A Risk Assessment of Fedex Corporation

A Risk Assessment of

FedEx Corporation

Marvin Conley

CIS RISK MANAGEMENT & STRATEGIC PLANNING CMGT/585

Mr. Sardoni

June 12, 2006

Abstract

Many organizations perform risk assessments to measure the amount of risks that could impact their organization, and identify ways in treating them before a major disaster occurs. Risks involve theoretical effectiveness of security measures, loss of impact, threats and vulnerabilities that are common in today's society. FedEx Corporation follows guidelines and policies that are governed by processes by which the company assesses and manages its exposure to risk. The company's major financial risk exposures and the steps management has taken to monitor and control such exposures (FedEx Corporation, 2005).

Introduction

Almost every company in business is face with some risk or potential threat that could cause a huge blow to their organization operations. These risks and threats usually comes from within or outside and organization. In order to prepare for the worst that could happen, organizations must focus their attention on how to assess different types of risk so they could protect themselves from the harm caused by them. Risks involve theoretical effectiveness of security measures, loss of impact, threats and vulnerabilities that are common in today's society.

FedEx Corporation is a 29 billion dollar company that offers a variety of supply chain, transportation, business and related information services (FedEx Corporation, 2006). Today FedEx consists of a network of different companies providing services to many countries around the world. FedEx Corporation is the premier provider of shipping and information services worldwide, and its companies function under the motto of "operate independently, compete collectively and manage collaboratively" (FedEx Corporation, 2006).

FedEx is committed to protecting its reputation and organization by implementing strategies that would reduce risk and potential impacts that are related to disasters and other major threats and risks. The company established an effective recovery capability to help reinitiate critical, core business processes following a significant, unplanned interruption of normal processing (FedEx Infosec, 2006). These strategies were implemented to help guard against unacceptable, adverse financial and operational impacts caused by unidentified risk and threats. The disaster recovery plan includes information that is critical to the business operation of the company. It outlines ways to make better decisions after a disaster, and promotes potential opportunities to reduce the risk of existing business processes.

With many major facilities and stations around the world, FedEx is vulnerable to all kinds of risks. The company has hundreds of cargo and commercial airlines that are potential targets for bomb threats or terrorism. Many of the company's critical facilities are located near water, and if a natural disaster like a hurricane strike, it could cause severe damage to the operations. Other potential impacts and threats the company could face are security issues, earthquakes, storms, bomb threats and terrorism.

Risks and Potential Impacts

There are many potential risks and impacts FedEx could face may lead the company in an unworkable state. Nearly 60% of disasters usually come from non-catastrophic events. The company's airline fleet and hub locations at airports are targets for potential bomb and terrorist threats. FedEx Express serves more than 220 countries world-wide through its 677 aircraft and 44,000 vehicles. The air cargo and transportation is one of the largest in the world. A major disaster to FedEx transportation service could cause a serious impact on company operations. In addition, a disaster to FedEx Express services would have an effective on our economy because so many customers use them worldwide.

Since 1998, terrorism makes up 18% of the amount of risk and threats that may impact FedEx. However, this number has significant change since 9/11, and the threat of terrorism is on the rise. The event of 9/11 was a wakeup call for everyone, but FedEx updated their disaster recovery plans so that they will be more effective, and able to handle new threats as they come. Earthquakes usually occur unexpected, but are capable of causing major damage to many areas. Earthquakes impacts on FedEx are only 2%, but a major one could destroy some of the company's major facilities worldwide. The chances of an earthquake occurring and causing problems within the company operations are slim, but every disaster should take serious consideration especially if it changes the way a company operates.

Storms and bad weather often occur around the world, and some of which are deadly. The smallest of storms are capable of causing major damage to some areas including power outages. FedEx operations usually are effective by storms which may cause power outages with some of the company's critical systems. Storms only make up 12% of disasters that could impact the company according the (FedEx Infosec, 2006). The probability of a bomb threat or explosion occurring at one of FedEx's major facilities are unlikely, but statistics show bomb threats have increased over the years. With the rise of terrorism around the world, FedEx could be a specific target due to its proximity near airports and global brand. The chances a bomb threats or explosions occurring at one of FedEx facilities is only 2%, however, that number may increase at any time due to the type of threats.

Other risks and threats could impact the company are fire and explosions. Fire and explosions make up only 3% chance something like it could happen at FedEx according to (FedEx, Infosec, 2006). The risk of a fire and explosion at FedEx would be devastating, and the result could cause the company to lose a lot of its facilities as well as lost of life.

According to (FedEx, Infosec, 2006), most risks faced by FedEx in the past are related to non-catastrophic events. These risks make up about 60% of the company operations and could leave the company in limbo if a major disaster strikes. They are hardware/software failure and network or utilities (power, telecom). The failure of hardware and software within the company's major network could bring the company to a halt, because most of the operations include airline flights are controlled by the computer systems. If a major problem was found related to hardware or software