Walmart is one of the
world’s largest international retailers, providing basic necessities such as
automobiles parts, garden equipment, and more. Founded in 1962 by an American
business man named Sam Walton in Rogers, Arkansas. Walmart has shown to be an
empire in its fifty-five years of operation. The stores can be found in all
corners of the world servicing different communities at constantly low prices. The
one stop shop has reigned in over 480 billion dollars in revenue. Walmart has
also expanded into 28 countries worldwide with over 11,600 stores and over 2.3
million employees, making it that largest family owned retailer. With Walmart success,
the corporation encounters numerous risks and potential hazards throughout its
operation, by applying risk control techniques they can minimize or eliminate potential
threats, hazards, and risks.
What is risk
control? Risk control is conscious act or decision that reduces the
frequency and or severity of losses or make losses more predictable. To manage
risks, Wal-Mart must first understand the risks that it is exposed to. Being
one of the largest retailers in the U.S., Wal-Mart faces risks and the first
step in managing the risk is making an inventory of the risks that it will face
and measuring the exposure of each risk. There are many ways to minimize risks.
Changes to an existing process or the implementation of a simple procedure are
often all that is required to reduce risk to an acceptable level. However, you
don’t need to eliminate all risk. Sometimes risk management professionals forget
that businesses must take some risks to succeed. Shifting risk elsewhere is a
relatively uncomplicated, but often forgotten method. Through a legal agreement
or an insurance policy risk can be transferred to a third party. Today most
commercial property and casualty policies come with a built-in cyber insurance
policy or rider. It may potentially be more cost-effective to allow a contract
or insurance policy to cover losses rather than of adding new controls.
Sometimes existing controls can be upgraded or shored up enough to reduce risk
to an acceptable level without undertaking a costly new deployment.
When Sam Walton founded
Wal-Mart, he envisioned a grocery store that could provide great customer
service along with low prices. Nobody in his industry trusted his ideas would bring
in success. After the corporation went public in 1970, his partners and
competitors soon began to believe in his vision. Walton once stated “If we work
together, we’ll lower the cost of living for everyone… we’ll give the world an
opportunity to see what it’s like to save and have a better life.” As he saw
his aspirations coming to life he then began to grow his legacy. He introduced new technologies, products, and opened chain
of stores Wal-Mart Supercenters and Sam’s Club.
The six classifications
of risk control techniques are avoidance (reduce loss frequency), loss
prevention (reduce loss frequency), separation (reduce loss severity),
duplication (reduce loss severity), and diversification (reduce loss severity).
Avoidance is the best technique
of loss control because, as the name implies, you’re avoiding the risk
completely. For example, Wal-Mart does not keep inventory in a warehouse. All
inventories are on the shelf. This completely eliminates Wal-Mart’s risk of
their warehouse being a target for theft.
Loss prevention is a means
that limits, rather than reduces, loss. Instead of avoiding a risk completely,
this technique acknowledges a risk but attempts to minimize the loss as a
result of it. For example, to reduce loss for injured employees, Wal-Mart
provides LP training and provides back braces and other safety equipment.
loss exposures from one another to minimize the adverse effect of a single
loss. For example, having headquarters in different states. For example, when
Hurricane Harvey hit the Houston area, Wal-Mart stores in other parts of the
country were not affected.
Duplication involves establishing
a backup plan, spares, or copies. Wal-Mart needs to focus more on this risk
technique. Often times, Wal-Mart is short staffed so, having an employee on
standby when another employee is not available, would be an example of managing
allocates business resources to create multiple lines of business that offer a
variety of products and/or services in different industries. For example,
Wal-Mart sells many different brand items such as, tires, clothing, etc. Not
only do they sell these items, they also make their own brand of these common
items and sell them along with their competitors. With diversification, a
significant revenue loss from one line of business will not cause irreparable
harm to the company’s bottom line.