Footlocker

Rakann Ammari Fin 431, Exam 1 February 17, 2010 find fault locker Incorporated Risk Prevention Methods stern console Incorporated (ticker symbol FL) is a U. S. based conjunction that charters worldwide. Their services include the sale of various gymnastic equipment, sports apparel and products. concord to their come with background, as of the arising of 2009 pes storage locker operates roughly 3,600 sell terminushouses in 21 countries worldwide ( somewhat Us).Although Foot console provides their goods through both(prenominal) local sell stores and an online based direct-to- nodes program, my periliness give carement tactics go forth primarily focus on local retailers and warehouses and their take a chances. The flipper risks I hand over chosen are employee larceny within the local branches and through bank nebs, customer theft within the store, physical injuries to customers and employees on Foot Locker property, property damage to Foot Locker property due to obscene stand conditions and the risk of move garnishs of necessary foreplays that are used in the production of various Foot Locker goods including baggear.One of the intimately essential inputs in the production of footwear is preventative. As a risk manager, I mustiness concentrate into account the possibility of the bell of rubber increasing. According to the commodities index ran by indexmundi. com, the harm of rubber has change magnitude every month for the past 6 months. In January 2010, the price of rubber increased to $139. 73 from $92. 86 merely 6 months ago in frightful of 2009 (Rubber Monthly Prices). This nearly 34% increase in the commodity price of rubber could have devastating effects on Foot Lockers embody of production.This increase will electromotive forcely increase the embody of producing foot and athletic wear, which in turn will increase retail prices. The charter for consumers to bargain for uplifted end Foot Locker products will and so decrease as retail prices increase. Rubber mud the main input in producing footwear still the leather used in everyday footwear is prevalent enough to be looked at. Due to the fluctuating productivity and qualification during the current economic pileturn, buyers bunk to be less predictable. Earlier, the buyers anticipated sales cause and placed orders well ahead of time.But now they retain to en certain(a) retail off-take before placing orders. Improving recreate of operations even as one keeps cost down is important (Business line of reasoning). This efficiency has brought down leather prices. Leather prices are likewise dropping and this contributed to leather costs coming down to 50-60 per cent from 70 per cent (Business Line). Although this decrease in leather costs could potenti every toldy 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 counte ract this risk.In doing so, I am also performing an opposite 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 centre time. Although I take the risk of the price travel be miserable my set price, since the prices have increased at a constant rate for the past 6 months my current risk is dramatically imprinter. By picture the price 6 months ahead of time I, as a risk manager, potencyly prevent the 34% qualifying that could have occurred over the past 6 months. Along with the speculative risk of price fluctuation, at that place are many pure risks that come when providing goods to consumers.Employee theft is one of the most common risks an employer or beau monde takes on when doing business. Every year billions of dollars are bewildered by businesses nationwide to employee art and theft and the offspring of incidents are rising. (Schaefer 1). Employees could steal bullion, merchand ise, and illegally redirect customer account information to a private account. A former Foot Locker employee was clipd to five eld probation and ordered to pay nearly $26,000 in payoff for taking the participations money to viewing his meshing gambling debts (The Maui News). Although a prison sentence and or a large fine may be the consequences of much(prenominal) employee theft, the $385,000,000 of cash and cash equivalents (2009) un committed for theft seems to lure in potential thieves ( dimension Sheet). The $1,120,000,000 in merchandise inventory for sale for possible theft is a savoring compute 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 Atlanta, Georgia was robbed when jurisprudence arrested two adults and four juveniles in a fail and grab job. (CBS Atlanta 1) Unlike employee theft, customer theft is limited to the $1,120 ,000,000 in merchandise inventory ( repose Sheet). Although the inventory and cash could potentially be recover from the employee(s) or customer(s) through a causa, as a risk manager I would need to take preventative action. I would create loss control by having surveillance cameras both ceremony 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 signals throughout the store. For employees I would get thorough background checks to prevent the hiring of former soaring profile convicts. I would also spread the finances among various managers I would not allow a single manager to keep track of or control the finances of any single retail store or warehouse.Finally, as a risk manager I would follow up on any customer complaints with any banking issues and take into accou nt any reported suspicions by employees about other employee or customer theft. In order to nurture prevent loss, I would purchase an policy policy to insure any outsized criterion of fraud or crime committed. Another risk held by business owners is the possibility of a typesetters case by customers and or employees for sustaining corporate injuries. Customers or employees may berth on an unmarked wet spot ca utilise a concussion or other bodily distress.Also, a tall person might smash an unmarked metal shutter or sign. Injuries may range from a no problem maculation or bump to a serious lawsuit involving several injuries. An employee may sever his or her spinal column after falling off a 20 foot latter darn trying to contrast merchandise or be severely harmed while operating footwear machinery within a company warehouse. The potential loss and costs gouge be irreparable depending on the lawsuit. Several precautions should be set in place. Prior to employment, I would ma ndate all employees to sign a contract indicating that a lawsuit against Foot Locker cannot be conducted.The contract would include bodily injuries. However, a severance package below workers compensation will be rewarded to all merit 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 persuade merchandise within a retail store warn customers of a wet floor or potential harmful area and teach 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 stakes lawsuits from employees or customers that obtained bodily injuries on Foot Locker property. exploitation these measures reduces Foot Lockers liability to customers and employees. However, the risk to Foot Lockers property is perpetually r angstromant due to prospective weather disasters. The potential cost during a weather disaster such(prenominal) as a flood or a hurricane can be enormous.Although the idea of all of Foot Lockers stores and warehouses being affected at the same 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 woul d purchase insurance on all property, furniture and equipment that would covered a loss due to catastrophic weather. A precautional 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 institute on, in order to protect employees from harm a risk manager should make sure all mite equipment is working roperly and all employees understand emergency procedures. As a risk manager, assessing risks and developing the entrance amount of precautionary methods to prevent potential risks is essential. retentivity track of these risks while evaluating the possible loss is dear as essential and a well highly-developed 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 Theft Case. 2010. The Maui News. 7 Febr uary 2008. http//www. aproundtable. org/gamblingsruinedlives/im. htmlIndex Mundi. Rubber Monthly Prices. 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