Acc 504 Module 3 Ca

Running Head: COSTS OF BUSINESS RISKS

Trident University

Jerry L Bailey

ACC 504 Module 3 CA

Issues in Managerial Accounting

Instructor: David Wagner, PhD

The old saying what gets checked gets done, in business it’s no difference what gets measured gets done.

For this case assignment I will discuss to what extent should risk be identified, managed, and measured in business organizations. Determine what tools are available to assist in this task. Explain why this should be the domain of management accounting. Finally, support my answers with good arguments and citations where appropriate. I will accomplish this by analyzing and evaluating the most common types of risk in most business entities. Next I will evaluate the risk, tools for risk measurement, and relationship between risk and management accounting. Finally by discussing the importance of risk management in management accounting including reliability and measurement issues.

According to Investopedia, business risks are the possibility that a company will have lower than anticipated profits, or that it will experience a loss rather than a profit. Business risk is influenced by numerous factors, including sales volume, per-unit price, input costs, competition, overall- economic climate and government regulations (Investopedia 2012).

To identify all relevant risks, organizations should capture perspectives from industry, academic thought leaders, economists, non-conformists, and contrarians in general anyone who can help take the thinking of internal executives and experts to new places. History shows that many risk events have resulted as much from complacency, limited foresight, and a reluctance to challenge the status quo as from failures of controls, judgment, and governance (PWC 2009).

A failure of any single relationship entails consequences for all relationship partners. Based on the organization’s strategy and goals, management should identify all potentially...