Risks

Aligning potential risks with a company's tolerance for risk requires management to take an enterprise$-$wide view of risk. Accountants and system designers can help to assess and reduce risk by considering the following approach to risk:

Identify risks

Estimate the probability of a risk occurring

Estimate the impact or the potential loss in dollars from each risk

Identify controls to prevent each risk

Estimate the costs and benefits from instituting controls

Complete a cost$/$benefit analysis for each risk and corresponding controls

Evaluate the results of the cost$/$benefit analysis and determine whether to reduce a risk by implementing controls or by accepting, avoiding, or sharing the risk.

For this discussion, consider the following case and respond to the requirements at the end of the case.

West Greenwich Village Boutiques was founded by Joni Williams in $2000$ with a single store in College Station, Texas. The company now has $20$ stores located in the triangle of Dallas, San Antonio, and Austin, Texas.