Saad Almubarak
Abdullah Zuhair
Executive Summary
Introduction
The Report gives a brief analysis of several risks that Apple is facing. Basically, the report provides
information about the risk exposure, how to response to it, and also it provides the required
action techniques to implement in order to give a proper response for any type of risk. We did
our report based on these types of risks, which are strategic, operational, hazard. And lastly
financial risks.
Strategic risk
Apple Company must look at their strategic risks carefully due to the huge negative impacts they
may face if these risk are not controlled. For a company such as apple, risks are something very
usual and dangerous and taking care of dealing with these risks are not easy. Furthermore, in such
a competitive and developing industry, apple must always try to avoid or deal with these risk
quickly by implementing the risk management techniques. For instance, apple has a strategic risk
which is the technology decision and how they must stay competitive in the market by keeping
up with the new innovations and apply them into their products and services. Therefore, if Apple
failed to keep up with the new innovations and develop their products and services they might
lose the competition within the industry. This kind of risk is likely to occur and its impact is
marginal and also the risk level is moderate. Apple can handle this kind of risk by controlling their
weak developments and wrong decision which were made while developing a product or
providing a services. Moreover, Apple must adapt the rapid growth of the technology industry
and try its best to provide much better innovations and implement them into their products and
services. In addition, Apple have more strategic risks such as the customer demand risk which also
likely to happen and its impact is marginal and the risk level is moderate. Apple can deal with this
kind of risk by controlling their set of prices and provide their customers with more choices to give
them the ability to choose cheaper devices.
Operational risks
For such a huge company like apple which operating in a highly risk and competitive market,
operational risks are an important concern and must be dealt with by using wise risk management
techniques. Apple faces operational risks such as HR recruiting which could lead to the lack of new
efficient developers and keeping the current developers too. Because it is a very competitive
industry, developers are easy for them to move from a company to another regarding the benefits
and the opportunities provided by another company. This kind of risk very unlikely to occur in a
company such as Apple but it is still has a significant impact and its risk level is low at Apple
Company. Apple can control this risk by building an efficient and attractive environment for new
developers and the current developers too. In addition, Apple faces other operational risks
regarding the product manufacturing outside the U.S and how it is hard to control the quality
overseas. This risk is likely to occur and its impact is marginal. Furthermore, the risk level is
moderate and apple must control this risk by assigning quality managers every time to supervise
the manufacturing of their products overseas.
Hazard risks
Hazard risks are kind of tough to control it, not because of the value of the risk, is more likely
because is not expected to happen. In our example regarding hazard, we had discussed the risk
of a third-party liability. The risk is mainly concerned about if the company is doing well enough
to assign their expenses properly, which they actually are not. Therefore, the company is having
such an unnecessarily expenses that may lead the company to have such an undesirable financial
status. Moreover, this risk is happening due to the lack of a content creator or developer, which
may apple see this as unnecessarily. To solve this little issue with Apple, we had some suggested
some techniques to follow. First of all, the risk of a third- party liability is very unlikely to happen.
Therefore, we strongly recommend the company to use the technique of avoiding risks, which
they are unnecessarily expenses. They can avoid it via adopting a highly skilled developers, which
they can create a content or an app without any obligations with a third- party liability. Also, we
had found that apple is sometimes experiencing cargo losses, which sounds not much risky, but it
could be if they continue to have their own components supplied from another country over
around the world. Since this type of risk is very unlikely to happen. We had recommended that
the company can transfer the amount of losses resulted from this risk to be insured and covered.
Furthermore, to prevent this from happening in the future. The company needs to have its own
local factory that produces the components of any type of products.
Financial risks
Financial Risk is one of the most important risk that any company could face. One exposure that
we had listed in regard to financial risk is that the company sometimes is facing an issue with
keeping up the Liquidity, which unlikely to happen. That risk certainly will lead the company to
result inadequacy to cover its own obligations. If Apple is experiencing such a liquidity problem
that certainly could affect their high quality performance with serving their customers due to the
lack of being solvent enough, which may for example lead to have its own employee’s salary
deferred and that as a result may affect the performance of the company as whole. To solve this
kind of problem, we had suggested that, the company is supposed to control this type of risk to
make it to not happening in the future. Moreover, if apple had a high-level manager, the company
may not experience this kind of financial exposure because a high-level manager is experienced
enough to control it and to enhance the financial performance of the company. Also, the concern
of unstable market share would result rate fluctuations, which sounds unfavorable for the
company. If apple is continually having this type of risk, it will lead the financial soundness of the
company to be weak. To deal with this risk, we suggested to control the risk to clearly stay away
from being not solvent enough. Also, financial group auditors are strongly recommended, because
they have the ability to analyze that type of risk using assets portfolio to classify the risk and define
it.
Conclusion
Apple Company is still a fast growing and developing company in the technology market and their
brand is very strong even though there are other strong competitors in the market better of Apple
in the number of lines of products provided. Therefore, it is important for apple to invest in new
innovations, developments and expand in more lines of products to compete much stronger in
the market. Moreover, it will be very helpful and efficient for apple if they start to manufacture
some of the important components of their products in the U.S to keep the quality high as much
as they can and also this type of a risk managing technique would help the company to transfer
any further expenses in regards to cargo losses since the company is not dealing with an external
source out of the U.S. Furthermore, if succeed in decreasing the level of being dependent on thirdparties, many risk exposures will decrease, and it will be much easier to control and avoid the
risks. In general, adopting a higley level managers and auditors would be super effective to make
the company to not experience any kind of financial risks.