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FIRM Risk Scorecard Analysis of NCCC Fire

The document discusses analyzing the impacts of a mall fire in the Philippines using a FIRM risk scorecard. It identifies possible financial, infrastructure, reputational, and marketplace impacts from the incident. It then defines the impacts as small, moderate, severe, or catastrophic. The explanation indicates the financial risk has low impacts, infrastructure risk is medium, reputational is medium requiring judgment, and marketplace has high impacts and is intolerable.

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Sophia Dominique Uy Alzate
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24 views3 pages

FIRM Risk Scorecard Analysis of NCCC Fire

The document discusses analyzing the impacts of a mall fire in the Philippines using a FIRM risk scorecard. It identifies possible financial, infrastructure, reputational, and marketplace impacts from the incident. It then defines the impacts as small, moderate, severe, or catastrophic. The explanation indicates the financial risk has low impacts, infrastructure risk is medium, reputational is medium requiring judgment, and marketplace has high impacts and is intolerable.

Uploaded by

Sophia Dominique Uy Alzate
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Module Activity No.

Essay
a. Read this article
[Link]
fire/[Link]
b. Identify 5 possible impacts using the FIRM Risk Scorecard.

Heading of the 5 Possible Impacts of Risk Scor


FIRM risk e
scorecard
Financial Inadequate funds are available (or at an 1
unacceptable cost) to carry out strategic plans.
Inadequately robust procedures for allocating 2
funds for investment
insufficient internal budgetary control 2
environment to detect and prevent and
manage credit risks
Inadequate resources to accommodate historical 2
liabilities (which include pensions) as well as
future anticipated liabilities
Unable to control inflation as well as 2
defaulting on its bonds or other debt issues.
TOTAL 9
Infrastructure Insufficient executive management structure to 3
manage the organization and instill a "Risk
Aware Culture"
Risk Management Plans are insufficiently robust 4
to ensure the organization's survival following a
major loss.
Insufficient physical assets to establish the 3
organization's operational and strategic goals
Inadequate adaptive capacity of data protection in 3
information systems (IT) infrastructure
Unreliable product delivery, transportation 2
arrangements, and/or communication
infrastructure
TOTAL 15
Reputational Poor public's view of the industry and/or the 2
potential for organizational brand damage
Inadequate focus on Corporate Ethical 4
Responsibility Environmental and Ethical
Standards
Poor governance principles and/or a highly 4
regulated industry with strict compliance
requirements
Concerns over quality of products or services 3
and/or after- sales service standards
Loss of customers and falling sales can 4
undermine employee retention.
TOTAL 17
Marketplace Organisation is exposed to potential for 5
international disruption because of political risks,
war, terrorism, crime or pandemic
Supply chain is complex and lacks competition 3
and/or raw materials costs are volatile
Lack of economic stability, including exposure 3
to interest rate fluctuations and foreign
exchange rates
Highly competitive marketplace with 3
aggressive competitors and high
customer expectations
Insufficient revenue generation in the marketplace 4
or inadequate return on investment achieved
TOTAL 18

c. Define each impact using Table 1.6 as your guide Definition of Impact

Descriptor Definition

Small No impact on financial strategic plans. Minor impact on economic stabilization,


organizational brand damage, communication infrastructure, inflation and debt issues,
resources to accommodation of liabilities, internal budgetary control environment,
and allocation of funds or investments.

Moderate Minor temporary impact on the marketplace, supply chain, sales service standards,
information system infrastructure, organization's operational and strategic goals, and
executive management structure.

Severe Serious impact on revenue generation, sales & customer, governance principles with
compliance requirements, Corporate Ethical Responsibility Environmental
and Ethical Standards, and Risk Management Plans.
Catastroph Death due to the incident of fire and serious impact on the organization's
ic marketplace.

d. Explain your answer in no. 2.

The Scorecard shows that possible impact on the given scenario in the article-
which is the NCCC Fire in Davao. So under the Financial Risk, here are the possible
impacts of risk: Inadequate funds are available (or at an unacceptable cost) to carry
out strategic plans; Inadequately robust procedures for allocating funds for
investment; insufficient internal budgetary control environment to detect and prevent
and manage credit risks; Inadequate resources to accommodate historical liabilities
(which include pensions) as well as future anticipated liabilities; Unable to control
inflation as well as defaulting on its bonds or other debt issues. With the total scores
of 9 in the risk scorecard. Under the Infrastructure Risk, the possible impacts of the
risk are: Insufficient executive management structure to manage the organization
and instill a "Risk Aware Culture"; Risk Management Plans are insufficiently robust to
ensure the organization's survival following a major loss; Insufficient physical assets
to establish the organization's operational and strategic goals; Inadequate adaptive
capacity of data protection in information systems (IT) infrastructure; Unreliable
product delivery, transportation arrangements, and/or communication infrastructure.
With the total scores of 15 in the risk scorecard. While the possible impacts of
Reputational Risk are: Poor public's view of the industry and/or the potential for
organizational brand damage; Inadequate focus on Corporate Ethical Responsibility
Environmental and Ethical Standards; Poor governance principles and/or a highly
regulated industry with strict compliance requirements; Concerns over quality of
products or services and/or after-sales service standards; Loss of customers and
falling sales can undermine employee retention. With the total scores of 17 in the risk
scorecard.
And the possible impacts of Risk in Marketplace are the following: Organisation is
exposed to potential for international disruption because of political risks, war,
terrorism, crime or pandemic; Supply chain is complex and lacks competition and/or
raw materials costs are volatile; Lack of economic stability, including exposure to
interest rate fluctuations and foreign exchange rates; Highly competitive marketplace
with aggressive competitors and high customer expectations; Insufficient revenue
generation in the marketplace or inadequate return on investment achieved. With the
total scores of 18 in the risk scorecard. Which goes to show in the FIRM Risk
Scorecard that the likelihood of Financial Risk has low-impact risks and will be
tolerable. While in the Infrastructure Risk there is a medium-likelihood and there will
be a medium-impact risk on the Reputational Risk and will require some judgement
before acceptance. However, the highlikelihood/high-impact risks fall on the
Marketplace Risk and will be intolerable.

Common questions

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Exposure to volatile raw material costs and geopolitical risks elevates a marketplace risk profile, reflected in a total score of 18 for Marketplace risks. These factors introduce cost unpredictability and operational disruptions due to political instability, wars, or pandemics. Organizations face increased costs and supply chain challenges, requiring comprehensive risk management strategies and diversified supply chains to mitigate associated high-impact risks .

The FIRM Risk Scorecard assesses risks across four main categories: Financial, Infrastructure, Reputational, and Marketplace. Financial risks involve inadequate funds for strategic plans, insufficient internal controls, and inability to manage liabilities or inflation, leading to a total score of 9, considered tolerable. Infrastructure risks include insufficient management structures and ineffective risk management plans, resulting in a medium likelihood and total score of 15. Reputational risks, scored at 17, are moderately impactful, involving potential brand damage and issues with ethical standards. Marketplace risks are the most severe, with a total score of 18, posing high-impact, high-likelihood threats due to political disruptions, competitive pressures, and insufficient revenue generation .

An organization might experience poor public perception due to failures in corporate ethical responsibility, environmental standards, and service quality, all scored highly in Reputational risks with a total score of 17. These issues can severely damage brand reputation, leading to customer loss and decreased sales, undermining employee retention, and affecting overall market presence. Addressing these concerns through enhanced governance and ethical practices is essential for maintaining a positive reputation .

Yes, inadequacies in corporate ethical standards can significantly impact an organization's reputation. Identified under Reputational risks with a high score of 17, these inadequacies lead to negative public perception and can cause brand damage. Organizations must commit to ethical corporate governance to maintain consumer trust and uphold their market position. Failing to address ethical shortcomings risks losing customer loyalty and employee trust .

To address financial risks, organizations should enhance internal budgetary controls to manage credit risks effectively, improve procedures for allocating funds, and ensure adequate resources for current and anticipated liabilities. These strategic measures prevent inadequate funding situations that impair the execution of strategic plans. Organizations should also focus on inflation management and debt strategies to maintain financial stability, as indicated by a total score of 9 in Financial risks .

Poor governance principles combined with strict compliance requirements can significantly harm an organization's reputation. This is characterized under Reputational risks, which score a total of 17, meaning these issues contribute to potential brand damage and diminish public trust. Such challenges necessitate a strong commitment to ethical standards and effective corporate governance to mitigate reputational damage and foster consumer confidence .

Unreliable product delivery and inadequate IT infrastructure can impair an organization's ability to achieve operational objectives, categorized as Infrastructure risks with a total score of 15. These factors disrupt operational flow, hinder strategic goal achievement, and decrease customer satisfaction due to delays and inefficiencies. To mitigate these risks, organizations must enhance physical and IT infrastructure resilience to maintain service levels and support strategic goals .

Inadequate resources for historical and future liabilities pose financial risks by impairing the organization's ability to meet obligations like pensions and future claims, which can threaten financial stability and lead to default risks. This issue, scored a total of 9 in the Financial risks category, indicates that organizations may struggle to align strategic needs with available financial resources, potentially leading to higher costs and financial losses .

The lack of robust risk management plans severely affects an organization's ability to survive after a major loss. This shortcoming is highlighted under the Infrastructure risk category, which receives a total score of 15, indicating a medium likelihood and medium impact. Insufficient plans fail to protect against significant disruptions and jeopardize the organization's operational continuity and strategic objectives. These inadequacies highlight the need for a stronger risk-aware culture and effective management structures to handle severe losses .

Competitive market conditions significantly raise an organization’s risk profile, categorized under Marketplace risks. These conditions are characterized by aggressive competitors and high customer expectations, leading to a high-likelihood, high-impact risk score of 18. The organization faces the threat of insufficient revenue generation and volatile raw material costs, necessitating strategic adjustments and robust competitive strategies to maintain market positions .

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