EVALUATING RISK AND DECISIONS: A REVIEW OF THE CHINA COMMUNICATION AND CONSTRUCTION COMPANY
Course and Course Code
Table of Contents
TOC o “1-3” h z u 1. Introduction PAGEREF _Toc86323305 h 22. Occurrence of Risks in Relation to Economic and Legal Implications PAGEREF _Toc86323306 h 22.1 Definition of Risk PAGEREF _Toc86323307 h 22.2 Difference between Risk and Uncertainties PAGEREF _Toc86323308 h 32.3 Origins and Nature of Risks PAGEREF _Toc86323309 h 32.4 Business and Societal Setting PAGEREF _Toc86323310 h 32.5 Identification of Risks in the Context of Economic and Legal Implications PAGEREF _Toc86323311 h 42.5.1 Compliance Risk PAGEREF _Toc86323312 h 42.5.2 Hazard Risks PAGEREF _Toc86323313 h 42.5.3 Control Risk PAGEREF _Toc86323314 h 52.5.4 Opportunity Risk PAGEREF _Toc86323315 h 53. Risk Management Plan PAGEREF _Toc86323316 h 53.1 Control Measures PAGEREF _Toc86323317 h 63.2 Corrective Measures PAGEREF _Toc86323318 h 83.3 Record Keeping and Review Frequencies PAGEREF _Toc86323319 h 84. Conclusion PAGEREF _Toc86323320 h 9References PAGEREF _Toc86323321 h 10
1. IntroductionThis is a report covering a deep insight of the China Communication and Construction Company to uncover the major and minor risks that are associated with the company in its operations within China. These risks are discussed in terms of their geographical nature and the impact they have to the company. The company operates in China, a fairly stable economy that uses a mixed controlled and open approach to regulation.
2. Occurrence of Risks in Relation to Economic and Legal Implications2.1 Definition of RiskRisk refers to the likelihood that someone or something will suffer harm or loss from a particular event or occurrence (Kuznetsova, 2019). It may also come out as the probability that a certain situation will lead to damage. According to Shad et al. (2019), a risk can is bound by measurable probabilities that are used in speculation or basic calculation and determination the possible likelihood of the event occurring and the amount of harm or loss that can be expected in case it happened.
2.2 Difference between Risk and UncertaintiesThe major and distinctive difference between a risk and uncertainty is within their possible outcomes and the possible occurrence of these outcomes. A risk represents a situation in which both the outcomes to the situation and the possibility of these occurrences are known to the investigator and they can be measured to ensure effective decision making (Kundzewicz et al., 2018). Whereas for the uncertainty, both the outcomes of the situation and their possibility of occurrence are not known and cannot be obtained by the investigator.
2.3 Origins and Nature of RisksThe nature of risk is interpreted according to the expected harm from the risks (Adeleke et al., 2018). The analysis of risk is put in classes of the sectors that may be impacted by the occurrence of the outcomes of the risk. In reference to the China Communication and Construction Company and the entire study around the risk analogy, the nature of risk in put in terms of: the market aspect, the legal aspect, the physical aspect and the financial aspect. da Silva Etges and Cortimiglia (2019) put these four aspects into four major categories to represent the whole nature of risks. These categories include; compliance risks, control risks, opportunity risks and hazard risks.
2.4 Business and Societal SettingThe China Communication and Construction Company is a multinational publicly traded company with its headquarters situated in Beijing, China. The company has the majority owner as the State to which the company anchors. The company is set in the Engineering and Construction industry offering major design and construction services all over the world. Standing at an approximate revenue of 70 billion dollars (China Communications Construction Company n.d.), the company possesses the capacity to offer construction activities such as Highways and Bridges design and construction, Port Construction, Airports design and construction, Railway construction, Oil mining platforms design and construction among many other developmental and high end infrastructural design and construction (Huang, Yang, & Zeng, 2020).
The multinational basis of the China Communication and Construction Company makes the company interact and impact a number of societies with different diversified composition of people. The basic society associated with the company is Chinese with a majority of the population consisting of the Chinese ethnicity however this changes when the company is contracted to work in other nations. With different nations the company interacts with different population of people with different languages and different practices. China Communication and Construction Company is exposed to as many cultural backgrounds and societal belief as the number of nation the world due to its worldwide operation nature.
2.5 Identification of Risks in the Context of Economic and Legal ImplicationsAccording to Polinkevych et al. (2021), four major aspects within which the nature of risk could be analyzed are brought out. This happens to be the major aspects within which the risk concept can be linked with the economic and the legal perspective. The China Communications and Construction Company also fall within these analytical suggestions of risk impact to the company and the link of the risk aspects to the economic and the legal parameters.
The economic and legal implications are an ever-present feature of the risk that China Communications and Construction Company takes. The economic risk can lead to the downfall of the organization. while it can be mitigated, it is impossible to negate entirely. Economic risks have an implication on the company’s ability to trade with other companies, to interact with suppliers, and it can create a long-term effect on the business’s ability to acquire the relevant components needed for success. Legal factors and implication point to the consequences and results of being in a legal issue. Legal risks include the risk of failing to know, or understand an issue, including an issue that is ambiguous or one with a reckless indifference. The application of the law to China Communications and Construction Company creates a relationship, one that may lead to reputational or financial losses.
2.5.1 Compliance RiskThis is the risk that results to a company suffering legal penalties, material loss and fines as when the company fails to comply to the set principles of operation, failure to follow stipulated internal policies and general failure to adhere to the set integrity practices (Dandage et al., 2018). For the China Communication and Construction Company, having the central operation position as Beijing, China requires the company to act under the regulations stipulated under the Chinese laws on the operation of companies and other organizations.
2.5.2 Hazard RisksThis risk category is associated with loss of material property (Aziz, 2020). It is felt from occurrences such as natural calamities for example floods, drought, earthquakes and tornados. Some of the occurrences are more prone to specific areas of the world than other however, due to the worldwide operation by the China Communication and Construction Company the risk occurrence distribution impacts the company’s operations worldwide. The flooding probability in China has been said to increase decade-wise, the last range of the increment was determined to be from 4.04% to 12.34% which indicates a higher chance of flooding in China meaning that the company in question is set to expect the occurrence of floods slightly often not only because of the percentage increase in the probability of occurrence but also due to the expectation in general increase of the flooding cases with decades (Schulte & Hallstedt, 2018). The impact that may be expected from the hazard risks is high since it affects the working equipment and the structural damage of projects leading to financial losses.
2.5.3 Control RiskControl risk involves the formulation of policies and management strategies for the safe driving of an organization or company in a way that can cope with the changing and unpredictable market (Xia et al., 2018). It is the risk that requires China Communications and Construction Company to adjust to market conditions and to be up to date with the external environment t. The Chinese market has been declared a high-risk and high uncertainty market especially with the high increase of the levels of FDI which has resulted to miscalculation of the entire market size and factors around it. For China Communications and Construction Company, the lack of proper data on the growth and the production level results to a market situation with very little ability of regulation and projection planning, increasing the general risk (Ullah et al., 2019). The China Communication and Construction Company is exposed to the lack of future proofing due to the high risk market proves a possible impact to the company by the risk situation.
2.5.4 Opportunity RiskOpportunity risk is the failure rate attached to an organization in case it takes upon a new venture. This may be in terms of branching to other areas or diversification of the business to introduce a new product of or service (Sum & Abdul, 2020). The size of the China Communication and Construction Company served as the cushion or mitigation measure for the occurrences attached to this risk. The size of the organization offers more resources to conduct research and investigation for relevant market data so that any decision or step there henceforth is statistical to avoid guesses and avoidable risk ventures (Panjehfouladgaran & Lim, 2020). The probability of the opportunity risk occurring is low however the impact of the same is high which may cost the company an entire branch or financial losses on initial investment costs on new product or services.
3. Risk Management PlanIn the preceding sections, China Communication and Construction Company has been investigated on the risks that are in direct and indirect effect to the company and the impacts these risks may carry. The section has shown that a risk is associated with a number of outcomes whose individual magnitude can be measured. The risks have been investigated with their relation to the economy surrounding China Communication and Construction Company both inland (within Chinese borders), and overseas in other branches of the company located in different countries and different economies subsequently. The section has also shown that in the case of an uncertainty situation the investigator can never have a specific strategy in dealing with the situation rather anything can be expected that no one is ready and prepared to tackle. The risks occurrences are also investigated in their compliance to the legal setting of the company’s locations. Having identified the major risks that are linked to the China Communication and Construction Company, this section presents the available mitigation strategies that are available useful in curbing the risks to protect the company from suffering the impact of occurrences from the risks noted.
3.1 Control MeasuresFrom the risks discussed above, it can be noted from the context that some of the occurrences have the power of impacting the company to cause a major loss of survival-threatening damage. To ensure thriving of the business, there has to be measures to be taken in ensuring the position of the company is protected from the environmental, legal, social and Economical perspective.
The legal department of the company should ensure that the operations within and around the company are in the total compliance with the respective laws. This is by ensuring that the products and services offered by the company are in accordance with the standardization regulation for customer protection and the environmental protection. For protection of the companies and the general public, the company, which is publicly traded, is expected to act under compliance of the company Law, The Law of Enterprise Income Tax, Basic Rules for the Enterprise Internal Control, Anti-Unfair Competition Law, Labor Contract Law and the Interim Regulations on Prohibition of Commercial Bribery. These laws are incorporated to serve the regulation purpose and enhance general compliance. For the China Communication and Construction Company, the possibility of the occurrence is generally low from the strict observation from the management and the legal department set to ensure compliance (China Communications Construction Company, n.d.). The company is also publicly traded and most of the ownership left to the state which ensures the compliance of the whole organization is at per for the interests of the government and the public at large.
The pricing of the products and services should all go hand in hand with the pricing act of the law (Gokmenoglu, Kirikkaleli, & Eren, 2019). And the general sustainability of the acquisition process and should be systematic in a way it ensure sustainability in the entire process. The Human Resource department should ensure compliance with the labor law as stated in the company law of the country. For every contract assigned, the labor acquisition should be checked in way that it respects and adheres to the labor law of the country. The company interaction in the market should be controlled to ensure protection of the company from Anti-Fair competition in tender winning and other multi-company involvement activities. The legal team should also study and understand the relevant laws of other countries in which the company works with or is starting to work with to avoid inconveniences when the company’s operations unintentionally assumes some regulations.
Project managers within the company should ensure that the safety measures are put in place I every project to avoid injuries and subsequent disasters from mistakes in safety measures ignorance. Proper fire-fighting equipment should be installed within the buildings of the company and other related buildings including the project sites. The company employees should also undergo necessary fire drills and other training first aid and other short medical care procedure in case of disaster. Projects in foreign countries should be thoroughly planned to accommodate any disaster expectation in the foreign land for example the case of tornadoes in The American Countries. This fore investigation ensures earlier preparations for the expected disasters which would help avoid injuries and at most save lives.
The marketing department and the data handling department together with the management should be in constant check of the statistics within the company operations and compare the current statistics with the previous ones to know and understand the position of the company against that of the prevailing economic climate. These should also use the data obtained for future planning to cope with the constantly changing market. This strategy ensures that the steps of the company are informed for thriving and progress and most of all adaptation to the prevailing market flow to maintain the current market share and even expand under right conditions. The management team and the data handling department should take proper steps in the investigation and projection of any major step in the company’s operations such as expansion or diversification to prevent unnecessary blunders
3.2 Corrective MeasuresThe management should always ensure harmonious working of the different departments to ensure effective information passage in the moments of updates and sensitive changes (Vekasi, 2019). The legal department should ensure they are always updated on the latest updates on the relevant laws and pass the information effectively to the relevant departments and personnel. This includes foreign laws, in countries that are in constant operations with the company and those starting their operation with company. Innovation within the design team should always be high to ensure the company maintains its market share for quality in the services offered (Han et al., 2018). Structural changes should also be undertaken within the working environment to accommodate relevant drills and ensure the health acts is strictly followed. Structural changes are also necessary when trying to curb any disaster such as fire outbreaks in working environment. Previous mistakes within the company should be noted and studied to help avoid the same mistake in future or any related mistake henceforth. The management should also consider foreign assessment or auditing from known companies to ensure the company is in the same position and direction as the internal auditing states.
3.3 Record Keeping and Review FrequenciesFor efficiency, the company must ensure proper record keeping which means the system and mode of keeping records should be such that the retrieval and access of the stored information is not interrupted and should not lose information (Chang et al., 2018). For China Communication and Construction Company, all incidents on law infringement within the company operation should be recorded in proper details and the number of occurrences to be used in decision making and for addressing the entire company personnel together with the public during the annual meetings.
The hazardous moments in the company’s lifetime should also be recorded accordingly and under the right variations. These records should indicate the occasions of flooding, fire, earthquakes among others. They should also indicate their locations and duration alongside the damage caused for future references and decision making. Market variations and changes should be recorded with their relevant variations and the effect they had to the company operations and the entire market at large. This information offers great reference in the future for projections and caution. Any major step within the company in terms of diversification and growth should be put in books with their relevant variations and the outcomes for better understanding in the future when the information is used for reference.
4. ConclusionThe China Communication and Construction Company being a very large organisation, should invest effectively on the risk study and mitigation. The organization with its size and value may be highly prone to assume proper running and production efficiency since it is difficult to identify any problem embedded in the large sections and department. Therefore to curb disaster the company should ensure proper check and study of various sectors in the internal and external environment both macro and micro to uncover risks and mitigate them for survival and thriving.
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