Risk management

 

• Introduction

            The current automotive niche has become more attractive for traditional rental and emerging companies entering such an industry. Car-sharing is the systematic use of a particular car by several customers in which hiring expenses are distance or time based as users are charged for the distance and/or time they drive.  The reason for that is because each business organization always desires to broaden the services that they offer to customers to be on track with the rapidly changing automotive mobility trend. The primary characteristics of the automotive industry, for instance, the presence of free-floating fleets of cars that potential customers can quickly or spontaneously access have imposed huge challenges and related risks that car rental companies have to face each day (Herrmann, 2015). Being the heart of the enterprise model, the primary source of such risks is vehicles.

            Nevertheless, if the damage related costs represent daily issues in the automotive industry are not efficiently controlled, it inflates insurance expenses in return. The driving behavior of the customers is a scenario that is difficult to screen or monitor. Such a scenario is also based on the fact that it is hard to detect high from low-risk customers before proving that they have the potential of becoming service members (Cheng & Choi, 2010). Therefore, car-sharing symbolizes one of the business organization segments within the automotive industry.

• Relationship of your topic to the rest of the class topics

            The continued development of car rental business has perceived to have brought a lot of traveling conveniences to the majority of customers.  Despite that, a large percentage of car rental companies and vendors encounter different challenges and risks while managing and controlling resources and reservations. From these perspectives, it means that there exist different distinctive warning signals that suggest whether a business will continue to thrive or not. As much as the risks involved in the car rental industry are concerned, efficient risk management does not necessarily imply that failure is apparent (Mitchell et al., 2015). In risk management, a combination of typical risk factors is one of the strategies that can assist in indicating whether the business is in trouble or not.

• Practical application of your topic to a created scenario
• Describe the scenario

            The car rental contracts are designed in explicit forms for car leasing which comprises of an agreement entered between the owner (leaser) of the car and the renter (lessee). Upon the specified period agreed, the renter is guaranteed the right to use the car. Equally, the owner will provide the lessee with all the agreed features of the car together with maintenance, accessories, tax payment, and so on.

• Describe how your topic applies to this scenario

            Over decades, car rental business industry have encountered immense development to the extent of establishing huge car leasing services networks on various business throughout the world. Regardless of that, there are various risks that such an economic activity is prone into. They include changes in repurchasing agreements, changes in interest rates, economic downturn, seasonality, changes in industrial policies and car prices, and so on (Mitchell et al., 2015).

             As much as the car hiring scenario is concerned, risk management in the car leasing industry should be based on the need for reviewing the strategies, policies, and philosophies of the management towards the perceived risks. For instance, it will be paramount to take into account the nature of the relationship that the company has with its potential users (Hensher, 2020). Understanding the organization’s market position, car fleet profile, marketing network, financial position, and flexibility will assist the management authority to better implement measures to curb such risks.

• In some detail describe how you would apply your topic to the scenario

            To successfully apply this topic in such a scenario, first, it will be paramount to evaluate some of the primary features that make such a business to prosper or fail.  One of the key features is to understand how changes in the current car hiring market niche keep on impacting the services being offered by such industry. Issues such as financial risks, rental fraud, diversification, and traffic accidents, transparency, and improvement in customer services should be systematically analyzed to effectively manage any perceived risk/s. in the process of examining the previous records, it is important to ensure that the organization keeps tracking all the current issues that can affect the relationship it has with the current and the new customers demanding the same services (Jacoby & Howard, 2015). As a result of that, it becomes possible to come up with better strategies that can make the organization to compete favorably in the market.

• How helpful would your topic be in managing risk for your scenario?

            With the advancement in technology and the increasing traffic rules, the management of risks in this scenario indicates that it is vital for the car leasing industry to ascertain whether their customers are capable of minimizing the risks they perceive might arise from the agreement entered. Other than offering some little training to customers, it is also important to ensure that the organization has provided detailed information regarding the functionality of the vehicle, norms of the country roads, routes, and other related details (Hensher, 2020). Utilizing cost mitigation measures assist in ensuring sustainable or prolonged business profitability.

            Managing and storing booking information is a tedious activity. To effectively manage risks, it is vital to book information regarding price management, performance, provision of new deals, and so on. That will aid in establishing a complex mechanism for managing and controlling car leasing activities daily. Customer satisfaction is one of the key factors in business development. The provision of accurate information assists in creating transparency for customers (Dallas, 2006). Inquiring from customers about the experiences they have and the changes they desire the company to make will assist the management authority to manage the business efficiently.

            Traditional and established car leasing business organizations face various challenges from new competitors entering the industry. New and independently managed businesses are entering the car rental market with advanced technologies and other new ideas. It negatively impacts the activities of the well-established conventional car leasing companies (Jacoby & Howard, 2015). Therefore, better manage such risk, it is important to consider getting updated with the newly emerging technologies and try to come up with new ideas or offers that can aid in grabbing customer attention.

• Reflection on your topic and this project

            Car leasing business is one of the economic activities that are full of numerous challenges. The implementation of effective strategies and quick fixes can assist in running the business in a better way as well as handle car rental challenges. It is important to help customers to understand the various risks that arise whenever they rent a car. Encouraging all customers to accept some of the coverage provided by the car rental business organizations has the propensity of reducing exposure to errors as well as omissions of claims (Herrmann, 2015). Furthermore, emboldening customers who desire to evade the cost of car damages waivers from car rental businesses and advising them that they are already covered will be a wrong approach.

             To come up with an n appropriate advisory approach, it is important to share the same perspectives and insights usually employed when leasing a car to a customer. Start by offering more detailed information regarding the various risks that are involved. Reviewing with the client the strengths and drawbacks of the different types of protection available is an important mitigation measure. After the available options and the risks have been understood, the client can evaluate the relative benefits and costs of each option to make sound decisions (Dallas, 2006). By analyzing various variables, it is easier for the organization to influence positive customer choices which in return assist in managing any risk appropriately.

• Conclusion

            Several factors such as increasing customer demand for speed, convenience, and individualization of mobility products and services, congestion of city centers have greatly contributed towards shaping the need for mobility by the majority of people. Such a scenario is what has resulted in the establishment of new approaches for rethinking car ownership, leasing cars, as well as other related expenses. With time, the idea of metropolitan mobility has greatly moved from the notion of restructuring municipal regions to accommodate the ever-increasing traffic jams to the establishment of mobility systems that is adaptable to city transportation requirements.

            Car-sharing facilitated by the development of car rental industries has assisted in the expansion and evolution of pioneering mobility services. Despite that, various risks are involved whenever a company is approached by a potential client wishing to hire their vehicle. To effectively handle such challenges, it is important for the organization to keep pace with the current market trends, provide detailed information to their clients concerning the risks involved to create transparency. In the long run, establishing a good relationship with customers will enable the company to enjoy the economies of scale. 

 

 

 

 

 

 

 

 

 

 

 

 

References

Cheng, T. C. E., & Choi, T.-M. (2010). Innovative quick response programs in logistics and supply chain management. Berlin: Springer.

Dallas, M. (2006). Value and risk management: A guide to best practice. Oxford: Blackwell Pub.

Hensher, D. A. (2020). Understanding Mobility as a Service (MaaS): Past, present and future. Amsterdam, Netherlands ; Cambridge, MA : Elsevier

Herrmann, J. W. (2015). Engineering decision making and risk management. Hoboken, New       Jersey: Wiley

Jacoby, B., & Howard, J. (2015). Service-learning essentials: Questions, answers, and lessons     learned. San Francisco, CA: John Wiley & Sons.

Mitchell, W. J., Borroni-Bird, C., & Burns, L. D. (2015). Reinventing the automobile: Personal urban mobility for the 21st century. Cambridge, Massachusetts : The MIT Press