Economic management
Economic management is those people who makes changes in the way company function based on the economy. For example, a textile industry supplies chain sudden decrease 72 percent. This is a major impact on both the company and the people. Since there is a shortage in supply, it would seem that the supply in the market will decrease. However, because there is not a decrease in those who depend on the company’s product, the company must change its strategy to cope with the situation.
There are multiple may a risk manager will deal with this situation. One of the ways that a risk manager will deal with this is through the assessment of the priority. The risk manager should access which steps to take that will have the greatest benefit for the company. The company will also act based on the way the economy is currently heading. Based on the economy, the company might decide to combine the warehouse of the company or even shut down their power plant.
One of the recent companies that change its strategy in captivating people is Visa. Recently, the United States has experience an economic downfall. The previous commercial Visa depicted the use of their credit card on luxurious things such as a boat or a house. This is a good strategy for Visa in the past since the economic are booming and there is less risk. However, due to the currently economy, there are more risk in people buying expensive materials and be unable to pay back. In order to change the whole image of Visa, Visa starts to produce commercial that shows the card being used to purchase everyday goods. They also add Twitter onto their website and encourage customer to submit photo of the good they purchase with their Visa card.
The cause of the change in Visa is due to the 2008 financial crisis. This crisis like many of the financial crisis in the world is caused by borrowing too much credit. The wall street takes out tons of credit and in return, makes a huge profit. One way the banker makes money is through mortgage. Families that wants to buy a house also buys mortgage. It is a loan for the house. The families needs to pay back the loan little by little to the loan owner as well as the interest. Then the banker buys the mortgage and takes an profit from the interest. Then the banker sells the mortgage to the investor and everyone makes a profit. However, as more people starts to buy house, many of them are unable to pay back the mortgage and thus money stop coming to the banker. Since the mortgage is defaulted, the house is owned by the bank owner and since many of the families default on their houses, there is more house on sale than people wanting to buy. This makes the price on the house drop. For those who already own a house and since most of their mortgage is higher than the price of their house, the family left the house. Now the mortgage loaner have no banker to sell their mortgage. This led to many bank closing down and cause the financial crisis.
work cited
Lynch, Gary S.. "Risk Management and Economic Change: A Catalyst for Re-evaluating Business Preparedness, Mitigation and Response." MMC.com - Welcome. N.p., n.d.
