Risk management : Alstom

Résumé du document

Before starting this report, I think it's important to state what risk management exactly is. Indeed, risk management's purpose is to help others create their desired variation from their desired outcome at their desired times. I then decided to analyze risk management in the Alstom transport company, who decided to implement their new manufacturing platform in Poland. This represents many risks such as financial, contractual or even quality risks. Alstom Transport has chosen to make its Polish site to become the future's most important manufacturing platform in Europe, and the main risks are to deliver the train later than expected (delay in deliveries) and to have quality problems, as it's the first time that a project is entirely done in Poland. This transfer to Poland has implied some important human means, such as the sending of employees to Poland in order to train the polish employees, some intensive trainings for the French as well as for the Polish. In this report, I will show that it's very hard, even for a multinational company, to remain competitive, and sometimes companies take many risks in order to remain on top.

Extraits

[...] This strategy implies some risks: - The company needs time in order to establish its manufacturing site in an autonomous way. It can cause delays in deliveries to clients - The quality of the products can be lowered, because the Polish don't have the French know how, and don't have enough experience compared to the other manufacturing sites. In order to face those risks, Alstom Transport has put in place several solutions, such as sending some French expatriates to Poland in order to help the Polish in the manufacturing and project management. [...]

[...] Risk position is one of the key elements in writing risk management document. It is extent of exposure to a particular risk, expressed usually in monetary terms.”(www.businessdictionary.com). Usually, it's quite difficult to access such information, as we don't have access to them if we are not in the company. Indeed some of the data needed to answer this question are confidential and it's difficult to have access to them. But in fact, the risk position equals to the total amount of the risk appetite (total amount ready to be invested in risky projects) and the risk tolerance (total amount ready to be paid for losses). [...]

[...] Now that the country has entered the European Union, it's a lot easier to hire Polish people and to travel to Poland. Moreover, it's a big opportunity for Alstom to be present in the Eastern countries, where contracts were always awarded to Siemens or the Russians before the Budapest project. These stakes are worth for Alstom taking so many risks, and so especially the quality risk and delay risk. I am aware of those risks as I work in the Alstom transport company. [...]

[...] Let's see who are the stakeholders, and how the risk is managed by Alstom. Introduction o Who (important people) o What (they do) o Where (location of headquarters and operations) o When I have decided to explain the context of change within the ALSTOM TRANSPORT company. But let's first explain what are Alstom's activities and how it's working. Alstom has been created in 1928 under the name of ALSTHOM. Today, the company hires more than people in over 70 countries, with mainly skills in two areas: equipment and services for power generation and rail transport. [...]

[...] But obviously, risk management is part of the business, and the mid term and long term stakes seem to be more important than the short term risks, as here in the case, risk management is seen through a long term investment, and risk is less important than the earnings and the benefits of the investment (of course depending if it's a short / middle / long term view). The different solutions put in place by companies to avoid risks don't allow to eliminate the risk totally. Indeed, the solutions are put in place to minimize the risks and there is no perfect solution that allows a risk investment. Bibliography www.alstom.com www.businessdictionary.com Seminar notes from the course of Risk Management II. [...]