Running Head: RISKS AND REWARDS 1 RISKS AND REWARDS 14 MGMT659 -1504A -01 Management Capstone Phase 4 IP Conclusion on Approach By John W. Casto Instructor Dr. Bryan Forsyth Research Design Name Institution Course Instructor’s Name Date Table of Contents 1.Introduction3 2.Research Design3 3.Justification4 4.Literature Review4 5.Data Collection6 6.The Data Being Sought7 6.1The Impact of the Government’s Regulation7 6.2The Regulations which Redeemed the Economy8 6.3The Specific Examples of Regulations8 6.4An Economist’s Take8 6.5Future Plans9 7.Measuring the Current Problem Issue9 8.Measuring Success10 9.Findings10 10.Recommendation11 11.Conclusion13 References14 1. Introduction The purpose of this research is to identify a management problem and then work out its literature review, methodology, findings, and recommendations. This research will, therefore, focus on the management issues relating to the balancing of risks and rewards in organizations. It is a valuable exercise since these are some of the issues which organizations need to consider when planning their long-term goals. The balancing facilitates sustainability of the endeavors in question (Adams, 2010).2. Research Design The financial crisis that commenced in the period between 2007 and 2008 did put many organizations and corporate into sharp focus based on how they were managing risks. The understanding of the trade-off between the risks and anticipated rewards became an issue of concern, and this is especially with regard to enabling the organizations to effectively take advantage of the opportunities which are available in the global market. Financial and economic researchers asserted that the problem of balancing risks and rewards had played a significant role in the occurrence of the stated financial crisis, and this was as a result of organizations giving little attention to risk management. During the economic crisis, it was evident that organizations, especially those that operated in the financial market, had inadequate knowledge regarding risk and reward management. It is essential to note that business risks cannot be totally eliminated from the global market because they ensure availability and occurrence of business opportunities and as such it is essential to ensure a balance between risks and rewards through effective risk assessment and management structures. 3. Justification Research into the problem of balancing risks and rewards is vital to institutional study because it will add to the available knowledge while at the same time ensuring that financial crisis for instance the one experienced in 2007-2008 are avoided. This study will also stress the significance of balancing risks and rewards because this is an area that has not been given much thought. In this regard, this paper will ensure that organizations take balancing of risks and rewards as an essential part of strategic decision making processes and thus a way of ensuring effective managemen.

1. Running Head: RISKS AND REWARDS 1
RISKS AND REWARDS 14
MGMT659 -1504A -01
Management Capstone
Phase 4 IP Conclusion on Approach
By John W. Casto
Instructor
Dr. Bryan Forsyth
Research Design
Name
Institution
Course
Instructor’s Name
Date
Table of Contents
1.Introduction3
2.Research Design3
3.Justification4
4.Literature Review4
5.Data Collection6
6.The Data Being Sought7
6.1The Impact of the Government’s Regulation7
6.2The Regulations which Redeemed the Economy8
6.3The Specific Examples of Regulations8

2. 6.4An Economist’s Take8
6.5Future Plans9
7.Measuring the Current Problem Issue9
8.Measuring Success10
9.Findings10
10.Recommendation11
11.Conclusion13
References14
1.
Introduction
The purpose of this research is to identify a management
problem and then work out its literature review, methodology,
findings, and recommendations. This research will, therefore,
focus on the management issues relating to the balancing of
risks and rewards in organizations. It is a valuable exercise
since these are some of the issues which organizations need to
consider when planning their long-term goals. The balancing
facilitates sustainability of the endeavors in question (Adams,
2010).2. Research Design
The financial crisis that commenced in the period between 2007
and 2008 did put many organizations and corporate into sharp
focus based on how they were managing risks. The
understanding of the trade-off between the risks and anticipated
rewards became an issue of concern, and this is especially with
regard to enabling the organizations to effectively take
advantage of the opportunities which are available in the global
market. Financial and economic researchers asserted that the
problem of balancing risks and rewards had played a significant
role in the occurrence of the stated financial crisis, and this was
as a result of organizations giving little attention to risk
management.
During the economic crisis, it was evident that organizations,
especially those that operated in the financial market, had
inadequate knowledge regarding risk and reward management. It
is essential to note that business risks cannot be totally
eliminated from the global market because they ensure

3. availability and occurrence of business opportunities and as
such it is essential to ensure a balance between risks and
rewards through effective risk assessment and management
structures. 3. Justification
Research into the problem of balancing risks and rewards is
vital to institutional study because it will add to the available
knowledge while at the same time ensuring that financial crisis
for instance the one experienced in 2007-2008 are avoided. This
study will also stress the significance of balancing risks and
rewards because this is an area that has not been given much
thought. In this regard, this paper will ensure that organizations
take balancing of risks and rewards as an essential part of
strategic decision making processes and thus a way of ensuring
effective management and assessment of risks.4. Literature
Review
Many organizations the world over are usually in business
because they view profit as a means to an end and thus fail to
take into account the long term sustainability of the business.
Research shows that at any one given time, a business might be
profit making, but hard questions must asked. One of the
questions that should be asked is whether the ‘success model’
that a said business is applying is sustainable. In today’s market
place, one of the major challenges that businesses are
experiencing is setting up structures that will ensure that the
rewards that an organization is realizing from its activities are
sustained by functional organizational structures.
They take into account the assessment and management of
business risks that could affect the business (National
Association of Corporate Directors (NACD), 2009). This
finding portrays profitability as being delicate and thus
assessing risks and managing them effectively ensures a balance
between risks and rewards and hence sustains profit margins.
Over the years, and as a lead up to the financial crisis of 2007-
2008, organizations have failed to give much thought to the
relationship that exists between risks and rewards, and as such,
the former has been given little attention and as such business

4. opportunities are not forthcoming in the market (Davies,
Moxey, & Welch, 2010).
As organizations continue to recover from the 2007-2008 crises,
financial sectors and other stakeholders are continually looking
for ways of addressing the problematic balance between risks
and rewards. In the banking sector, government players and
other stakeholders are ensuring that banks and other financial
organizations are well capitalized as a way of ensuring that they
remain profitable even when financial crisis strike (Davies,
Moxey, & Welch, 2010). Moreover, globalization has also
brought with it several opportunities and as such every
organization needs to identify a growth and development
mechanism that best suits their needs. In the case of mergers
and acquisitions, it is essential for organizations to ensure that
proper channels are adhered to and that existing risks have been
effectively assessed and management processes established
because several organizations have greatly benefitted from such
growth opportunities (Lee & Pennings, 1996).
In order to effectively balance risks and rewards, putting in
place long term assessment and risk management plans is
essential. In many organizations and businesses, and as
traditional theories of organizational behavior portray, an
organization’s top management and stakeholders exist in a set
up whereby the latter compel the former to ensure that
organizations are profit making at all costs. This set up has
often worked to meet short term goals but fail later because the
profits are usually not protected and thus sustained by effective
risk assessment and management structures.
Sustainability should always be a key feature in decision
making process and as such long term goals and objectives that
protect stakeholder interests should be taken into account
(Herzog, 2011). Moreover, research shows that in order to
ensure that a business is sustainable, the risks involved in
making decision to either acquire or merge with another
business or get into a strategic alliance should equal the odds of
the expected rewards in order to make financial sense.

5. Thompson (2007) notes that every investment opportunity
usually comes with its demands and risks and as such
organizations should not only focus on the opportunity but
should evaluate the risks involved and the consequent rewards
on investment.5. Data Collection
Data collection is through questionnaires. Questionnaires make
it possible to gather a wide range of information, and this is
because the respondents are able to expound on their answers.
Questionnaires are practical, and large amount of information
may be corrected from a huge number of people in a short
period of time. As long as validity and reliability are
established and ascertained, the researcher may delegate part of
the data gathering roles to assistants. It is also possible to easily
and quickly quantify the results of the questionnaires via the
use of software packages (Kridel, 2010).
In addition to the above issues, questionnaires were also
selected since the analysis of the pieces of data is may be a lot
more objective and scientific than is the case when using other
methodologies. The data that has been identified may be a lot
easier to utilize while comparing and contrasting other research
studies, and it is also possible to measure and analyze change.
The data in question may henceforth be utilized in the creation
of new theories as well as during the testing of new as well as
existing hypothesis (Rubin, 2012).
Nonetheless, there are arguments against the use of
questionnaires. Critics argue that some of the respondents may
lie or provide misleading information. Others may tend to be
forgetful, and there are still others who are unable to reason
within the entire context of the situations at hand. Finally, there
are critics who feel that questionnaires are primarily meant to
satisfy the artificial creation of the researcher, and that is why
only a limited amount of information is sought.
Qualitative research is basically a development of concepts
which facilitate the understanding of social phenomena. The
understanding is largely in natural settings, and emphasis is
given to the views and experiences of the participants. There is

6. a lot of emphasis on meanings and inferences. The goal is to
understand the context, the people, as well as the
comprehension of the interaction between the two (Rubin,
2012).
Quantitative approaches are meant to quantify the problem or
the issue at hand. This is why there is the generation of
numerical data, and this data is that which is transformable into
useable pieces of statistics. This methodology will facilitate the
quantification of behaviors, opinions, attitudes, and a host of
other useable statistics. Results are then generated from the
larger population. Surveys and interviews may facilitate the
collection of the data in question (Vogt, 2011).6. The Data
Being Sought
In spite of the arguments discouraging the use of this procedure,
it has been determined that it is one of the best. In any case,
there is always the room for supplementing with other
methodologies, meaning that some of the identified weaknesses
are addressed and eliminated as much as possible. This section
identifies some of the pieces of information which are being
sought. There is an endeavor to discuss the impact of the
analysis of the information in question so as to make the section
as conclusive as possible. The information being sought
include:
6.1 The Impact of the Government’s Regulation
Basically, this seeks to establish how the government
regulation/polices factor into changes in economic activity on
both domestic and global scale. The government in this case
refers to the authorities in the United States. At the heart of
many regulations’ intention is to aid the economy and
strengthen certain industries or secure jobs. Nonetheless, this is
the widely accepted view: it is important to give the
respondents a fair chance to air their views.
6.2 The Regulations which Redeemed the Economy
This seeks to establish if there were specific regulations which

7. facilitated an effective redemption of the economy, and
especially the banking sector. The food safety modernization act
of 2010 was a regulation passed to give more power to the food
and drug administration and improve the safety. This boosted
customer confidence n the products and more people bought
products produced by those industries that were affected (Vogt,
2011).
6.3 The Specific Examples of Regulations
This is meant to pinpoint the specific gains which were attained
as a result of the reforms in question. The goal is to understand
the aspects which hindered vibrant economic activities, and how
the challenge was addressed. The deregulation of the financial
sector and especially the mortgage sector were made to enable
economic activity in the industry based on the belief that
markets can self regulate. This led to the Great depression
where eight million jobs were lost after the housing bubble
burst. This hindered economic activity in the housing market
(Vogt, 2011).
6.4 An Economist’s Take
The respondents were asked to assume the position of an
economist. Then they were to evaluate the policy and air some
of the ideas they would suggest, and this is with respect to
changing the manner in which similar situations would be
averted in the future. It is assumed that the parties have a
legitimate interest to see the market performing as optimally as
possible. Of course it would be inconceivable for the key
stakeholders not to wish for the betterment of the economic
situation on the ground.
As an economist the job would be to evaluate the cost and
benefits of the regulations and ensure that the costs do not
exceed the benefits. Since the goal was to increase freedom of
the financial markets, firm and effective regulation would have
to be in place when it came to offering credit. Cheaper houses
could have been built to ensure more people owned homes or

8. could afford to pay off their homes without necessarily taking
out a mortgage.
6.5 Future Plans
The Respondents were asked to say how they perceive a career
in monitoring and evaluation. Of course, this was meant to
ascertain if they really have an interest in understanding the
emergent trends as well as in finding the means of dealing with
them in a manner that avert catastrophes. A number of them
argued that having survived the recent economic crisis, they
would enjoy being in a position that evaluates the impact of
such regulations on the economy. They felt that this would help
a host of business organizations as well as the members of the
wider society from being blindsided like before. A significant
number of them stated that this could be a possible future career
choice.7. Measuring the Current Problem Issue
In order to effectively measure the problem, I will use a
qualitative evaluation strategy because it will enable me assess
the risks are rewards involved and hence categorize risks as
being either big or small and its impact on the organization.
Secondly, I will study the organization’s objectives and goals,
strategic positioning, operational and production demands,
financial and market analysis, network and security systems and
the available risk analysis mechanisms in order to get a
foundational understanding. This will then enable me prepare an
operational scope that will enable me develop a risk profile that
is essential in determining the intensity and weight of a risk
against expected rewards. This will then inform the balancing of
risks and rewards.8. Measuring Success
Equipped with an organization’s operational scope and a risk
profile, it is easier put in place effective assessment and risk
management structures because both the scope and profile
document the necessary data. To measure success, I will
identify an opportunity and then research on the inherent risks
after which I will profile them. This will then enable me assess
and then install processes of managing them so as to balance

9. them against rewards.
To successfully measure the success of an organization, it is
essential to detect, quantify, monitor and effectively report the
major risks that your organization could be exposing itself to.
These processes are very essential in balancing risks and
rewards because they constantly measure impacts of the
changing business environment, evolving issues, the execution
strategy, identify operational gaps in the implementation life
cycle and any regulatory variations. Of great importance
towards measuring success is internal self-evaluation because it
enables an organization to identify operational gaps that need to
be addressed for effective and efficient functionality. Further,
periodic assessments and evaluations of internal controls are
essential because it ensures that key processes are functioning
as per the strategies in place and as earlier designed. 9.
Findings
The research found out that many organizations were not
carrying out a number of risk assessments in order to be in a
position of realizing rewards. Strategic, compliance, market,
internal audit, operational, financial statement and cyber-crime
risk assessments were some of the evaluations that needed to
carried out but they were not being applied and thus available
risk assessment and management structures were untested.
Moreover, top management teams were not asking necessary
questions that would be essential in ensuring that there is
relevant information on risk assessment and management before
engaging emerging opportunities.
Although monitoring and evaluation are key areas of ensuring
that expected growth is being achieved and thus important
decisions are reached, it was found that many organizations did
not see this process as being important and hence risks and
rewards were not being monitored and evaluated for checks and
balances. Through monitoring and evaluation, organizations are
usually able to develop structures and programs that make it
easier to assess and hence manage risks and rewards thus
transforming organizations into being effective and resourceful

10. thus yielding desirable results. Since this process was not being
taken seriously, organizations did not have a sufficient number
of monitoring and evaluation officers to manage and hence
ensure that a balance between risks and rewards was being
maintained. 10. Recommendation
Organizations should ensure that adequate and effective risk
assessments are carried out before undertaking business
activities in unchartered territories. Moreover, risk management
processes should be agreed upon so as to mitigate any
undesirable occurrences. Top management should ensure that
important and pressing questions are asked during board
meetings so as to stir action (Martin & Higgins, 1986).
Moreover, organizations should ensure that monitoring and
evaluation are key areas of strategic approach so as to ensure
that timely interventions in the management of risks and
rewards are taken so as to achieve expected or desirable
outcomes. To achieve this, organizations should invest in
monitoring and evaluation officers; whose role will be to ensure
relevance, efficiency, resourcefulness, expected impact and
sustainability of projects being undertaken in order to balance
risks and rewards.
The society should thus be made aware of the importance of
monitoring and evaluation courses so as to ensure that
communities reap from communal programs and projects being
initiated. Further, government, industry players and
stakeholders should work together in order to oversee enactment
of regulations that favor growth and prosperity of businesses
and organizations. During this process, deregulation of laws
that hinder progress in the business environment will be
essential because it will open up growth opportunities while at
the same time equipping industry players with requisite
knowledge on how to avert global economic crisis.
Organizations should not just assume risks because the benefits
look credible or the end result is profit making. It is essential to
note that the risks that organizations and businesses take on
should be acceptable because risks are usually owned by those

11. who assume them. Before shouldering a risk, it is vital to take it
through necessary assessment, management, monitoring and
evaluation processes so as to ascertain that its execution is
beneficial to the organization. Prior to assuming risks, it is thus
essential to ensure that a four-hold assessment, managing and
processing unit is in place to monitor and document external
factors, strategic aims, regulatory adherence and control gaps.
Although organizations and businesses will continue to assume
risks, it is essential to have risk impacts management processes
because they minimize the damages that could occur.
Reputation is usually essential because it dictates the publicity
and press views in circulation. Moreover, compliance to
stipulated industry regulations ensures that a business does not
face penalties or discontinuation of services. Further, managing
the company bottom line takes care of arising opportunities
hence preventing loss making ventures. It is thus essential to
ensure that risks are well managed so as to protect organizations
from reputation loss, suits as a result of recalcitrant behaviors
and negative effects on the bottom line. 11. Conclusion
In today’s marketplace and corporate world, managers and
business leaders are working in a very challenging environment
than any other group of market leaders have in the past. Forces
and other factors that shape the business setting have been
drastically changing and in the process bringing about different
risks that business have had to weather in order to survive
(Martin & Higgins, 1986). Globalization, frequent global
economic crises, collapses in the global financial structures,
threat of new markets, developments in technology and
innovation, changes in demography, cyber-crimes, industry
mergers, consolidations, acquisitions and regulatory
developments are some of the risks that businesses encounter in
their operations. With respect to this end, in order to remain in
business, organizations need to have a balance between risks
and rewards (Herzog, 2011).
References

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from http://www-
management.wharton.upenn.edu/pennings/documents/Mergers_
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