an industrial commodity and must have, to being a huge risk, being one of the most dangerous fibers. There has been a call for a total ban on the use of asbestos due to the current health risk. Asbestos use is seen as not acceptable, controlled use is not possible and safer substitutes are available. In this case study, the benefits do not outweigh the cost. One may save money using asbestos, but the cost to seek healthcare for the individual affected is far more costly. In expressing...

Words: 453 - Pages: 2

Premium Essay

Risk Assessment

... Subject: Risk Assessment in Business Plans Report of: City Treasurer Summary The Subgroup requested a review of the risk management components of service business plans. This report provides a review of the current completeness and content of risk assessments, synthesizing emerging themes and providing a comparison with the quality of content in previous years. Recommendations Members are requested to comment on the report. Wards Affected: All Contact Officers: Richard Paver City Treasurer 0161 234 3564 E-mail richard.paver@manchester.gov.uk Tom Powell Head of Audit and Risk Management 0161 234 5273 E-mail t.powell@manchester.gov.uk John Gill Risk Manager (Strategy) 0161 234 5272 E-mail J.Gill1@manchester.gov.uk Background documents (available for public inspection): None 1. Introduction 1.1. Thirty Heads of Service are required to produce and update service business plans on an annual basis. The deadline for the receipt of the latest draft plans was 14 October 2010. In order to provide effective support and challenge to Heads of Service in further developing their plans, a team of specialist officers was established to critique the main sections of the delivery plan which were: • Performance. • Transformation. • Finance. • Workforce. • Equalities. • Risk Management.......

Words: 1977 - Pages: 8

Free Essay

Risk Assessment

...Risk Assessment and Mitigation Techniques Any solution will have inherent risk, the key is to identify and explore the consequences of the risks so mitigation can be incorporated into the implementation plan through contingency plans. Lawrence Sports faces several risks in attempting to implement a working capital policy. The first risk is the extension of credit to customers. If Lawrence Sports is too liberal with extending credit they will be faced with the need to borrow money to meet the target cash balance. On the contrary, if Lawrence Sports has a strict credit policy, sales may suffer as a result. The mitigation of this risk is for Lawrence Sports to have a conservative credit policy and consistent implementation with every customer. The second risk is the implementation of the electronic payments. Lawrence Sports can not coerce Mayo Stores, Gartner Products or Murray Leather Works to convert to a new system which Lawrence Sports may implement. In addition, an aggressive attempt to implement the EFT could cause a sever rift in business relations which could cripple the company. To mitigate this risk, Lawrence Sports could communicate early on with customers and vendors about their intention to convert systems and providing explanation of the numerous benefits of implementing an electronic payment system. Lawrence Sports can also offer a higher discount on transactions for a limited period for using the electronic payment process. Cash budgeting may cause shockwaves......

Words: 681 - Pages: 3

Free Essay

Operational Risk

...The definition of operational risk by the Basel Committee on Banking Supervision is broad in conceptual terms, but also brief in its wording. If we accept that operational risk represents loss resulting from inadequate or failed internal processes, people and systems, or from external events, then to appreciate the amount of assumed exposure we must: • specify the people, processes and systems that are responsible for operational risk events; and • estimate the frequency and impact of these events as well as assign corresponding responsibilities. I fully agree with the principle advanced by The Geneva Association that everyone is accountable for operational risk. The challenge is to identify everyone’s accountability, bearing in mind that the operational risk definition includes people, processes, systems, and whole organizations. In the last analysis, companies are made up of people. Table 1 presents a list of what I believe to be the top dozen operational risks encountered in nearly every entity. The pattern shown in Figure 1 helps in appreciating that these operational risks can be grouped into three major categories: • the more classical, with legal risk being one of them; • the more modern, where the role of people is emphasized; • those which are technology- and systems-oriented. One more reference is needed to complete this introduction. The myriad of operational riskswhich formthe aforementioned 12 classes have neither the same frequency, nor the......

Words: 771 - Pages: 4

Free Essay

Risk Assessment

...Risk Assessment SCI/275   Malathion is something that is being taken into consideration by the City Council of Genericville it is an insecticide spray that will help to control the West Nile Virus and the further spread of the virus. This is a risk assessment on the use of a spray called Malathion in the city of Genericville. There are several steps that are involved in this first is hazard identification and that is the effects that it will have on the health of the humans who are going to be exposed to the spraying of the Malathion. The second is what is called dose response; this is the amount on spray that would be needed to cause any health effects. The third deals with the exposure to all the humans and also based on the total amount of spray that was used and also how long the exposure to the insecticide will last. The final step is what I would call risk characterization which would be used to help determine that if any or certain humans that live in the city would be prone to any health risks that would associated with the use of Malathion. The result of this assessment is that the city of Genericville should really use the insecticide spray called Malathion to help in reducing the spread of the West Nile Virus. There are many sides to this and they include the social, economic, and the political sides of any arguments that have to be considered with the use of the insecticide spray. The West Nile Virus is a very huge concern in the area and that is......

Words: 1146 - Pages: 5

Premium Essay

Risk Assessment

...Risk Assessment A risk assessment is something that is produced to help carry out a risk assessment of what might cause harm to the service users and what needs to be carried out in order to avoid the risks from taking place . It is something by law that is expected for all the workplace to carry out. This links in with the HSAWA as every workplace when opening up a business they need to follow the rules and regulation in order to keep the environment safe as well as the employees. When creating risk assessments it’s about producing a table of which identifies all the possible hazards that could take place in the workplace. Every workplace must produce a risk assessment and by creating this you are pointing out all the risk that could take place but also putting in place steps to prevent it from happening. The process of doing risk assessments is to identify hazards and state what they are but also analysing the hazard as to what risks are involved with that hazard and what harm it could bring. Finally, stating the steps that need to be taken in order to eliminate or to control the hazard from occurring. Doing a risk assessment is really important they form an essential part because doing a risk assessment is the key to a good occupation because they help they help to create awareness of the hazards and risks. The aim of having a risk assessment is the process of trying to remove hazards and remove the risk that it accompanies and adding precaution to stop the risks from......

Words: 2044 - Pages: 9

Premium Essay

Operational Risk

...Operational Risk Key Term Operational Risk is the monetary risk that a corporation faces when people, processes, or system failures occur. The concept of operational risk is a constant in the workplace and has a major impact on decision making within the corporation. In my current workplace, we are considering a major change in workflow, and must measure the operational risk to the benefits of the proposed changes. Explanation of the Key Term Many factors must be considered when a change is proposed within an organization. Benefits and detriments must both be weighed in order to make the most informed decision; however, even after careful consideration, some decisions are poor. Operational risk must also include monetary damages that occur outside the realm of human decision-making, such as natural disasters or communication failures. Any action that causes a disruption to routine business operation is considered an operational risk. The more information used to calculate operational risk, the more complete and reliable picture is created for total risk evaluation (Mittnik, Paterlini, & Yener, 2014, p. 102). It is imperative to have accurate data to make quality decisions, and to create processes for predicted failures to minimize impact on the corporation. Major Article Summary Operational risk assessment should be a common, daily occurrence within an organization and should be implemented in every process in place. Corporations should implement an......

Words: 887 - Pages: 4

Premium Essay

Operational Risk

...Your report should coverthe following learning outcomes and assessment criteria:- LO1. Be able to identify personal skills to achieve strategic ambitions Assessment Criteria 1.1Analyse the strategic direction of the organisation1.2 Evaluate the strategic skills required of the leader to achieve the strategicambitions1.3 Assess the relationship between existing, required and future skills toachieve the strategic ambitions LO2. Be able to manage personal leadership development to supportachievement of strategic ambitions Assessment Criteria 2.1 Discuss the opportunities to support leadership development2.2 Construct a personal development plan to direct leadership development2.3 Devise an implementation process for the development plan LO3. Be able to evaluate the effectiveness of the leadershipdevelopment plan Assessment Criteria 3.1 Assess the achievement of outcomes of the plan against original objectives3.2 Evaluate the impact of the achievement of objectives on strategic ambitions3.3 Review and update the leadership development plan LO4. Be able to promote a healthy and safe environment that supportsa culture of quality Assessment Criteria 4.1 Assess the impact of corporate and individual health and safetyresponsibilities on the organisation4.2 Estimate an organisational culture of quality on the achievement of strategicambitions General Instructions To address the Learning Outcomes/Assessment Criteria you are required to make statements as......

Words: 589 - Pages: 3

Premium Essay

Risk Assessment

...If I were working for McDonalds I would proceed to do a Country Risk Assessment having in consideration the currency risk, the banking risk also economic structure of the country and finally the political and cultural risk. I case of Iran I would overview their problems such as the terrorism so the attacks could be indiscriminate in this point I should found some back up plans to maintain security on my location I would try to locate the McDonalds in a safe area also increased level of awareness like for example against robbery. Another cultural aspect to be aware is religion, sanitation, clothing & equipment, emergency first aid in case of terrorism. Currency risk According to the Economist Intelligence Unit, the currency is stable and strong foreign-currency earnings from oil sales that will help to support their currency. The negative aspect is the higher inflation and the increasing use of alternative asset classes for government compensation payments following the removal of subsidies. Economic Structure According to the Economist Intelligence Unit, Iran economy is based on and dependent on hydrocarbon revenue, Iran is the second largest gas reserves in the world. Iran has concerns about the level of oil production and insufficient foreign investment in the sector. Political and Cultural Risk Internal and external security situation, policy competency and consistency, and other such factors that determine whether a country fosters an enabling business environment...

Words: 322 - Pages: 2

Premium Essay

Risk Assessment

...large emphasis on financial risk assessments. The risk assessment process is needed to identify risks that need to be treated within an organization, as well as to provide strategies and methods that are most appropriate to treat these risks. Because many organizations are poorly aligned between their risk exposure and their risk appetite, it is important to engage in the risk assessment procedures. These procedures can help an organization prevent risk exposure and determine if their current operations will result in an increase or decrease of market value and owners’ wealth. As a result of the economic crisis, and the recent increase in corporate failures, organizations can now learn from the mistakes of others. This paper will discuss the mistakes that lead WorldCom, a telecom company that was once the fourth-ranked in Fortune 500, to bankruptcy in 2002, in an effort to demonstrate the importance of successful risk assessment and alignment implementation. Keywords: corporate failure, risk analysis, risk assessment, risk management, WorldCom Over the past years, and as a result of high profile firm failures, the economic crisis, and increased regulatory pressure, many organizations have placed a large emphasis on financial risk assessments. Risk assessment is the process where risk managers analyze the risks of an organization and identify risks that need to be treated (Tarantino & Cernauskas, 2011, p.47). In addition, a risk assessment provides strategies......

Words: 4331 - Pages: 18