BFA522 Risk Management

Introduction

The risk management process plays important role in resolving the potential issues associated with the business (Tjoa, et al, 2008). In this regard, the risk management of new restaurant; Spices of Melacca has been evaluated with the application of risk management process and environmental analysis. 

Stakeholder Analysis

The analysis has been done as follow for Spices of Melacca-

Table 1: Stakeholders' analysis

Stakeholders	Issues/Risks
Customers	Changing demand related to products and services and availability of substitute because of price variation.
Investors	Interferences in the decision making and dissatisfaction at the time of low rate of return.
Employees	Unskilled employees might create additional cost of training and development.
Suppliers	Ineffective supply chain along with the poor quality of input. Furthermore, payment related issues with suppliers might also affect the performance of the business.
Competitors	Due to high competition in the marketplace, Spices of Melacca might get low rate of return.
Government	May create issue through unfavorable regulations and rules.

Risk Analysis

Pestle analysis

The description of several elements has bene provided as follows-

• Political factors-Australia is considered as the world’s most political stable country which supports beginners to commence business in the country from (HABC, 2018). Owing to this, Spices of Melacca have superior opportunity to begin trade in Australia with supportive and stable political factors.
• Economic factors-The economic condition of Australia is good due to it have highest growth rate among the developed countries (ePortal, 2018). Further, the GPD rate of Australia encourages new investor to begin their business. Thus, Spice of Melacca has minimum risk from the economic condition and also have fine prospect to establish their business in Australia. 
• Social factors- Many tourists prefer to spend their time in the restaurant in Australia (Restaurant & Catering magazine, 2017). Owing to this, their taste is according to their region so the selection of menu dishes will be accordingly.
• Technological factors-In the present era the technology is crucial for establishing of any business (Rodgers, 2007). In this context, the restaurant business needs to bed more advanced in term of technology in several (Saad Andaleeb and Conway, 2006).
• Environmental factors-Climate change influenced the restaurant business because it has impact on the availability of raw material of food product through the changing rainfall pattern this impact on Australia as other continent (Collet, 2014). Owing to this, the Spice of Melacca has risk from the climate of Australia.
• Legal factors-Australian government is aware about the food safety of their public and accordingly imposed the food safety Act 1991 which focuses on the food quality serve by the commercial purpose (Australian Institute of Food Safety, 2018). Owing to this, the legal environment of the Australian market related to food may affect the performance of the new business.

Participation and Goals

Objectives and critical success factors

The success of the business will be measured on the basis of objectives which are listed as follows-

• To avail the products and services at favorable price to deal with competition
• To maintain the effective as well as integrated supply chain for reducing the cost by 10% in the time span of 6 months.
• To create the brand image in the Australian market by offering variety of products and services
• To increase the sales turnover by 15% till the next financial year

Stakeholders involvement for risk management

On the basis of stakeholder analysis and the objectives of action plan, different methods will be used to involve the stakeholder in the risk management process. For involving the customer in risk management, survey will be conducted that helps for understanding the customer’s current requirements in Australian market. Further, to increase the product quality, connection will be established with the major supplier in restaurant industry of particular area. Moreover, the involvement of investors will be increased through enhancing their participation in decision-making process for financial support.

Risk Matrix

Risk matrix helps an organization to understand the risk and their relation with the objectives (Lim and et. al., 2012; Ankley and et. al., 2010). In this context, the management of the Spices of Melacca has been carried out as follows. In this regard, the score is changes on the level of 1 to 5 wherein 1 present very low risk and the last 5 present very high intensity of risk

Risk identification

Table 2: Risk identification

Risk	Purpose1 Customer satisfaction	Purpose 2 Isolation	Purpose 3 commence in Australian market	Purpose 4 Profitability	Score
Pressure of stakeholder	5	3	3	2	13
Political pressure	2	3	4	3	12
Employee development	4	3	4	4	15
Technological risk	4	3	4	5	16
Low quality related issue	5	4	4	4	17

On the basis of risk prioritization low quality, technology and employee development require keen focus of the business as these are high risk areas (refer appendix). However, likelihood and consequences of risk is determined in the following manner-

Likelihood and Consequence

The score of each score, refer the table in appendix.

Table 3: Risk likelihood

Risks	Risk 1	Risk 2	Risk 3	Risk 4	Risk 5
	Low quality related issue	Technological risk	Employee development	Pressure of stakeholder	Political pressure
Likelihood	2	2	3	4	2
Consequence	5	5	3	4	3
Risk 1	0	1	3	5	0
Risk 2	1	0	4	4	0
Risk 3	4	4	0	3	0
Risk 4	4	3	4	0	4
Risk 5	0	3	1	3	0
Risk interface score	9	11	12	15	4
Risk interface Weighted score	45	55	36	60	12

As per the evaluation of the risk analysis, low quality, pressure of stakeholders and technological changes should be addressed effectively so as to determine the successful operation of the business.

Risk management options

• Total quality management
• Employee training
• Free flow of communication between stakeholders
• Applying new and cost-effective technology

Evaluation of Risk Management Process

To ensuring the good product quality total quality management model will be applied along the employee training program on the regular basis which will enhance the employee capabilities in organizing. Further, it will increase product quality together with employee development. Apart from this, the healthy communication will establish between the stakeholders of company. After some period of commencing the business, the technological advancement will be done for the improvement of the service and product quality. Further, it will enhance the quality of those operation which leads customer satisfaction and improve productivity.

Conclusion

According to present report it can be concluded that the external environment influenced the business by creating threats which affects company’s profitability and productivity. In this context, the risk management is most crucial for beginners to manage the efficiency of their business with effective management of particular risk and minimize the effect of risk on the business.

Refrences

Ankley, G.T., Bennett, R.S., Erickson, R.J., Hoff, D.J., Hornung, M.W., Johnson, R.D., Mount, D.R., Nichols, J.W., Russom, C.L., Schmieder, P.K. and Serrrano, J.A. (2010) Adverse outcome pathways: a conceptual framework to support ecotoxicology research and risk assessment, Environmental Toxicology and Chemistry, 29(3), pp.730-741.

Australian Institute of Food Safety, 2018. Food Safety Laws. [Online]. Available at:< https://www.foodsafety.com.au/resources/videos/food-safety-laws>. [Accessed on 1September 2018].

Collet, J., 2014. Climate Change and Australian Food Security. [Online]. Available at:< https://www.futuredirections.org.au/publication/climate-change-and-australian-food-security/>. [Accessed on 1September 2018].

ePortal, 2018.AUSTRALIA: ECONOMIC AND POLITICAL OUTLINE. [Online]. Available at< https://en.portal.santandertrade.com/analyse-markets/australia/economic-political-outline>. [Accessed on 1September 2018]

HABC, 2018.Geopolitical assurances of stability for business and investment. [Online] Available at:< https://www.habc.gr/australia_geopolitical.asp>. [Accessed on 1September 2018]

Lim, S.S., Vos, T., Flaxman, A.D., Danaei, G., Shibuya, K., Adair-Rohani, H., AlMazroa, M.A., Amann, M., Anderson, H.R., Andrews, K.G. and Aryee, M. (2012) A comparative risk assessment of burden of disease and injury attributable to 67 risk factors and risk factor clusters in 21 regions, 1990–2010: a systematic analysis for the Global Burden of Disease Study 2010, The lancet, 380(9859), pp.2224-2260.

Restaurant & Catering magazine, 2017.Foreign tourists spend big in Australian cafés and restaurants. [Online]. Available at:< https://rca.asn.au/magazine/foreign-tourists-spend-big-australian-cafes-restaurants/> [Accessed on 1September 2018].

Rodgers, S., 2007. Innovation in food service technology and its strategic role. International Journal of Hospitality Management, 26(4), pp.899-912.

Saad Andaleeb, S. and Conway, C., 2006. Customer satisfaction in the restaurant industry: an examination of the transaction-specific model. Journal of services marketing, 20(1), pp.3-11.

Tjoa, S., Jakoubi, S. and Quirchmayr, G., 2008, March. Enhancing business impact analysis and risk assessment applying a risk-aware business process modeling and simulation methodology. In Availability, Reliability and Security, 2008. ARES 08. Third International Conference on(pp. 179-186). IEEE.