Verified Document

Operational Risk Subway Research Paper

Risk Management Operational risks tend to focus on employees, and finding ways to ensure that employees are not a source of reduction in the wealth of the company. Among the operational risks that were identified in Horcher (2005) were those related to training, fraud, theft, as well as managing exposures to certain risks that arise in the course of operations. There have been many examples of operational failures over the years. While most fraud is going to occur at the highest levels of the organization (i.e. Enron), in other companies operating issues have been the problem.

One such instance was with Subway, which faced a salmonella outbreak in the UK (Poulter, 2008) in a major outbreak, but has also faced similar situations in Canada (Mickleburgh, 2011), and the U.S. As well (Blau, 2012; Falkenstein, 2010). Food poisonings increase the risk of legal action that could devastate franchisees and can have a strongly negative impact on the brand as well. Yet, they seem to happen quite frequently over at Subway.

Food poisoning is usually a training & handling issue. Occasionally, it can be traced to a supplier, but again to training and handling issues within the supply chain. The CDC estimates that each year 1 in 6 Americans gets sick from eating food, so in that sense given the number of meals Subway serves its track record might not be statistically horrible, but clearly this is something...

An estimated 3000 Americans die each year from foodborne diseases. The CDC notes that foodborne illness arises when bacteria are allowed to grow, which happens inside food, especially meat and leafy vegetables, on cutting services, or on the hands of food workers (CDC, 2014). Where Subway's supply chain risk is a different issue, the operational risk associated with workers failing to adhere to basic sanitation standards is an entirely preventable operational risk.
There are several ways for management to mitigate this risk. First, the organizational structure of Subway must be taken into consideration. Individual stores are owned by franchisees. The franchisees will get some training manuals from head office, but Subway also prefers to work with experienced franchisees, so a lot of the training is simply left to the franchise owner. So the first step for Subway is to ensure that there are strict training standards, and that franchisees agree to follow them. This is a step that can mitigate the legal risk for Subway, ensuring that the franchise owner bears most of the risk associated with operations.

For the franchise owner, mitigating this risk starts with establishing standards, if Subway has not already provided them. It is recommended that the standards are stricter than local food handling standards. Working to the minimum standards…

Sources used in this document:
References

Blau, R. (2012). Subway restaurants have been closed for health violations more than any other chain in the city. New York Daily News. Retrieved December 12, 2014 from http://www.nydailynews.com/new-york/subway-restaurants-closed-health-violations-chain-city-article-1.1063271?localLinksEnabled=false

CDC. (2014). Overview of attribution of foodborne illness. Center for Disease Control. Retrieved December 12, 2014 from http://www.cdc.gov/foodborneburden/attribution/overview.html

Falkenstein, D. (2010). Subway lawsuits and food poisoning claims. Food Poison Journal. Retrieved December 12, 2014 from http://www.foodpoisonjournal.com/foodborne-illness-outbreaks/subway-lawsuits-and-food-poisoning-claims/

Horcher, K. (2005). Essentials of Financial Risk Management John Wiley & Sons: Hoboken, NJ.
Mickleburgh, B. (2011). Bad tuna sends seven Subway customers to the hospital in Richmond, BC. Globe & Mail. Retrieved December 12, 2014 from http://www.theglobeandmail.com/news/british-columbia/bad-tuna-sends-seven-subway-customers-to-the-hospital-in-richmond-bc/article554590/
Poulter, S. (2008). Sandwich chain Subway linked to deadly salmonella outbreak. Daily Mail. Retrieved December 12, 2014 from http://www.dailymail.co.uk/news/article-1043031/Sandwich-chain-Subway-linked-deadly-salmonella-outbreak.html
Cite this Document:
Copy Bibliography Citation

Related Documents

Subway Restaurants Small Business- Subway Restaurants Amidst
Words: 1268 Length: 3 Document Type: Essay

Subway Restaurants Small Business- Subway Restaurants Amidst the depths of the Great Recession, one restaurant chain managed to grow their revenues and bottom line with a unique marketing concept created by a franchise owner. The now famous "Five Dollar Foot Long" was launched by a Stuart Frankel, a Miami Subway Franchise owner, and is "a national phenomenon that has turbocharged Subway's performance" (Boyle, M. November 5, 2009). Subway restaurants with 2010 revenues

Promising Phenomenon That Lends Itself
Words: 26560 Length: 96 Document Type: Dissertation

66). Furthermore, social software will only increase in importance in helping organizations maintain and manage their domains of knowledge and information. When networks are enabled and flourish, their value to all users and to the organization increases as well. That increase in value is typically nonlinear, where some additions yield more than proportionate values to the organization (McCluskey and Korobow, 2009). Some of the key characteristics of social software applications

Is the "New Terrorism" That Much Different From the "Old Terrorism" ...
Words: 3803 Length: 11 Document Type: Essay

New Terrorism -- Risk Management In the aftermath of the carnage created by terrorists on September 11, 2001, in which 2,977 people were killed (in the World Trade Center, the Pentagon, and in hijacked commercial jetliners), the United States government initiated a "war on terror." That war has yet to be won, and may never be won because terrorists have found new ways of launching attacks and where there once was

Operations and Quality Management "Research
Words: 1886 Length: 5 Document Type: Essay

To reduce inventory management costs and errors, enterprise must form a strong, galvanizing connection with suppliers, buyers, internal production, and customers most of all. In conclusion, inventory management will always be part art and science, as tacit & implicit knowledge is needed to provide greater insight into the analysis generated fro enterprise software applications specifically designed to streamline inventory management. The inherent unquantifiable aspects of demand management will also

Strategic Management Plan Process
Words: 2779 Length: 10 Document Type: Research Paper

BMW Strategic Management The Car Manufacturing Industry Research has proven with time that the most creative and efficient labor force in this globe of conventional production has come from both Japan and Germany who lead the world in creative initiatives. Moreover, studies have also shown that the reason for these two countries being highly productive is because they follow their cultural heritage. There are only few luxurious brands in the car industry

Technology -- Blessing or Curse
Words: 474 Length: 1 Document Type: Term Paper

Response Yes, technology generates problems, and it is shrewd and apt to point out that for every net gain to certain members of society via technology there is a net loss. The hand weavers of the 18th century were put out of business by 19th century factories that could manufacture clothing cheaply, computers have probably collectively caused the art of calligraphy to die, and made even professional writers overly reliant on

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now