A risk is a probability that actual revenue received from an investment will be below the expected income. Therefore it is a probability of liability occurrence perpetrated by the external and internal factors and can be eliminated by preemptive action. The risk is categorized according to the specific attached investment. So, it is inevitable to conduct a risk assessment to maximize the returns. Assessing possible risks at Wal-Mart was necessary. Organizational risk assessment is a widely structured method to identify, evaluate and rate the probable risks experienced in its contexts of financial reporting, operations alongside compliance with legal policies.Wal-Mart is a global retail giant (Ayers& Odegaard 2017).

The organization has been expanding its online footprint by purchasing other online retail sites. By 2017 the company had over 11000 big-box stores globally and stocked about 60 million products with more 2 million employees worldwide. Despite the reported death of its real-world retail, Wal-Mart achieved a significant show-up for its real-world stores as of 2^nd quarter 2018 (Ayers& Odegaard 2017).  Some of the risks experienced by Wal-Mart are;

Market Risks

As of any organization, it is the most generic category of risk that any corporation experiences. Several market risks encountered by Wal-Mart emerge from its significant global presence. The most common business challenge to a multinational company like Wal-Mart is regulatory compliance cost involved in every market country. So, Wal-Mart must implement difference workforce standards in China more than it does to US market together with the high incidence of regulatory uncertainty. For instance, regulatory compliance risks hit the company in China in 2014 as well as in the United States in 2015. Wal-Mart faced a fine equivalent to $ 10 million for violations of food safety policy in China (Fiorino& Bhan 2016). However, the company responded by intensive inspections, increased training programs alongside some recalling food products. These actions increased production costs of the company, incurred by shareholders through fewer share prices.

Also, Wal-Mart was pressured in the United States to increase minimum wages by the economic and political powers in 2015. The move cost the company about $1 billion in the first year of implementation. Other market risks incurred by the company are business cycle risk, a risk of the exchange rate as well as intense competition from companies like Amazon and Target.

Salary Pressure

As announced by the company in early 2018 that it would increase pays from $9 – $11 as a remuneration action following the federal tax cut on corporate income (Fiorino& Bhan 2016). However, it is anticipated that the pay rise will not last long since there has been constant pressure to raise the minimum wage per hour by $ 12 or $15, and this agitation comes from local states of high living costs (Fiorino& Bhan 2016). Unfortunately, Wal-Mart is experiencing lower earnings per share as compared to its possible competitors, so the company would be compelled to make necessary labor adjustments to combat such an increment. The company’s profit margin is below 3% due to lower product costs and good share prices. Therefore, the shareholders and employees would bear the risk to maintain Wal-Mart’smarket competitiveness (Huffman, 2016).

Law Suits

Since Wal-Mart is in every market selling about all type of product, thus the company is often involved in litigation over specific matters involving its employees and markets through violation of federal and state labor laws.

References

Ayers, J. B., & Odegaard, M. A. (2017). Retail supply chain management. CRC Press.

Fiorino, D. J., & Bhan, M. (2016). Supply Chain Management as Private Sector Regulation: What does it Mean for Business Strategy and Public Policy?. Business Strategy and the Environment, 25(5), 310-322.

Huffman, B. (2016). Assessing the Risk of Conservative Investments. Journal of Applied Financial Research, 1.

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