Chapter 8

Outsourcing and Risk

Management
Clarissa Yvette Acha
Claudio Acha
Isabel Castro
Steven Cortez
Esmeralda Olivarez

TMGT 4341-P01

What is Outsourcing?
Outsourcing is the act of one company contracting with
another company to provide services that might
otherwise be performed by in-house employees.

Often the tasks that are outsourced could be performed
by the company itself, but in many cases there are
financial advantages that come from outsourcing.

Many large companies now outsource jobs such as call
center services, e-mail services, and payroll.

These jobs are handled by separate companies that
specialize in each service, and are often located
overseas.
What is Outsourcing?
http://www.youtube.com/watch?v=R
NTLIwH7f1o

Drawbacks to Outsourcing
One of these is that it often eliminates direct communication
between a company and its clients.

This may prevent a company from building solid relationships
with their customers, and often leads to dissatisfaction on
one or both sides.

There is also the danger of not being able to control some
aspects of the company, as outsourcing may lead to delayed
communications and project implementation.

Any sensitive information is more vulnerable, and a company
may become very dependent upon its outsource providers,
which could lead to problems should the outsource provider
back out on their contract suddenly.
Why Outsource?
There are many reasons that companies outsource
various jobs, but the most prominent advantage seems
to be the fact that it often saves money.

Many of the companies that provide outsourcing
services are able to do the work for considerably less
money, as they don't have to provide benefits to their
workers and have fewer overhead expenses to worry
about.

Depending on location, it may also be more affordable
to outsource to companies located in different
countries.
cont
Outsourcing also allows companies to focus on other business
issues while having the details taken care of by outside experts.

This means that a large amount of resources and attention, which
might fall on the shoulders of management professionals, can be
used for more important, broader issues within the company.

The specialized company that handles the outsourced work is often
streamlined, and often has world-class capabilities and access to
new technology that a company couldn't afford to buy on their own.

Plus, if a company is looking to expand, outsourcing is a cost-
effective way to start building foundations in other countries.
Why Outsource?
http://www.youtube.com/watch?v=
aqhjNJkvC9w

Outsourcing Pros
The pros of outsourcing often positively reflected by
enterprises across industries include:

Better revenue realization and enhanced returns on investment

Lower labor cost and increased realization of economics of scale

Tapping in to a knowledge base for better innovation

Frees management time, enabling companies to focus on core
competencies while not being concerned about outsourced
routine activities

Increases speed and the quality of delivery of outsourced
activities

Reduces cash outflow and optimizes resource utilization

Outsourcing Cons
Often weighed with the advantages before any decision on
outsourcing is undertaken, the following represents some of
the possible disadvantages often dwelled upon:

Possible loss of control over a companys business processes

Problems related to quality and turnaround time

Sluggish response times coupled with slow issue resolutions

Shortcomings in performance vice versa expectations

Lower than expected realization of benefits and results

Issues pertaining to lingual accent variation

An irate customer base coupled with enraged employee unions

Outsourcing Pros and Cons
http://www.youtub
e.com/watch?v=90a
2qHYqMoU


What is Risk Management?
Risk management is a process for identifying,
assessing, and prioritizing risks of different kinds. Once
the risks are identified, the risk manager will create a
plan to minimize or eliminate the impact of negative
events.

A variety of strategies is available, depending on the
type of risk and the type of business.

There are a number of risk management standards,
including those developed by the Project Management
Institute, the International Organization for
Standardization (ISO), the National Institute of Science
and Technology, and actuarial societies.

Risk Management
What is it?! Why is it
important?!
http://www.youtube.com/watch?feature=player
_detailpage&v=CLH-dZfVPwQ

The Importance of Risk
Management to Business
Success
Risk management is an important
part of planning for businesses.

The process of risk management is
designed to reduce or eliminate the
risk of certain kinds of events
happening or having an impact on the
business.


Types of Risks
There are many different types of
risk that risk management plans
can mitigate.
Common Risks
Legal Risks
Risks can also relate to:
business practices,
uncertainty in financial markets,
failures in projects,
credit risks,
or the security and storage of data and records.

Common Risks
Common risks include things like:
accidents in the workplace or fires,
tornadoes,
earthquakes,
and other natural disasters.

Legal Risks
It can also include legal risks like
fraud,
theft,
and sexual harassment lawsuits.


What is Legal Risk?
http://www.youtube.com/watch?v=M
9EYHSDbPeg

Jerry Kaplan-Types of Risks
http://www.youtube.com/watch?v=kGfO1nz4y
sg

Goals of Risk Management
The idea behind using risk management practices is to
protect businesses from being vulnerable.

Many business risk management plans may focus on
keeping the company viable and reducing financial
risks.

However, risk management is also designed to protect
the employees, customers, and general public from
negative events like fires or acts of terrorism that may
affect them.

Risk management practices are also about preserving
the physical facilities, data, records, and physical
assets a company owns or uses.

Process for Identifying and
Managing Risk
While a variety of different strategies can mitigate or
eliminate risk, the process for identifying and managing
the risk is fairly standard and consists of five basic
steps.

First, threats or risks are identified.

Second, the vulnerability of key assets like information to
the identified threats is assessed.

Third, the risk manager must determine the expected
consequences of specific threats to assets.

The last two steps in the process are to figure out ways to
reduce risks and then prioritize the risk management
procedures based on their importance.

Assess Your Risks: Using
Warnings to Close the Gap on
Acceptable Risk
http://www.youtube.com/watch?v=-
jYRHvaixFY

Strategies for Managing Risk
There are as many different types of strategies for
managing risk as there are types of risks.
These break down into four main categories.

Risk can be managed by accepting the consequences of a
risk and budgeting for it.

Another strategy is to transfer the risk to another party by
insuring against a particular, like fire or a slip-and-fall
accident.

Closing down a particular high-risk area of a business can
avoid risk.

Finally, the manager can reduce the risk's negative
effects, for instance, by installing sprinklers for fires or
instituting a back-up plan for data.

Chart
Political Social Economic Scientific Historical Cultural
Knowledge
Integration
Knowledge
application
Program
Evaluation
System complexity Multiple synergies
Resources Displacing risk
Ethics and social
justice
Triangulating
methodologies
Conceptual and
theoretical
advances
Legal/
Regulatory
Health
Psychological
Managerial
Technical
Challenges
Fields
Contexts
Risk Management Plan
Having a risk management plan is a
very important part of maintaining a
successful and responsible company.

Every company should have one.

It will help to protect people as well
as physical and financial assets.

Sources
http://www.youtube.com/watch?v=RNTLIwH7f1o
http://www.youtube.com/watch?v=aqhjNJkvC9w
http://www.youtube.com/watch?v=90a2qHYqMoU
http://www.youtube.com/watch?feature=player_detail
page&v=CLH-dZfVPwQ
http://www.youtube.com/watch?v=M9EYHSDbPeg
http://www.youtube.com/watch?v=zRRk5S1gPgY
http://www.youtube.com/watch?v=_qPpwrKQk9A
http://www.youtube.com/watch?v=_qPpwrKQk9A
http://www.youtube.com/watch?v=-jYRHvaixFY