THE RELATIONSHIP BETWEEN RISK CONTROL AND RISK AVOIDANCE/ TUTORIALOUT THE RELATIONSHIP BETWEEN RISK CONTROL AND RISK AVO | Page 2

Tameer was the biggest developer in the region. William Telford
had Tameer professionally risk - profiled, and the company seemed
safe and reputable. But over the
following months, Tameer became The Business Centre's biggest
client - just before the GFC hit. Tameer started lagging in payments...
Previously, The Business
Centre had never experienced bad debtors, so Telford
believed business would bounce back and Tameer would eventually
pay - it would just take time. Plus, The
Business Centre had a large client base, so Telford tried to overcome
the issue by leveraging income from other projects and invoice
factoring to raise funds and keep business going.
In most cases, this strategy would work as an emergency measure.
But due to the GFC, suddenly all of his clients stopped projects, and
absolutely no income came in.
With these factors combined, The Business Centre was beyond help.
The company collapsed after 10 years of operation in 2010, and
William Telford lost everything he owned.
Keeping in view the above answer the questions below:
1. Where do you think William Telford made a mistake?
2. How does the risk management strategy would have helped him?