Financial Risk Management: The Sports Industry
Financial risk management is the process of reducing a firm’s exposure to various risks. According to Emery (2011), it is a process that enables organizations to reduce failures and increase their profitability by carefully evaluating the risks they are exposed to and developing strategies to manage them. The sports industry can learn a lot from the business industry in regard to risk management as it is often prone to issues such as corruption and drug abuse, which it is often insufficiently prepared/equipped to deal with. The office of Sport and Recreation Tasmania (as cited in Emery, 2011) claims that today, risk management is a central part of sports organizations’ strategies because it enables management result to balanced and responsible decision making. This text examines risks sports businesses are exposed to, how financial risk management can be applied, and the strategies that should be applied to protect business finances.
Risks faced by sports businesses
Finance risks
Most major leagues operate under the constant threat of financial instability. Bankruptcies distort products and interfere with the financial capability of an entire league. The American National Football League (NFL), for instance, is known to be the most successful league globally but it constantly struggles to secure its financial stability (Troelsen and Kuperman, 2006). It uses salary caps and equal revenue distribution tactics to increase cost savings and reduce loss control.
Reputational risks
News of corruption, age cheating, identity theft and doping are becoming quite popular in the sports industry. These charges are bad for the image of any sports business and league, since they damage hard earned credibility. The International Association of Athletics Federation (IAAF) acknowledges that “some member organizations and athletes will go to great lengths to gain a competitive advantage” (Troelsen and Kuperman, 2006). Sports organizations have to devise ways to deal with image risks to avoid reduced profitability that stems from low ratings and poor performance.
Accidents and injuries
According to Emery (2011) every injury in sports is accompanied by 600 near misses and 10 minor injuries. Risk management should reduce the number of injuries and near misses that occur by identifying potential dangers and evaluating options that can reduce severity of accidents to athletes and the audience.
Effective use of financial risk management in sports businesses
The risk management process in sports related businesses comprises of three steps: risk assessment, risk treatment and risk control (Emery, 2011). Risk assessment involves an analysis of the specific risks that a particular business is prone to. Once identified, the severity of the risk is evaluated to find out the danger it pose to that particular business. The next stage is the treatment of the risks that have been identified. Suitable risk reduction plans are identified, and if they will reduce or eliminate the financial, reputation, or accident risks, they are implemented. The final stage is risk control where the progress of risk reduction plans is monitored and the achievements communicated to management. Constant review is needed to ensure new risks in the industry are well-handled.
There are four risk management techniques that can be applied by sport organizations to manage the various risks they are prone to. These include the avoidance, transfer, reduction and acceptance of risks (Troelsen and Kuperman, 2006). Risk avoidance techniques generally involve the intentional omission of activities and events that may cause risks. Race car drivers should not be allowed to race without all the required protective gear. Risk transfer involves shifting the responsibility of some activities to parties that are better equipped to handle them. Security, for example, is often outsourced. Procedures to mitigate risks can also be applied. For instance, the Major League Baseball (MLB) uses insurance policies in their risk management systems to reduce their financial risks (Troelsen and Kuperman, 2006). Risk acceptance, on the other hand, is a technique that involves cutting costs by accepting that a risk is affecting performance and finding other ways to salvage the situation. A good example is the reaction of the IAAF to doping and cheating charges. Once allegations are confirmed, the officials get together to determine what the best course of action is, and they formulate ways of dealing with the crisis (Troelsen and Kuperman, 2006).
What risk management strategies would be used to protect business finances?
Effective risk management should ensure that organizational leaders are able to identify and evaluate the various financial risks that may affect the businesses’ finances. There are various risk management strategies that may be applied. These include:
Risk financing and budgeting
Organizations should have financial reserves that will enable the continuity of operations even in times of financial difficulty. Effective budgeting ensures money is allocated to every department according to its needs and functions, to prevent problems of inadequate cash.
Business Insurance
Insurance enables a business deal with unexpected events. It makes it possible for an organization to transfer substantial risks to insurance companies which saves it from bankruptcy in the event of a disaster or in times of consistent losses.
Avoidance of risks
Once the management of an organization becomes conversant with the specific risks their businesses are prone to, it should do its best to avoid them (Frigo, 2008). This saves the organization a considerable amount of time and resources that would have otherwise been incurred when dealing with the consequences of these risks.
Mitigation and retention strategies
According to Frigo (2008), key areas that are found to cost an organization more than the revenues they generate should be eliminated. Long-term projects which may also be non-profitable in the long-term should also be abandoned. Management should also critically evaluate the assets that should be retained and those that lead to cumulative losses.
Conclusion
The sports industry is prone to a variety of risks that can affect performance; however, there are no standard risk management procedures applicable to every sports business. Every organization should thoroughly assess its risks areas and examine different scenarios that may affect its success. Once this are established, risk assessment, treatment and control techniques should be effectively applied in all areas of the organization. Risk avoidance, acceptance, transfer and reduction measures should then be implemented. Sports organizations should abandon disorganized risk management strategies and borrow a leaf from the business industry, where appropriate strategies are applied in accordance to an organization’s circumstances in an effort to reduce exposure to risk.
References
Emery, P. (2011). The Sports Management Toolkit. New York, NY: Routledge
Frigo, M.L. (2008). When Strategy and ERM Meet. Strategic Finance. Retrieved 24 January 2015 from https://driehaus.depaul.edu/about/centers-and-institutes/center-for-strategy-execution-and-valuation/center-sev-initiatives/Documents/11When_Strategy_and_ERM_Meet.pdf
Troelsen, T. & Kupperman, B. (2006). What sport can learn from business about risk management. The Olympic Capital Quarterly, Vol. 1(3): 1-7
Get Professional Assignment Help Cheaply
Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?
Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.
Why Choose Our Academic Writing Service?
- Plagiarism free papers
- Timely delivery
- Any deadline
- Skilled, Experienced Native English Writers
- Subject-relevant academic writer
- Adherence to paper instructions
- Ability to tackle bulk assignments
- Reasonable prices
- 24/7 Customer Support
- Get superb grades consistently
Online Academic Help With Different Subjects
Literature
Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.
Finance
Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.
Computer science
Computer science is a tough subject. Fortunately, our computer science experts are up to the match. No need to stress and have sleepless nights. Our academic writers will tackle all your computer science assignments and deliver them on time. Let us handle all your python, java, ruby, JavaScript, php , C+ assignments!
Psychology
While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.
Engineering
Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.
Nursing
In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.
Sociology
Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.
Business
We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!
Statistics
We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.
Law
Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.
What discipline/subjects do you deal in?
We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.
Are your writers competent enough to handle my paper?
Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.
What if I don’t like the paper?
There is a very low likelihood that you won’t like the paper.
Reasons being:
- When assigning your order, we match the paper’s discipline with the writer’s field/specialization. Since all our writers are graduates, we match the paper’s subject with the field the writer studied. For instance, if it’s a nursing paper, only a nursing graduate and writer will handle it. Furthermore, all our writers have academic writing experience and top-notch research skills.
- We have a quality assurance that reviews the paper before it gets to you. As such, we ensure that you get a paper that meets the required standard and will most definitely make the grade.
In the event that you don’t like your paper:
- The writer will revise the paper up to your pleasing. You have unlimited revisions. You simply need to highlight what specifically you don’t like about the paper, and the writer will make the amendments. The paper will be revised until you are satisfied. Revisions are free of charge
- We will have a different writer write the paper from scratch.
- Last resort, if the above does not work, we will refund your money.
Will the professor find out I didn’t write the paper myself?
Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.
What if the paper is plagiarized?
We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.
When will I get my paper?
You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.
Will anyone find out that I used your services?
We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.
How our Assignment Help Service Works
1. Place an order
You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.
2. Pay for the order
Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.
3. Track the progress
You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.
4. Download the paper
The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.
PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A PERFECT SCORE!!!
