Steel Gas & Light Co. employs 1200 full-time employees, with an average annual base compensation wage of $50,000. SGL's annual payroll, not including benefits, is $60,000,000. 97% of this payroll is subject to Social Security taxes. SGL is projecting $83,000,000 in annual revenue. Based on the economic slowdown due to COVID 19 and the traditional narrow margins in the industry, SGL is projecting a $1,300,000 profit for the current year.

SGL has an enterprise risk management group that continuously reviews financial risks. This group has identified significant operational risks which require risk reduction measures that include workforce cutbacks if the annual profit margin goes below 1%.

SGL's enterprise risk management group also identifies legislative and regulatory risks that may impact its business. It has identified recommendations from both the Social Security and Medicare Trustees in their 2021 reports to immediately and permanently increase the employer withholding for Social Security an additional 1.68 percentage points to 7.88% and to immediately and permanently increase the employer withholding for Medicare an additional 0.385 percentage points to 1.835%.

SGL wants its employees and its local, state, and federal representatives to understand the impact this change will potentially have on its business if the recommendations were enacted into legislation.

SGL leadership requests your help in drafting a brief yet detailed explanation of the impact on its business!

Answer rating: 100% (QA)

Operational risk summarizes the uncertainties and hazards a company faces when it attempts to do its daytoday business activities within a given field or industry A type of business risk it can result ... View the full answer