Risk Mitigation

Risk mitigation prevents AJPS from entering uncertain or dangerous territory that could lead to massive failure (Sharma & Soederberg, 2019). What’s more, risk mitigation plays a vital role in the development and growth of the business. AJPS has been able to thrive in international markets because it continuously monitors itself and is willing to undertake calculated risks (Simchi-Levi & Schmidt, 2019). Bruno & Shin (2014) states that the need for taking computed risks hinges on the fact that AJPS operates in an era of globalization whereby successful companies are these that expand their business opportunities is new and emerging markets such as that of Africa, Latin America, and Southeast Asia.

One of the prioritized lists of risks that AJPS has to mitigate is climate change. It is highly likely the unexpected changes in the world’s climatic pattern could affect AJPS’s legal responsibilities, reputation, regulatory obligations, supply chain, and financial reporting (Page & Heyward, 2016). For example, the State of California enacted strict auto emission rules that are stricter than federal standards. Under Californian law, automakers are required to build vehicles that achieve an average fuel economy of 54.5 miles per gallon per 2025 (Davenport, 2019). It means that AJPS will be forced to manufacture cars that are specifically tailored to California’s roads since such strict laws do not apply to other states.

Apart from varying regulatory frameworks, the severity and frequency of extern me, weather conditions have a direct bearing on AJPS’s risk profiles and strategic positioning (Park, 2015). For instance, AJPS’s supply of automobiles to the South East Asian market depends on its strategical production facilities located in Thailand; however, the floods in Thailand meant that AJPS produced 17,000 fewer vehicles than it had previously planned (Hookway, 2011). Altogether, hazards brought forward by the climate change risk include storms/natural perils, fire and property damage, business interruption, liability claims, disease and disability, reputation damage due to bad publicity, and regulatory changes (Page & Heyward, 2016). Cybersecurity is another vital risk that AJPS has to mitigate effectively.

The dependence on disruptive technologies such as social media, database management systems, and so on increases AJPS’s vulnerability to cybersecurity risks that are constantly changing as technology improves (Eze & Chukwunonso, 2018). Any form of security failings in the cyberspace is a threat to the firm’s ability to achieve its objectives and deliver some of its core functions. Besides, deficiencies in this information-driven era can erode consumer trust, which can affect brand reputation.

Cyber-attacks often target intellectual property, sensitive customer information, and control of central machinery. Indeed, automotive companies are worried about car-hacking risks in this era where cars are becoming connected devices (Bryant, 2013). The modern vehicle that AJPS manufactures is a complicated mobile computer that comprises electronics and software that contribute to as much as 50% of its value. Cars are fitted with several megabytes of software, extended length of cables, and multiple computer networks that are vulnerable to sophisticated attacks from cybercriminals (Bryant, 2013). Furthermore, cybercriminals may be interested in making a fortune by selling valuable information such as company secrets that can be illegally accessed from computer systems owned by AJPS. According to Arce (2018), foreign state actors and industrial competitors may also be interested in damaging AJPS’s reputation to gain an advantage for their countries or their companies.