Companies are constantly making business decisions based on accepting a certain level of risk. Discuss a situation where a company has accepted a certain degree of risk. Compare and contrast the cost of compliance against the degree of risk of noncompliance. What considerations may a company take into account when determining whether accepting risk is acceptable or unacceptable?
A situation where a company has accepted a certain degree of risk happened at one of my clients. I was there to evaluate their ocean freight and reduce the freight expense. I noticed that they are paying $100K in ocean freight insurance. When I looked into more details, I found that they only had one incident where they lost goods in a container which was travelling on the ocean. I took up this matter to the COO and he decided to self insure and accept the risk of losing goods while they are on the ocean. At any given time, the loss would not exceed the ...
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