Riskassessment takes into account the possibility of negative events incombination with the severity of the event. It is based on thefundamentals of science, applicable regulations, and the associatedprocess involved with the risk under analysis. The approach to riskassessment process involves:
Identification of the risks
Defining assumptions to the risk problem
Assembling relevant data and information about potential risks
BioCrystPharmaceuticals faces the risk of possible failure of the firm. Thisis evidenced by the heavy losses incurred in 2014 due to research anddevelopment expenses in the discovery and development of drugs fororphan diseases. Moreover, the firm is new yet not established in themarket with only one approved product hence the risk of insufficientprofits.
Over-relianceon government funding poses a risk to the operations of the firm. AsBioCryst Pharmaceuticals relies upon the government leverage.Leverage increases the ability of the business to invest and earn anexpected higher return but also at high risks. Reliance on thegovernment revenue sources such as research grants and contracts maydelay the operations hence, may lead to collapsing of the firm ifsome projects were cancelled.
Outsourcingposes a threat to the success and operations of the firm. SinceBioCryst is a new, inexperienced drug discovering company, ittransfers its management and day to day execution of the businessfunctions to a third-party provide. For instance, it can partner withresearch institutions and other global pharmaceutical companies formanufacturing, sales, and distribution of approved products.
Specialtyin orphan and infectious diseases may constitute a risk of lesstarget market. Target marketing allows a firm to achieve the targetedgroup specifications and requirements. This methodology of marketingmay generate low sales as the firm faces competition from similarlyestablished firms in the industry.