Footlocker

Rakann Ammari quin 431, Exam 1 February 17, 2010 floor storage locker Incorporated Risk saloon Methods theme console Incorporated (ticker symbol FL) is a U. S. based political party that operates worldwide. Their services include the sale of various athletic equipment, sports app arl and products. harmonise to their company background, as of the beginning of 2009 nucleotide Locker operates roughly 3,600 retail shop classs in 21 countries worldwide (About Us).Although cornerstone Locker provides their goods through both local retail shop classs and an online based direct-to- nodes program, my attempt caution tactics will primarily focus on local retailers and w arehouses and their risk of infections. The quin risks I baffle chosen are employee theft within the local branches and through bank carryers, client theft within the store, physical injuries to customers and employees on Foot Locker holding, property damage to Foot Locker property due to obscene weather c onditions and the risk of fluctuating prices of necessary stimulant drugs that are used in the production of various Foot Locker goods including nucleotidewear.One of the well-nigh essential inputs in the production of footwear is meritless. As a risk coach, I must scram into account the possibility of the cost of surface increasing. According to the commodities index ran by indexmundi. com, the price of rubber has change magnitude both month for the past 6 months. In January 2010, the price of rubber increase to $139. 73 from $92. 86 merely 6 months ago in wonderful of 2009 (Rubber Monthly Prices). This nearly 34% increase in the good price of rubber could have devastating effects on Foot Lockers cost of production.This increase will likelyly increase the cost of producing foot and athletic wear, which in turn will increase retail prices. The get for consumers to purchase advanced end Foot Locker products will whence decrease as retail prices increase. Rubber remain s the main input in producing footwear however the leather used in workaday footwear is habitual enough to be looked at. Due to the fluctuating productivity and efficiency during the sure economic downturn, buyers tend to be less predictable. Earlier, the buyers pass judgment sales trend and placed orders well forrad of time.But now they delay to ensure retail off-take before placing orders. Improving speed of operations raze as one keeps cost down is important (Business caudex). This efficiency has brought down leather prices. Leather prices are as well as displace and this contributed to leather costs coming down to 50-60 per penny from 70 per cent (Business Line). Although this decrease in leather costs could strengthly help the cost of footwear production, the main input in footwear production is rubber. As the price of the main input of my product increases, I must be ready to counteract this risk.In doing so, I am also performing another risk by hedging the cost of my inputs. I must be willing to set a pre-determined price of rubber to be purchased from my wholesaler for a set measurement time. Although I take the risk of the price f anying be pitiful my set price, since the prices have increased at a constant rate for the past 6 months my current risk is dramatic all toldy lower. By setting the price 6 months ahead of time I, as a risk omnibus, potentially keep back the 34% termination that could have occurred over the past 6 months. Along with the defective risk of price fluctuation, there are many pure risks that bugger off when providing goods to consumers.Employee theft is one of the most common risks an employer or company takes on when doing business. Every year billions of dollars are lost by businesses nationwide to employee tosh and theft and the number of incidents are rising. (Schaefer 1). Employees could steal cash, merchandise, and illegally redirect customer account assureation to a private account. A former Foot Loc ker employee was sentenced to five years probation and ordered to pay nearly $26,000 in restitution for taking the companys money to cover his cyberspace profit gambling debts (The Maui News). Although a prison sentence and or a vauntingly fine may be the consequences of such employee theft, the $385,000,000 of cash and cash equivalents (2009) gettable for theft seems to lure in potential thieves ( proportion Sheet). The $1,120,000,000 in merchandise scroll available for realizable theft is a relishing number to employees and even Foot Locker customers. Shoplifting is a prevalent crime within the United States that must be controlled by risk managers.During December of 2009, a Foot Locker in battle of Atlanta, Georgia was robbed when law of nature arrested two adults and four juveniles in a smash and grab job. (CBS Atlanta 1) Unlike employee theft, customer theft is limited to the $1,120,000,000 in merchandise inventory (Balance Sheet). Although the inventory and cash coul d potentially be healed from the employee(s) or customer(s) through a lawsuit, as a risk manager I would need to take preventative action. I would create loss control by having control cameras both watching customer and employee actions.This includes surveillance on all cash registers and credit card machines. Also, I would inform both the customer and employee they are being watched and remind them of the potential prison punishment for any crime committed by posting signs end-to-end the store. For employees I would conduct thorough background checks to prevent the hiring of former high profile convicts. I would also spread the finances among various managers I would not allow a single manager to keep thwart of or control the finances of any single retail store or warehouse.Finally, as a risk manager I would meet up on any customer complaints with any banking issues and take into account any reported suspicions by employees virtually other employee or customer theft. In order to further prevent loss, I would purchase an insurance policy policy to insure any outsized amount of fraud or crime committed. Another risk held by business owners is the possibility of a lawsuit by customers and or employees for sustaining bodily injuries. Customers or employees may slip ones mind on an unmarked wet spot causing a buffet or other bodily harm.Also, a tall person major power hit an unmarked metal shutter or sign. Injuries may purge from a no problem scrap or bump to a serious lawsuit involving several injuries. An employee may sever his or her moxie after falling off a 20 foot latter(prenominal) while trying to clove pink merchandise or be in earnest harmed while operating footwear machinery within a company warehouse. The potential loss and costs can be irreparable depending on the lawsuit. several(prenominal) precautions should be set in place. Prior to employment, I would mandate all employees to sign a contract indicating that a lawsuit against Foot Loc ker cannot be conducted.The contract would include bodily injuries. However, a severance packet under workers compensation will be rewarded to all deserving employees pending a full investigation. As of 2009, company severance packages totaled $13,000,000 (Balance Sheet). I would also provide training on how to stock merchandise within a retail store warn customers of a wet floor or potential harmful area and read employees how to operate equipment within a warehouse. For customer lawsuit prevention, I would have managers post clear signs where potential harm may occur.Also, I would post a sign right outside of every retail store transferring injury risk to all customers that step foot into a Foot Locker location. Furthermore, I would purchase several insurance packages against high post lawsuits from employees or customers that obtained bodily injuries on Foot Locker property. Using these measures reduces Foot Lockers liability to customers and employees. However, the risk to Fo ot Lockers property is always rampant due to prospective weather disasters. The potential cost during a weather disaster such as a alluvial deposit or a hurricane can be enormous.Although the idea of all of Foot Lockers stores and warehouses being affected at the identical time is highly improbable, the potential can be exceedingly high. The net value (purchase price subtracted by accumulated depreciation) of Foot Lockers buildings, furniture, fixtures & equipment reached $223,000,000 in 2009 (Balance Sheet). This amount of loss could potentially bankrupt Foot Locker without the possibility of coming back into business. To prevent such a loss, Foot Locker could place their warehouses in locations with a lower potential for harmful weather conditions.Locations that tend to have a hotter climate with low wind gusts are ideal due to the low probability of property damage. Also, I would purchase insurance on all property, furniture and equipment that would covered a loss due to cat astrophic weather. A precautionary measure to minor damage could be using flood bags during a flood and making sure exposed sections of property are sufficiently covered to prevent wind from damaging interior assets. To tack on, in order to protect employees from harm a risk manager should make sure all emergency equipment is working roperly and all employees render emergency procedures. As a risk manager, assessing risks and developing the appropriate amount of precautionary methods to prevent potential risks is essential. Keeping track of these risks while evaluating the possible loss is just as essential and a well unquestionable report will help subordinate these risks.ReferencePage Footlocker. com. About Us. 2010. http//www. footlocker-inc. com/company. cfm? page=aboutGambling Debts Over Internet Tied to thefts. Former Footlocker stealing Case. 2010. The Maui News. 7 February 2008. http//www. aproundtable. org/gamblingsruinedlives/im. htmlIndex Mundi. Rubber Monthly Pric es. 2010. http//www. indexmundi. com/commodities/? commodity=rubber&months=300Schaefer, Patricia. Employee Theft a Big Problem. Business Know-How. 2006. Attard Communications. http//www. businessknowhow. com/manage/employee-theft. htm