Risk Map of Sales Recording System

PR1: Errors in customer orders due to electronic glitches

This process poses a risk in that 100% of all sales orders are taken electronically via an EDI interface.  This becomes a risk because small problems in the system can have big impacts on customer orders and a system failure would put a halt on the ability of taking customer orders.  Electronic malfunctions are not uncommon and therefore the likelihood that this would happen is moderate but its impacts could be quite high.

PR2: Excessive default on bills by customers

According to the inquiries presented, it is more and more difficult to collect payment on shipped products.  This poses a risk of excessive default by customers.  There seems to be no way to ensure payment prior to sending products to consumers.  This causes a big impact especially on the financial statements where accounts will be inaccurate due to this failure to collect.

PR3: Miscommunication between warehouse and shipping

There seems to be some miscommunication between the warehouse and the shipping dock.  There are times when not all items that need to be shipped to the customer are given to shipping.  Therefore when shipping has to update its files, there is some confusion.  This confusion is further irritated when the items not originally shipped are shipped to customer, as the invoice has already been filed.

PR4: Maintenance of large amounts of accounting records

It was indicated that a large number of accounting records are maintained, even though a number of them contain duplicate information.  This could cause disorganization among the accounting books and records could be ignored or recorded multiple times, causing inaccuracies in the financial statements.

PR5: Lack of supervision over credit verification

It seems that authority over credit verification has been given to sale representatives.  This poses a conflict of interest as sales representatives have the incentive of commissions driving their actions.  This could lead to the approval of customers with bad credit.  However, since sales representatives do not have a sole authority over verification and the accounting department double checks these verifications, this risk has been somewhat mitigated.

PR6: Incomplete shipping orders

As the warehouse employee stated, some orders are sent to shipping incomplete.  This means customer orders are not completely fulfilled.  When partial orders are sent to shipping, this creates confusion for shipping, as well as accounting, because they cannot match the order to what is on the invoice.  However, this risk is decreased due to the fact that the warehouse updates inventory before it is sent to shipping.  That way orders will not be taken if the product is not in stock and partial shipping orders will not be sent.

PR7: Inadequate credit authorization process

This risk seems to be the one creating the most impact.  SDE does not have a clear cut credit authorization process.  Different employees have different ideas of the process.  For example, on employee stated that almost everyone who applies is approved, while another stated that the process is very rigorous.  In addition, there is no set authority over this area.  It is unclear whether this is the task of the sales representatives or the task of the accounting department.  Furthermore, while the company feels that this should be the job of the accounting department, sales representatives have the stake of commission in the task.  This creates a lot of confusion and could result in inconsistent approval methods.  It could also lead to approval of customers with bad credit, especially since the default on bills has increased recently.  It also seems that there is no set control to help mitigate this problem as of yet.