How to reduce risk in a company’s worldwide physical footprint and thereby reduce overall risk exposure to the corporation

How to reduce risk in a company’s worldwide physical footprint and thereby reduce overall risk exposure to the corporation

Group Project: Risk Management

How to reduce risk in a company’s worldwide physical footprint (i.e. real estate portfolio) and

thereby reduce overall risk exposure to the corporation

The challenge:

Your consulting team has been retained by a large, multinational corporation in the financial

services, high-tech, or manufacturing sector seeking to answer the CEO’s charge to review their

worldwide real estate portfolio in terms of risk (economic, supply chain, geopolitical, physical,

reputational, etc.).

APPLE INC. IS THE COMPANY

Specifically, your team is charged with determining a strategy for the CEO that articulates how

to reduce risk in the company’s worldwide physical footprint (i.e., real estate portfolio) and

thereby reduce overall risk exposure to the corporation. Key questions include:

• What is our current level of risk exposure?

• What can we do to reduce those risks in the short term (within 24 months)?

• What can we do to reduce those risks in the long term (beyond 24 months)?

• What new systems or processes do we need to better manage risk?

The range of risks to consider in evaluating real estate portfolio risks include, but are not

limited to, the following:

• Business risk

• Real estate market risk

• Financial risk

• Supply chain risk

• Economic risk

• Reputational risk

• Geo-political risk (e.g., potentially unstable or weakened governments, potential seizure

or nationalization of corporate assets, etc.)

• Physical risk (e.g., natural disasters, terrorist attacks, etc.)

Your client seeks to develop a strong capability in risk management across the corporation,

both in terms of individual functional areas and in the numerous potential synergies that exist

for sharing data, insight, plans, and strategies among these functions. To that end, a new Risk

Management Committee, comprising Real Estate and five other functions, will be established.

As a leading organization with operations in all global regions, your client is exposed to a wide

range of risks. They want to achieve greater business flexibility and enhanced business

continuity, and to not only manage uncertainty, but also potentially exploit it for business

advantage.

In the past, risk management has been formally or officially the domain of a single function

(Risk management). Now six corporate functions (Finance, HR, IT, Legal, Procurement, and

Corporate Real Estate), are being asked to “up their game” and contribute more, and at the

enterprise level.

Real estate is being asked to detail how it will respond to manage and mitigate risk in the real

estate portfolio and in business operations overall against the backdrop of growing

protectionism and nationalism, talk of building a wall between the US and Mexico, “Brexit”,

saber-rattling by rogue nations, disruptive technologies, powerful new competitors, and more.