Risk Assessment. OK Yen, Ltd is a Japanese electronics games and amusements company specializing in pachinko games. Pachinko parlours are a big industry in Japan, whose 18,000 pachinko parlours in 1996 accounted for a quarter of the country’s civil sector and are thought to produce Japanese Yen (¥) 30 trillion per year in revenue — more than Japan's auto industry. Customers who play pachinko buy a supply of pinballs costing around ¥ 4 and cash in the balls they win back for prizes equivalent to

¥ 2.5 each. Although it is illegal to give cash to winners, the customers may go to nearby shops and sell their prizes for cash. Recently a new form of pachinko has been developed that gives very large prizes to winners, but decreases the chances of winning. Although the number of players have decreased over the last four years, the gross sales have doubled. Location of the stores is not crucial, so OK Yen can locate in low rent areas.

Government authorities have recently given much attention to pachinko gaming. Operations featuring the game have been associated with the yacuza, the Japanese criminal organization. Some people in Japan are concerned that pachinko is really addictive gambling. There are complaints to authorities over children being left to play on busy streets or locked up in parked cars while their parents go to play pachinko.

Required

Following the five step procedure outlined in the chapter, identify the risks associated with OK Yen's business.