Assessment of Hazard Risk of a Business: Amazon Loss Exposures

3-1: Hazard Risks

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3-1: Hazard Risks

A hazard can be described as something that could bring about harm. On the other hand, risk entails a combination of two key aspects. The first aspect entails the likelihood that the hazard will bring about harm, while the second aspect is how serious the harm could be. This being the case, hazard risk could be described as a risk that poses a significant threat level to either property, life, or the surrounding environment. Besides, most hazards are considered dormant or contain only a hypothetical “risk of harm.” Nonetheless, emergencies can be established once a hazard is active (Kuipers et al., 2018). This paper discusses loss exposures at Amazon Inc. and insurance policies for the loss exposures.

Amazon Loss Exposures

Amazon Inc. is a United States global technology firm mainly involved in e-commerce, among other aspects such as cloud computing and digital streaming of films and television shows. After reviewing Amazon’s most recent annual report and 10-K statement of risk factors, specific loss exposures can be identified (SEC, 2021). The list of the loss exposures is as follows:

Amazon faces fierce competition, especially in the eCommerce sector, which might result in loss of revenue (“net income loss exposure”).

Local political and economic conditions may impact international operations resulting in a lack of profitability (“net income loss exposure”).

Amazon’s retail sector’s variability may significantly strain its operations, failing to meet customer demand, reducing revenue, and curtailing future growth (“net income loss exposure”).

Amazon also faces loss exposure through fraudulent seller activities leading to criminal liability based on these fraudulent activities (“liability loss exposure”).

Another loss exposure entails Amazon being accused of breaching the “intellectual property rights” of 3rd parties resulting in civil litigations (“liability loss exposure”).

Amazon’s continued expansion is strenuous to its management, financials, and operations sector resulting in a loss exposure in the form of limited growth and reputation damage (“net income loss exposure”).

The company’s significant variations in its growth rate and operating results subjects it to a loss exposure in the form of revenue loss and decreased profitability (“net income loss exposure”).

Amazon sometimes fails to sufficiently augment its fulfillment networks and data centers bringing about loss exposure through increased costs that reduce profitability (“net income loss exposure”).

Since Amazon deals with significant amounts of data, it could face loss exposure through data loss and security breaches. (“net income and liability loss exposure”).

Considering Amazon is a big company, it usually faces system interruptions and delays that prevent its websites from fulfilling orders and other services, bringing about loss exposure in the form of reduced net sales (“net income loss exposure”).

The company also faces loss exposure based on failure to hire or retain key personnel, reducing operations effectiveness (“personnel loss exposure”).

Amazon has a strict supplier chain subjecting them to loss exposure in case of failure to supply in time, considering it would be