Assessment Task 1 Bsbrsk 501 Manage Risk PDF

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Assessment Task 1 BSBRSK501 Manage Risk Author: Instructor:

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Introduction Risk management is one of the most essential factors in any business organizations. It involves a situation where a business faces high chances of getting loss or damages due to both internal and external factors (Abdullah et al. 2017). This makes it necessary for the management to have effective actions in place to prevent these risks from happening. To meet out the possible risks from happening, the management of business organizations are required to implement a risk management system which helps in forecasting available risks and possible solutions that will help lower the impact in case it happens. The management of the business organization employs various factors including risk avoidance, risk transfer, and risk assumption to deal with the possibilities of a risk-taking place (Kohnke et al. 2016). This risk management report is made to determine and analyze the risks context associated with a new business outlet that is within an existing structure of business. The report will review both the internal and external environmental factors to identify risks whereby a case study of Macville Pty Ltd simulated business will be used.

a. Effectiveness of the Risk Management Framework of MacVille in supporting the principles and processes of risk management set out in the risk management standard AS/NZS ISO 31000:2009. In risk management, it is very essential for business organizations to make sure that the methods used for the analysis are aligned with the international guidelines and standards including AS/NZS ISO 31000:2009 (Purdy, 2010). This standard has been established to make sure that the risk management frameworks of Macville applies the same recommended principles. AS/NZS ISO 31000:2009 provides 11 principle of risk management to organizations which are meant to guide the management when developing the risk management programs and framework. The principles include; to create and protect value, be an integral part of the processes of organizations, be part of the decision making, address uncertainty, be systematic, be tailored, based on the best available information, take into account cultural and human factors, be inclusive and transparent, be dynamic and lastly to facilitate continual improvement of the organizations. The Macville Risk management Framework has applied some of the mentioned principles although there are some deficiencies that were identified in the company.

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The risk management framework of Macville organization comprises various elements as recommended in the AS/NZS ISO 31000:2009 standards which allow it to facilitate efficient operations which enable the management to respond to various financial, operational, strategic and commercial risks (Purdy, 2010). The elements involved include; reporting, policies and procedures, business planning and budgeting, risk management review, CEO and external audit. The finance, audit, and risk management committee of the organization are tasked with reporting to the board meetings about the internal controls. The CEO of the company has the responsibility of briefing the directors on development procedures and policies so as to ensure efficient and effective operations, and risk management strategies and their implimentation. The finance and audit committee on the other hand pays particular attention on the management of the identified risks. Besides, the committee oversees all the internal audit, management and external audit and it is therefore well placed to advice the board of directors on the effectiveness of the control systems and the risk management strategies. However, it is important to note that the risk management committee of Macville only focuses on the internal control which is a function of the audit department which could expose the company to unidentified risks which are not particularly in the internal control including external factors (Abdullah et al. 2017).

b. Identify and describe the scope of risk management required in your role The main role of a manager in risk management is to create a disciplined, well-structured and a controlled business environment that allows effective anticipation of risks and maintenance within predetermined and acceptable limits. By establishing the risk management framework, it is important for the management to define the basic parameters within which the risks of the organization should be managed and set the scope for the whole process of risk management. For a manager to effectively identify and manage the risks associated with an organization, it is essential to apply appropriate strategies and identify the scope. For the purpose of this report, the scope of the risk analysis shall focus on the operations of the Toowoomba café and the expansion of Macville operations in Queensland in purchasing and rebranding Toowoomba café. The main elements that shall be targeted include the human resources, and the financial operations of the

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café which covers the operations of the store operations management and demand, local governance, supply chain management and regulations compliance issues.

c. Identify and describe the critical success factors, goals or objectives for areas included in the scope Critical success factors refer to elements or things that are necessary for an organization to successfully achieve its missions and objectives. They are essential areas of activity that the management of the organization must ensure that are performed well if the goals and objectives of the company are to be achieved (Sadgrove, 2016). To identify the critical success factors of Macville, it is first important to identify the goals and objectives in the scope. The main objectives and goals of the senior manager in the company’s risk management are identifying the effectiveness of the risk management procedures that are in place and in case of any problem, it is their responsibility to advise the organization on the best strategy to employ, risk analysis and monitoring. The goals include to give the new managed important insight on the operations of the store, to effectively manage the operation risks of the Toowoomba store, and to make sure that there is a smooth transition to the systems of Macville and finally to encourage the new senior manager of the store to continuously support risk management.

For the objectives and goals to be achieved, there are various critical success factors that the organization must emphasize on including added services to the store to improve customer experience e.g. Wi-Fi, employee training and professionalism, competition, improve décor in the café, quality furniture, work culture, employee manuals, operational expenses, litigation and penalties and revenue growth of the company.

d. Role of stakeholders in risk management Macville Pty Ltd business has various internal and external stakeholders who play an important role in helping the organization achieve its objectives and goals. The internal stakeholders are individuals who are committed to serving the operations of the company while the external

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stakeholders are people who are affected by the work of the organization (Hillman and Keim, 2001; Elshandidy et al. 2017). Stakeholder

Internal/externa

Role in process

The board

l Internal

Board

of

Stake in process

director’s

role

includes

application of the appropriate strategy

Potential

loss

of

assets.

of risk management and overall risk management. Ron

External

Landlord and councilor

Potential loss of a

Langford Paula Kinski

Internal

CEO

tenant. Promotion prospects and avoids the loss

James

Internal

of reputation. Improvement

Supervisor of Hurley’s store.

Mansfield

reputation

and

potential Hurley’s

of

Internal

staff

Employees. The staff roles involve

loss

of

promotion. Loss of employment

identification, monitoring and taking timely action regarding the risks to ensure

Gddsmith

External

that

they

are

managed

effectively. Compliance and legal advice

Partners

Potential for being sued

for

wrong

advice given and Suppliers

Customers

Internal

Internal

Suppliers role include provision of

loss of a client. Suppliers have

advice to the management regarding

medium

risks.

stake in the process

Customers who are loyal to the

of risk management. Customers have

organization can participate in risk

very few stakes in

management because they show great

the

level

procedure

of

of

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care and affection towards it. They can

risk management.

participate by providing advice to the Government

External

management and what they expect. The government has an important role

Government

to play in risk management through

high level of stake

implementation of food safety laws and

in risk management

has

policies and employment laws to strategy. protect the employees.

e. PEST analysis and a SWOT analysis to identify risks associated with the scenario To identify the external and internal risks that are associated with the organization, PEST analysis and SWOT analysis will be carried out. PEST analysis: PEST analysis includes evaluation and analysis of political factors, economical, special and technological factors affecting the organization (Gupta, 2013). Political factors: The federal legislation by the government that involves the efficient use of water resources and the by-law which was introduced to allow cafes in the region to expand their footpath dining will affect the operations of the store. The new water usage legislation can easily expose the organization to potential penalties and litigation as a result of non-compliance. Social factors: there is a steadily increasing population in the region which has the potential to increase customers in the café. Also, the retiring population in Toowoombora which is the main target of the café increases the loyalty to the organization as a result of the high costs associated with switching.

Economic factors: the global economic growth and development has a significant impact on the progress and sustainability of business organizations. High industry growth and population growth plays a critical role in boosting the revenues of the businesses and also increases the potential for growth. There has been a region product growth of approximate 8.9% which will have a significant impact on the development of the café while

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the number of visitors which has decreased to 18% may have a negative impact on its growth and development and financial performance.

Technological factors: in the recent past, the government has invested a lot of resources in promoting technological advancement in the country (Koumparoulis, 2013). In Toowoomba, the government is investing in federal national broadband network which can be used by the organization to improve its operations e.g. by offering WI-FI in the café. Therefore, the café can take advantage of technological improvement e.g. internet for efficient communication with other branches, their customers and other stakeholders and also provide free internet to the customers and thus improve their brand image.

SWOT analysis SWOT analysis focuses on strengths, weakness, opportunities and threats facing the organization (Helms and Nixon, 2010). Strengths: the location where the café plans to open its stores is one of its strengths given that the strategic location will promote its accessibility for all the customers. The store is conveniently located on the corner of two main streets in the city which has increased its viability to customers and accessibility. Also, its operations in different areas will increase the number of customers served in a day which will add to its profitability and enable continuous growth and development. Also, the café boasts of offering differentiated products to its customers and this attracts more customers into the store. Weaknesses: given that one of the key objectives of Macville is offering fresh products to all customers, the two hour delivery time makes delivery of fresh products from the central bakery plant impossible. Also, there are no Cleary written policies and procedures in the organization as the management set them verbally which might be difficult to remember. Another weakness that was identified is that there was no established procedure of dealing with injuries at the working place and that not all take-ins from the cash register by the members of the family were recorded. This increases the risk related to cash and safety of the workers. Besides, the organization lacks an effective sales promotion strategy which is very essential when entering a new market and attracting more customers and creating consumer awareness.

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Opportunities: some of the identified opportunities for the organization are the front path expansion whereby new legislation has been introduced to allow the organizations to expand its footpath dining which has the potential to increase the store capacity. Also, there is an opportunity to increase the size of the café operations in Toowoomba given that the population was increasing and that the government was to allow cafes to expand their footpath dining. Therefore, the management should put up more tables and chairs to accommodate more customers as well as take advantage of the National Broadband network being rolled out by the government to provide free internet to customers. Threats: One of the major threats faced by the organization is that there was information that representatives of larger international chains of coffee shops had been making enquires in the town about opening a new store. This is a major threat for the café as it would face stiff competition from a more established organization with a strong brand image.

f. Methods of research that you used to complete your PEST and SWOT analysis To conduct the PEST analysis and SWOT analysis, different methods of research can be employed. In the case of Toowoomba store, the risk management framework involved various elements that assist the senior manager to carry out the operations and help generate quick responses. To conduct the SWOT and PEST analysis, the main source of information used was from an analysis of secondary documents which provided more information about the organization including its background, recordings from meetings with senior management team and risk management committee, risk management policy and management framework. This involved a major site visit with James Mansfield to collect primary information and data about the store operations including the use of water resources, employment, promotion, fit out and cash handling. Another source of primary data what through interview with Ron Langford who provided important information regarding the economic conditions of the region, the expansion options, government legislation, and the technology plans. Secondary data was sourced from extracts from both Toowoomba regional council and Macville NSW which provide important

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economic indicators in the region and the key problems that are likely to be faced by the organization.

g. Complete the analysis of risk for the scenario by summarizing the scenario and identifying a list of risks to the project.

WHS risk- the terrain of the region is steep which increases the risk of accidents due to the narrow roads in the town for managers who have to attend weekly meetings in the organization and this could lead to physical injury. Also, there are increased risk of injuries to both customers and the employees due to fit-out in parts which are old and broken and also some parts of the worn target provides a safety hazards to the people and could lead to reputation loss, and compliance breach. In addition, the organization lacks a well-established process that is designed to deal with injuries that might happen at the premises which could also result to reputation loss and unions suing. Human resource management risk- the organization lacks well written policies and procedures to guide the employees while varying out their day to day activities as recommended by global standards which could result to inappropriate actions and errors. Besides, information regarding the workers is not well protected by the management because the computer which stores these details and other financial records lacks a password and therefore any unauthorized individual who can access the computer can easily access the details. Also, the organization lacks efficient sales promotion strategies and defined authorization systems which could lead to negative impacts on the financial viability of the store and fraud.

Financial operation risk- the daily earnings and cash of the business are more than often left overnight in the business premises because the management has not emphasized on banking and therefore there is a high chance of theft taking place. In addition, there are not well laid financial recordings as not all cash that are taken by the family staff members are recorded for proper financial recordings which could result to misappropriation of the business funds. Also, the superannuation records and wage records in the business seemed incomplete.

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Local governance and compliance risk- there is the introduction of a new law by the government that allows the café to expand its footpath dining and therefore put in more chairs and tables outside the premises and the council regulations that require the premises to have efficient water fittings e.g. on taps and urinals which would require more water usage which could lead to fining and brand loss. Also, incomplete records regarding to employment could result to government penalties that amount up to $50,000 and brand loss.

Supply chain risk- due to the long distance from the company’s central bakery to the store, it would not be possible to deliver fresh pastry to the customers as desired and this could compromise the quality of services offered and loss of brand value.

Email to the relevant stakeholders TO: stakeholders FROM: Macville Risk Management Committee RE: Invitation to be involved in Risk management of the organization Dear our valued employees/ investors/ Customers: As part of the strategy of Macville limited company, the management has decided to expand the operations of the business into Queensland by purchasing and rebranding the Hurley’s café located in Toowoomba. It is therefore the delight of the risk management committee of Macville limited that you are hereby invited to provide your inputs as we start the risk assessment and management procedures. A preliminary review has been conducted and the following are some of the major problems that were identified in the café.  The café lacks a well written policy and procedures to guide the employees.  It lacks efficient internal controls on cash handling, monitoring and recording of the financials.  They are yet to comply will various WHS standards including privacy and industrial relations laws.  Lack of professionalism in ...