Risk Management

Overview of the company

Sysco Corporation is a leading distributor of food and related products in the US. The company mainly operates in North America. It has headquarters in Houston, Texas and has employed around 46,000 people. The company achieved a revenue figure of $37,243.5 million in the financial year of June 2010 that ended with an increase of 1.1% throughout 2009. The increment in the revenue was certainly due to the additional week included in fiscal 2010 and better case volumes during the second half of the fiscal year. The operating profit of the company was $1,975.9 million in FY2010, an increase of 5.5% over 2009. The net profit was $1,180 million in FY2010, an increase of 11.7% over 2009.

Company's operations

Sysco Corporation, acting through its subsidiaries and divisions, is the largest North American distributor of food and related products primarily to the foodservice or food-away-from-home industry. They provide products and related services to approximately 400,000 customers, including restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers. They were founded in 1969 and Sysco commenced operations as a public company in March 1970 when the stockholders of nine companies exchanged their stock for Sysco common stock. Since the formation, they have grown from $115.0 million to $39.3 billion in annual sales, both through internal expansion of existing operations and through acquisitions. Sysco's fiscal year ends on the Saturday nearest to June 30th. Sysco Corporation is organized under the laws of Delaware. Therefore, these are the overall company's operations.

Company's Financial Position

Sysco Corporation sales have increased nearly every year for more than four decades. This enviable history is built on durable relationships with both customers and suppliers and they believe they have many opportunities to continue to grow the business across all customer segments. As a result, the strong cash flow and commitment to prudent financial management give company the strength to continue to invest in the business and return value to the shareholders. They have consistently delivered a strong return on invested capital every year for the past decade and have paid a dividend every year since going public in 1970, increasing the dividend 42 times during that period. However, company is still maintaining a reasonable level of performance since many years and would need to continue the same trend in the future.

Application of Risk Management for Sysco Corporation

Risk management concerns how people deal with risks. Risk reduction (making risks smaller, as by changing a technology or altering how people behave) and risk prevention (for example, banning a potentially hazardous technology or activity) are methods most people can imagine, because they are widely discussed. However, risk acceptance is probably at least as common. This often entails deciding that the benefits of a hazardous activity or technology far outweigh its harms, but not always. For example, individuals might engage in “risky” recreation, like skydiving or rock climbing, without explicitly weighing its personal benefits or costs; institutions and nations might also accept certain risks because to ...