For the reasons of refurbishing the nearby environs in the merger with the skyrocketing of real estate values, Goose Island Manufacturing Firm faces a selection of risks as a result of the new policies. The company risks incurring more losses as a result of the relative costs needed for the entire refurbishment. In the commercial insurance checklist, it guarantees insurance for the replacement cost valuation (Draffin, 2016). Through the use of loss valuation criteria, the coverage caters for settling bills for repairing the old items. The assessment defines that a company is at risk of facing extensive losses should it opt to refurbish its property with the already accelerating prices of replacements. Thus, Goose Island would incur significant losses, with its only benefit being remunerations from the depreciated value of replaced items.

With its construction dating back in the late 1920s, it closes up the average costs of replacement to stand at a range of $12 – $14 million. Parting ways with such a considerable amount of money at once for a company like Goose Island is a significant loss hence a risk itself. Closing down of the firm for 11 months would mean a possibility of an increase in expenses according to the workforce reviews(Adapted from Commercial Insurance Checklist, 2015). It also means an opportunity for related companies coming in to conquer its markets. About the commercial insurance checklist, it says the firm should entitle to improvements and betterments insurance column. In its absence, the company is at risk of losing its customer base. It owes to the 11 months of alterations in the smooth supply of products into the market.

From a given dimension, the exposure could lead to price risks in operations during the shutdown period. For instance, it should take considerations as to whether, beyond the geological risk, could the reserves in heavy equipment by the company be feasible enough to sustain the economy during the closure? It means, shut down in operations would increase risks in additional spending as a replica for the broad types of machinery that are not operational during that time(Adapted from Commercial Insurance Checklist, 2015). Fact is, the higher the valuation of the equipment that a substantial use, the higher the relative costs needed during a refurbishment phase. It owes to the alternative forms of operations within the manufacturing company itself. With such risks in place, the company is not at a position to eventually close down its operations (Draffin, 2016). But still then, one must understand the significance of the closure in terms of the unprofitability due to dripping of prices.

The manufacturing company also faces untimely risks in terms of constant demand and supply of goods, should it come to a sudden closure. Shutting down of operations for the 11 months leads to the loss of already existing customers to your rivals. Hence, the company needs to comprehend the extensive lengths of time that it takes for operations to bounce back after a closure. The demand is at risk of declining due to the loss of customers (Adapted from Commercial Insurance Checklist, 2015). It, in turn, affects the smooth supply of items, thereby subjecting the company to a form of the jam in operations. Sure things could defect after a while, and this also puts the firm at risk yet.

To the company, other aspects that could specifically lead to loss includes economic constraints like macro-economic and financial crises as soon as the firm restarts its operations. The aspects as mentioned above could dry up the firm’s budget. Couple the above with the unexpected price fluctuations, the refurbishment process hinders most of the future operations by the firm.

References

Commercial Insurance Coverage Checklist – Allison Ins. (n.d.). 2015 Retrieved from http://www.allison-ins.com/uploads/6/3/7/7/6377634/aig_commerical_checklist.pdf

Draffin, N. (2016). Bunkers: An introduction to managing commercial risk.

 
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