Risk Minimization and Loss Prevention in Small Term Paper

Pages: 59 (16256 words)  ·  Bibliography Sources: ≈ 9  ·  File: .docx  ·  Level: College Senior  ·  Topic: Business

Risk Minimization and Loss Prevention in Small Business in the Post-9/11 ERA

Chapter 1, Introduction,

Chapter 2, Literature Review,

Chapter 3, Methodology,

Chapter 4, Data Analysis,

Chapter 5, Summary, Recommendations and Conclusions,

Small businesses face the same risks, in many instances, as do major corporations. For instance, both small businesses and major corporations face turnover, competition, fluctuating market demands, a volatile economy, bad business decisions and many other risks associated with entering the market place with a particular product, whether it be goods or services,

However, because of their size, small businesses are particularly vulnerable to certain types of losses and risks -- and also because of their smaller size and stature, the loss in revenue or profits is much more deeply felt in small businesses.

Unfortunately, most risk minimization and loss prevention literature is geared at large corporations. It is a significant problem for small businesses, that they do not have white papers or literature to which to turn to minimize their losses and risks. In fact, they have to seek out expensive consultants often to answer those questions for them, and since they cannot afford those consultants, they continue to suffer from preventable losses.

Purpose of the Study

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This study seeks to provide best practices literature for small businesses in loss prevention and risk mitigation. As mentioned in the Statement of the Problem (infra), small businesses simply do not have much literature to guide them through loss prevention, and are the business forces that often are most in need of it.

As a result, this study will focus on some key areas of loss prevention for small businesses, and provide not only the problems -- many of which are entirely ignored by small businesses -- but why they cannot be ignored, and some steps to minimize risk and loss.

Large corporations pay teams of in-house and third party experts to determine how to prevent loss and risk. Small businesses must rely on their management team to foresee all. This study helps them do just that.

Term Paper on Risk Minimization and Loss Prevention in Small Assignment

Importance of the Study

In the post-9/11 era, business fluctuates at a much more rapid pace than every before. Take the current gas crisis, for instance. Small trucking companies have had to cease several operations and ancillary products because gas is skyrocketing over $3 a gallon: They are facing challenges they have never faced before, unless they were in existence during the late 1970s, and chances are, they were not if they are relatively small.

Therein lies the importance of this study: Small businesses face fluctuations and additional risks and potential losses, and need a best practices guide to take through and allow loss prevention and risk minimization at a lower cost.

Large corporations are much more suited to surviving large supply shocks and business market changes than are small companies; but fortunately, small companies are more flexible and are able to re-orient on a dime. But, first they must survive crises and minimize losses before they can move beyond, and that is the importance of this study.

Scope of the Study

As the small business world is a changing one, this paper will focus on research developed in the past 15 years. It will summarily throw out research commissioned or performed prior to 1990, so as to guarantee the timeliest and most apropos information.

Also, the paper will rely on both statistical and anecdotal evidence in its formulations for risk mitigation and loss prevention for small businesses. Statistical evidence's importance is obvious: Numbers are essential to provide a guide to what exactly are the risks for small businesses and what are successful means of dealing with them.

However, anecdotal evidence is also critical from small business owners and operatives and experts in determining whether the theory actually extends to the practice. If the risks tagged to small businesses are merely academic, mitigating those risks will actually result in no loss prevention for small businesses.

Rationale of Study

This study's rationale is quite simple: A need exists for information, and this study will strive to provide it in the most unbiased, pithy and complete manner possible.

Small businesses must truly benefit from this study if it is to be considered a success -- and the timeliness and importance of the risks listed her and their mitigation strategies without doubt helps to prevent losses for small businesses in the post-9/11 era.

Definition of Terms

Small businesses are defined as any businesses that employ fewer than 150 people. In general, these can be privately held, shareholder driven or partnership driven. However, their maximum capitalization cannot exceed $50 million.

However, the vast majority of case studies included in this study deal with much small examples of small businesses -- 10 person firms, or even neighborhood Mom 'n' Pop stores.

Risk mitigation means the realistic hope that an impending and probable even that will adversely affect the business is being reduced in its probability of occurrence or its magnitude.

Loss prevention refers to successful risk mitigation resulting in a lower loss of revenue and profits for the small business.

Overview of the Study

This study finds that some of the most critical areas for loss prevention for small businesses are:

1) employee fraud

2) earthquakes

3) litigation

4) technology security issues

As a result, this paper will focus on those four issues and pursue strategies for loss prevention and risk mitigation. Generally, this study discovers that CPAs must be hired, earthquake insurance is not enough to prevent loss, there are indeed prophylactic methods to avoiding litigation and security issues must be combated on almost a weekly basis with regard to small business information technology.

Chapter 2

Literature Review

Introduction

While the events of September 11 have directly or indirectly impacted the daily life of many Americans, business life has also undergone change in so many concrete ways.

According to a survey conducted by Management Recruiters International, Inc. (MRI), nearly one-half (44.8%) of executives polled said that their companies have changed the way they conduct business in the post-9/11 era. MRI is the world's largest search and recruitment organization and a subsidiary of staffing and outsourcing leader CDI Corp. (MRI, 2005)

In further detail, of the nearly 1,800 executives surveyed, 30.7% said that their companies have somewhat changed the way they conduct business, while 14.1% said the change has been great. (MRI, 2005)

"There is no question that September 11 changed our lives forever, because not only have those catastrophic events triggered a domino effect in many sectors of the economy, they have also had an effect on America's workplace mindset," said MRI President and CEO Allen Salikof. (MRI, 2005)

Indeed, the results of the survey were staggering. "What we have seen are changes in day-to-day business activities such as a reduction in business travel in favor of teleconferencing or web conferencing, for example. Disaster contingency planning, an increase in telecommuting, and a shift in the way companies look at their real estate and how they distribute their operations geographically are a few examples of how companies are conducting business differently. We've even heard of instances where job candidates are hesitant to interview at companies headquartered in high-profile skyscrapers," continued Salikof. (MRI, 2005)

Intriguingly, however, more than 40% of those executives surveyed said that little or nothing had changed in the way they conduct their day-to-day business since September 11. 19.2% said that their companies had not changed anything and 21.8% said that they had only slightly changed how business is being conducted. (MRI, 2005)

"In spite of some changes in the way business is conducted on a daily basis, American resolve to continue 'business as usual' has become a powerful driving force in the workplace. While tightened security in the workplace is here to stay, as time goes by, American business leaders will undoubtedly revert back to doing the things that are best for their business. In addition, many companies not located in close proximity to the attacks have not really felt the impact first-hand," said Salikof. (MRI, 2005)

What is even more staggering is the impact of 9/11 on small businesses. Take Chinatown in New York city, for instance. After the destruction of the Twin Towers, Chinatown was nothing but a dust cloud for several weeks and months following the attacks, rendering many of the groceries, restaurants and fish markets bankrupt -- they were unharmed physically, but no one could walk down the streets to patronize them.

With the added risks of 9/11 and era in which we now live, it is increasingly important for small businesses to prevent preventable losses by having concrete loss minimization and mitigation strategies in place for today and for tomorrow.

There are countless measures in which small businesses can minimize risk, but this paper focuses on some of the most missed practices -- and those that can have the greatest impact.

Specifically, this paper will focus on preventing employee fraud, earthquake damage minimization, litigation mitigation and security risks dealing with technology.

This paper serves as a blueprint for ways in… [END OF PREVIEW] . . . READ MORE

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