Seminar paper · Risk Management · Kajaani University of Applied Sciences
A risk framework from the literature, applied to Apple Inc.
What I did
In a business environment, lots of dynamic processes happen simultaneously. Without a solid risk framework, a company faces financial losses, legal issues and even operational disruptions. The paper first builds the theoretical foundation, then applies it to a real company: a risk register for Apple Inc.
The most important segregation is between risks and problems: risks are a potential outcome, while problems have to be dealt with in the present. Once a risk has materialised, prevention is too late.
Risk management is science mixed with a bit of art, for interpreting the results correctly.
Twenty-five risks for Apple Inc., each scored for effect and probability on a scale of one to six — my own estimates, giving a ceiling of 36. Sorted by score rather than by class, which is what makes the shape visible.
| Risk | Class | Effect | Probability | Score |
|---|---|---|---|---|
| Competition | Strategic · macro | 4 | 5 | 20 |
| Supply chain disruptions | Strategic · corporate | 5 | 4 | 20 |
| Economic downturn and inflation | Financial | 4 | 5 | 20 |
| General market volatility | Strategic · macro | 4 | 4 | 16 |
| Technological substitution | Strategic · macro | 5 | 3 | 15 |
| Overreliance on iPhone sales | Strategic · corporate | 5 | 3 | 15 |
| Cybersecurity threats | Operational | 5 | 3 | 15 |
| Dependency on key partners | Strategic · macro | 4 | 3 | 12 |
| Interest rate risk | Financial | 4 | 3 | 12 |
| Cost overruns in R&D | Financial | 4 | 3 | 12 |
| Production interruptions | Operational | 4 | 3 | 12 |
| Product malfunction | Injury and damage | 4 | 3 | 12 |
| Regulatory changes | Strategic · macro | 3 | 3 | 9 |
| Foreign exchange fluctuations | Financial | 3 | 3 | 9 |
| Environmental impact and sustainability | Operational | 3 | 3 | 9 |
| Workplace safety | Injury and damage | 3 | 3 | 9 |
| Intellectual property disputes | Strategic · corporate | 4 | 2 | 8 |
| Product launch risks | Strategic · corporate | 4 | 2 | 8 |
| Brand image risks | Operational | 4 | 2 | 8 |
| Investment risks | Financial | 3 | 2 | 6 |
| Product quality decrease | Operational | 3 | 2 | 6 |
| Environmental impact (customer side) | Injury and damage | 3 | 2 | 6 |
| Supply chain accidents | Injury and damage | 2 | 3 | 6 |
| Facility security | Injury and damage | 2 | 2 | 4 |
| Leadership changes | Strategic · corporate | 3 | 1 | 3 |
Scroll the table sideways to see every column.
The three highest scores are competition, supply chain disruption and a consumer demand shock. Foreign exchange, interest rates and investment risk land between 6 and 12.
Market volatility and supply chain disruption both resolve to the same counter-measure: move outsourced production out of Taiwan. The concentration is geographic, not financial — and scoring the two separately makes the total look more diversified than it is.
Nothing reaches beyond 20 of a possible 36: many moderate exposures rather than one that could end the company.
The outcome is a first introduction to dealing with risk in a business: identify the risks, measure and analyse their impact, then control them — with constant risk controlling built into every project and into the company structure itself.
The next step would be to test the quantitative tools on real cases, and to examine the best risk-controlling structure for a given type of company.