Operational Risk Management Of Produce Buying Company: An Assessment
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Date
2016-09
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KNUST
Abstract
Risk is the uncertainty that the future outcome may be deviated. That is, what is expected may not be achieved. Risk is part of every human endeavour, so it is in every business operations. Risk management is the continuing process to identify, analyze, evaluate, and treat loss exposures and monitor risk control and financial resources to mitigate the adverse effects of loss. The general purpose of the study was to assess the operational risk management of Produce Buying Company (PBC Ltd). The specific objectives were; to examine the operational risks that affect PBC Ltd; to analyse the effect of operational risks on the performance of PBC Ltd; and to investigate the challenges that may affect the operations of PBC Ltd. Both quantitative and qualitative approaches were used as the research strategies to achieve the objectives of the study. Semi structured questionnaires were administered to District Operations Managers and Commission Marketing Clerks (CMCs) of PBC Ltd. The sample population was one hundred and thirty- seven (137), out of which eighty (80) were chosen to be the sample size.
The findings of the study indicated that the operational risks of PBC Ltd were production risks, environmental risks and cash in transit risks. The production risks that were identified were attacks on cocoa trees by diseases and pests, bush fires and bad road networks that inhibit the operations of PBC Ltd. One major environmental risk that was identified was the smuggling of cocoa by some CMCs and farmers across the border lines of Ghana. Some CMCs absconding with funds advanced to them and some farmers who are pre-financed but default payments were also identified as cash in transit risks. These risks identified were seen as having adverse impact on the performance of PBC Ltd.
The study recommended the management of PBC Ltd should put in place an inspection and monitoring team to ensure that all cocoa beans that are sent to the takeover points are well dried and meet the quality requirements set by the quality control company (QCC).
Further recommendation was also made that the company should strengthen their internal control system so that funds advanced to CMCs are regularly monitored to avoid misapplication and diversion of funds.
Since not all aspects of operational risks were exhausted, the researcher suggested that future researchers can conduct standard multiple regression to ascertain the degree of impact of operational risks on the performance of PBC Ltd.
Description
A Thesis submitted to the School of Business In partial fulfilment of the requirements for the award of Master of Business Administration in Finance.