Meggitt Plc Case Study

3.5. Risk Management
Schmit and Roth (1990) assert that the basic concept that aims to reduce the negative effects of uncertainties with respect to losses is known as risk management. Redja (1998) defined risk management to be a purely systematic process that can be to identify and review the losses faced by an organisation or an individual. Moreover, this concept can also be used to recognize, choose and incorporate the best strategy to deal with such exposures. According to Bessis (2010), the risk management in general involves the recognition, scaling and the complete management of risk. It is also known to have a set of tools that are used to monitor and regulate risk.
3.5.1. Risk Faced by Meggitt PLC
The risks linked to the provision of engineering services are strongly affected by the type of services rendered. These risks have been categorised by various authors so that they can conduct analysis and formulate frameworks. The most common risks identified by these studies include market
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The different risks faced by Meggitt Plc can be considered as follows:
• Strategic Risk: Risks that can be linked to poor strategic decisions made by the organisation. Meggitt manages the same by having long term agreements, ensuring structured customer service, investing in research and development and having a clear production system.
• Operational Risk: Risks that can be made from poor decision-making or presence of sub-standard execution of operations. Risk is managed by using clear validation and verification systems.
• Financial risk: Risks linked to maintaining liquidity. Keeping clear guidelines on applicable liquidity measures is important.
• Foreign exchange risk: Management of currency, interest rate and credit risks are optimal.
According to Reuters (2015), Meggitt is currently having a risk of 1.00. This indicates that there is significant risk linked to the shares and that the shares of Meggitt are more volatile when compared to the

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