1.

Can the impact of one specific risk event, such as a technical risk event, create additional risks,
which may or may not be technical risks? Can risk events be interrelated?

A specific risk event can definitely create additional risks. In today’s market different
departments are so dependent on each other that a small change in one can really create a big
problem for the other. Such as a technical risk event can give rise to severe marketing issues.
Suppose Luxor came up with a product which can only perform up to 75% of the task of a similar
product that the competitor might have. This will give the marketing department a headache even
to just market it against the competitor. Similarly a product might be the best in its line but exposed
to not the best of marketing schemes it is likely fail in the market; perhaps the price is higher. Thus
risk events can be interrelated and so risk management should be done at every department.

2. Does the list provided by marketing demonstrate the likelihood of a risk event or the impact of a risk
event?

The list provided by marketing demonstrates the impact of a risk event. If there is one risk the
company will be hit by a loss which will take them into a damage control mode. That is when
options like outsourcing, using contractors, sharing or buying technologies from competitors,
changing marketing plans and overall growth of the company will be in the minds of top
management. Likelihood of risk event would be like lack of investment in R&D might result in falling
behind from rivals or not adopting to newer and more efficient production methods resulting in cost
increase or delay in launch of a product.

3. How does one assign probabilities to the marketing list?

Yes it can be related. If the product performance is not up to the mark it will cause them to fall
behind from others resulting in less sales and profit. This means they no longer can provide high
quality, state of the art product at low cost. Abandonment of projects will halt the growth of the
company and also cause layoffs because company won’t have work for them. System performance
degradation can be a result of outsourcing technology. Need for future enhancements can be
related to growth as well. Reducing profit margin will result in many of the events listed by
marketing. Thus I feel it can be related.

4. The seven items in the list provided by engineering are all ways of mitigating certain risk events. If
the company follows these suggestions, is it adopting a risk response mode of avoidance,
assumption, reduction, or deflection?

The action plans proposed by Engineering are a part of a contingency plan. They are aware that
a risk event might happen in the future and this might be a way to confront them. They are
proposing to hire, train and educate staff so that if there is a risk event they could all be capable
enough to find a way out of it by doing research and development and coming out with newer and
better technologies or processes. There is idea is to invest in the future of Luxor which will help
 them cope with a risk event as well as add to the growth of the company. Co-developing with other
companies or partners and licensing technologies from others may also fall under risk sharing to
some extent. On the other hand outsourcing can fall under prevention/avoidance, because it will
cut cost for both current and future products. Overall I think these actions are a part of a
contingency plan

5. Would you side with marketing or engineering? What should Luxor do at this point?

Marketing is just letting us know the consequences of what might happen in case of a risk
whereas Engineering is showing us a way on how to be better prepared if indeed any risk event
happens. Both of their inputs are valuable to the company but in order to make sure that company
is not affected I would go with the Engineering plan. I think this might be a good time for the
company to invest on not only training or hiring staff but also to expose themselves to different
options which they never considered in the past. Since they are a technology related company
thinking the Engineering way can only bring more good than bad. If in fact there is no risk event that
happens they can always use these options for the company’s growth. Prevention is better than
cure.
Luxor was falling behind in a lot of areas mostly because they did not want to change the
company’s way of life. It being such a successful institution in the past one would think they have
the future well thought out but not having a risk assessment department proves that they might
have been complacent. If they had done their homework right they could have launched a complete
product every time as compared to doing it in 2 years in a 75-25 manner. They should strongly
consider the inputs from both marketing and engineering to move forward. To stay competitive
they not only need more R&D but also consider outsourcing and technology sharing with others. It
can only help them stay strong and may be ahead of the rest in this competitive market.

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