Risk Management Framework And Policies: A Case Study Of MacVille Pty Ltd Essay.

1. Review the MacVille simulated business scenario information provided in the Appendix of this task.
2. Develop a report for the CEO (your assessor), which examines the ongoing implementation of the risk management action plan.
   1. Ensure you include the following sections in your report:
      1. Plan – a clear summary of the initial risk and the plan implemented to manage it.
      2. Implementation – a summary of all actions taken to date in attempting to manage identified risks.

• Outcomes – a clear statement identifying continued and/or reduced risks, with supporting information in tables or graphs where available.

1. Evaluation – a clear analysis of the effectiveness of the risk management plan, including risk assessment (e.g. risk matrix), by comparing the implementation with the outcomes.

Note: Ensure your report is written in a style appropriate to your stakeholder audience, for example, using appropriate language and including appropriate illustrative material (such as checklists, diagrams or flow charts) and attachments to support your findings and process.

3. Submit the required documents for assessment as per the specifications below. Be sure to keep a copy for your records.

Specifications

You must provide:

• a monitoring report.

Your assessor will be looking for:

• reading skills to review, interpret and analyse text-based business information from a range of sources in order to evaluate effectiveness of risk management implementation
• written skills to organise and deliver information to effectively communicate evaluation of activities to stakeholders
• numeracy skills to interpret mathematical data when reviewing and evaluating scenario business information effectiveness of activities
• ability to work independently to analyse scenario information and evaluate effectiveness of activities
• ability to interact with others using appropriate conventions when communicating to, and consulting with, stakeholders
• ability to sequence and schedule activities and manage communication
• ability to analyse relevant information to identify and evaluate effectiveness of activities
• ability to use familiar digital technology to access information, document findings and communicate them to stakeholders.

Adjustment for distance-based learners

• No variation of the task is required.
• A follow-up interview may be required (at the discretion of the assessor).
• Documentation can be submitted electronically or posted in the mail. 

Appendix: Scenario – MacVille Pty Ltd simulated business

It has now been six months since you delivered your risk management action plan.

In accordance with the action plan, an external audit was completed and has been presented to the MacVille Board. The audit investigated the status of the planned actions on the risks identified.

A summary of the findings

• The financial controller had taken out $5,000 on insurance cover for cash held on the premises overnight from the launch week as planned.
• The company bank account that was planned to be opened in the first week was actually opened about four weeks after the café’s launch at the bank two doors down the street. As it is not MacVille’s regular bank, there are difficulties with getting the same level of service that MacVille stores receive in Brisbane.
• The teleconferencing system, planned for six months after launch, has not yet been installed, due in part to the delay in the rollout of the federal government’s National Broadband Network.
• The weekly management meetings are finishing close to 3.00 pm as planned but sometimes the manager has to stay on at the request of the head office team. The manager has not yet been issued with an excusal letter by the CEO as agreed, and feels that they do not have the authority to just walk out at 3.00 pm.
• The assistant manager training has been shifted to the mornings, allowing the manager to leave before 1.00 pm as planned.
• The Board of Directors and CEO included a new policy regarding compliance with the Toowoomba by-law on water conservation as planned, but the specific procedure has not yet been written. However, it appears that compliance is being achieved.
• The plants have been changed to natives that require minimal water as planned. The installation of dual-flush toilets were planned for completion six months after settlement, and although the dual-flush toilets have been ordered and are in stock, they cannot be installed due to the backlog of work by district plumbers. The five-star rated (WELS) dishwasher was installed by the supplier within the six-month timetable as planned.
• The application to ‘make good’ by Goldsmith Partners on behalf of MacVille was accepted by the Toowoomba City Council; however, the grace period to comply with by-law ends in 14 days and the store is still above the acceptable benchmark for water use.
• The training on daily banking appears to have been successfully completed as planned. An audit of the bank deposit book shows that there is no banking entry for the day’s sales on only two occasions in the past six months.
• There has been one internal audit arranged by the store and, as planned, there should have been a call every two months. The store manager cites the distance that auditors have to travel and their overloaded work with the Brisbane stores as the reason for this infrequency.
• Although the training on the water-saving processes, as directed by the policy, has been verbally explained and followed, the written procedure has not been completed as the assistant manager (James Mansfield) claims to be too busy.
• A water tank had been built in to the courtyard but the plumbing has not yet been connected. There is a weekly water-usage monitor in the staff room as planned but the information has not been updated for the past three weeks.
• All the original staff members are wearing the MacVille uniform. However, these original employees are now responsible for directly supervising new employees. The original staff members are not explaining the uniform requirements to new employees and are not delivering any warnings for uniform non-compliance. As a result, there has been an increase in uniform non-compliance.

Specifications

Answer 1:

            MacVille Pty Limited was a café chain based in Queensland and having its outlets in Queensland and Sydney, Australia. The café chain offering high quality coffee and gourmet food in café style environment. The café was looking forward to acquire Hurley’s Café in Toowoomba. One can infer from the strong business of MacVille that the company has complied with all the documents pertaining to café business like food licenses.

The company employed human resources and was running successfully for more than a year. This means it complied with acts like FairWork Act pertaining to labour use and environment (fairwork.gov.au 2018). The high productivity of the café proved that it’s was able to deal with risks like financial ,risks efficiently which was evident from the stringent risk management policy of the company. The risk management framework and the decision framework of the company also pointed out the well-structured hierarchical structure which prevailed within the organisation (Lasserre, 2017).

Answer 2a:

            The purpose of the risk management framework of MacVille is to prevent or at least minimise the risks which the business can face. The risk though included but were not limited to financial risks, environmental risks and market risks. MacVille Pty Limited had a very stringent risk management framework which worked under the strict vigilance of the apex management by the name of MacVille Risk Management Framework. The company strictly complied with the risk management framework prescribed by the ISO 31000:2009 (iso.org, 2018). The company applied the framework in the generic risk management guidelines laid down by the risk management standards.

            The outline of the risk management framework of MacVille Pty Limited consisted of identifying the risks and intimating the senior management, if required about them. The senior management then took decision regarding dealing with the risks. The risk management outline of the company embraced all employees across departments, locations and hierarchies (Bromiley et al, 2015).

Answer 2b:

            The scope of the risk management of MacVille Proprietary Limited covered wide areas right from policy making to business planning and budgeting. The case mentions that MacVille Café sent the manager of the Toowoomba Café to meet the owner and staffs of the new café it was eyeing to acquire, namely Hurley’s Café. The aim of the MacVille was to investigate the actual working culture particularly risk management framework at the Hurley’s Café. This shows that the scope of the risk management at the MacVille Café was not restricted to its present outlets but also business firms it aims to takeover in the near future (Burns, 2016).

Answer 2c:

            The first critical success factor of risk management framework of MacVille Pty Limited consisted of the support of the apex management. The risk management policies of the restaurant was overseen by the apex management. The second critical factor which led to the success of the risk management policies was involvement of the staffs across departments and hierarchies. This led to more effective and prompt execution of the risk management strategies as per the instruction of the top managers. The third critical factor responsible for the success of the risk management procedure of the MacVille was its investigation into the safety parameters of the firms it aimed to acquire in the future (McNeil, Frey & Embrechts, 2015).

Adjustment for distance-based learners

The fourth critical success factor backing the risk management framework of the restaurant was its strong communication network connecting the employees both up and down the hierarchy. This was evident from the teleconferences which took place between the new manager of the Toowoomba stores, Ash, the senior management and finance, audit and risk management committee or FARM. The goals of the risk management plan of the MacVille Café was to recognise and minimise the risks to the extent possible (Olson & Wu, 2015).

Answer 2d:

Stakeholder	Internal/external	Role in process	Stake in process
Management of the MacVille Cafe	Internal	Forms policies and strategies	Crucial
Employees of the MacVille	Internal	Executes policies and strategies	Crucial
Management of the Hurley’s Cafe	External(from the angle of MacVille)	Forms policies and strategies	Crucial
Employees of Hurley’s Cafe	External before acquisition and internal post acquisition.	Execute plans and policies	Crucial
Managers	Internal	Supervise juniors and communicates orders up and down the hierarchy	key
Government(including Toowoomba Council)	External	Forms laws	Key stakeholder
Customers	External	Purchases products and services, thus forming basis of revenue generation	Important

Answer 2e:

PEST:

            The PEST analysis of the market of Australia shows that the country is political stable and has bilateral connections with various other countries. The government forms laws like the fair Work Act which governs the operations of the various industries. These factors promote expansion of industries like tourism. The economy of Australia is financially stable and has immense natural resources. The economy of Australia is experiencing high GDP which means that the people of Australia have more disposable income to afford expensive food and beverages in restaurants.

Moreover, Australia is one of the most visited countries in the world which means that the country has a booming tourism sector (Brustbauer, 2016). This inflow of foreign tourists is prospering the restaurant because they are having more customer visits which is boosting their revenue generation.  A crucial social factor which is affecting the industries in Australia is growing awareness and concern in the society of Australia regarding growing risk factors and accidents in the industrial sectors including restaurant. The Australian society is today putting ethical and moral pressure on the business organisations to adopt risk management policies to ensure employee safety.

This is backed by the work health and safety laws enacted by the government of Australia. The technological factors which are affecting the market of Australia is abundance of technological knowhow and innovation. The technological strength of Australia is reflected by the advanced risk management policies which are now being adopted in the risk prone industries like restaurants (Gatzert & Martin, 2015). The increasing use of ecommerce in the Australian market to purchase products like food also points out to the technological prowess of the country. The same is exemplified by the use of internet and telecommunication to hold meetings in the Australian companies (Ashs holds several meeting with the risk management team) also provide testimony to this technological strength.

SWOT of MacVille Cafe:           

Strengths: 1.      Financially strong. 2.      Present in multiple markets like Queensland and Sydney. 3.      Strong risk management policies. 4.      Strong communication between managers enforce accurate decision making.	Weaknesses: 1.      The prospective subsidiaries of the MacVille Café often do not follow risk management which would add to the risks of the restaurant post acquisition.
Opportunities: 1.      Enforcements of stringent risk management policies on subsidiaries. 2.      Expansion into markets	Threats: 1.      Unethical activities among subsidiaries ultimately would increase risk management expenditure post acquisition.

 Answer 2f:

            The researcher would use secondary sources of resources to gain information on the SWOT and PEST analysis. For example, the information about Fair Work Act have been obtained from the official website of Government of Australia.

Answer 2g:

S.L.No.	Risks	Risk analysis
1.	Financial risks	The management of the Hurley’s Café did not handle cash responsibly and deposit cash in bank. There have been reports of thefts. Accounting entry was not carried out properly.
2	Environmental risks	Wastage of water.
3	Legal risks	There was no written agreement between the café and the employees which would leave scope for future conflicts. The Toowoomba Council would be bringing in laws to curb wastage of water which would lead to increase in expenditure.
4	Data theft risks	Data could be entered by any member which exposed the café to data risks
5	Market risks	Entry of new restaurants into the Toowoomba region including multinational restaurant chain.

 Answer 4:

To: email ids of stakeholders

From: email id of company

Cc: CEO’s email id

Subject: Identification of risks in case of acquisition of M/s Hurley’s Café

Dear Sir/Ma’am,

            This is in reference with the acquisition of M/s Hurley’s Café which is under consideration. Please find attached the list of risks recognised and the analysis of the same. We would be very grateful if you help us in identification further risks.

Appendix: Scenario – MacVille Pty Ltd simulated business

Regards,

…. (Name and designation of sender manager)

Attachment: Risk analysis chart.

Answer 5:

To..(email id of CEO)

From…(email id of the sending manager)

Subject: Request for meeting for review of risk management of the Hurley’s Café

Dear Madam,

Please find attached the risk analysis report of the Hurley’s Café which we are aiming to takeover. It is an earnest request to your good self to go through the same and provide your valuable feedback regarding the same.

Regards,

…..(name and designation of the sending manager)

Attachment: Risk analysis chart.

Answer 6a:

            The critical success factors of the takeover of the Hurley’s Café would be its customer base and its strategic position. The risk factors would be the poor risk management standards which are followed in the café by the owner of the Hurley’s Café and the employees.

Answer 6b.

            The risk management process of MacVille was very stringent and was under the supervision of the apex management. The directors and senior managers intervened immediately and found out ways to deal with the risk. The risk management measures were monitored from time to time to point out their effectiveness in managing the risks (Sweeting, 2017). 

Answer 6c:

            The important stakeholders like the Toowoomba Council would be communicated about the risks identified through emails and letters from the office of the CEO. They would through the emails and letters would be requested to express concern about additional risks they would identify during the course the takeover of the Hurley’s Café (Hoyt & Liebenberg, 2015).

Anwer 6d and 6e:

            The support of the CEO would be obtained in the process of risk management and to identify further risks. 

Answer 7:

            The following is the summary of discussion with the CEO in the risk management of the Hurley’s Café:

1. The risk management standards of the Hurley’s Café is not up to the risk management standards of the Hurley’s Café.
2. The management of the Hurley’s Café should be made aware about the risk management measures which they need to adopt.

It can be recommended that the management of MacVille Café should place moral and ethical pressure on the management of the Hurley’s Café. 

Task 2:

Part A:

Answer 1:

            The review of MacVille simulated business shows that the café is financially strong and established itself in the Queensland and Sydney. The values of the cafe stood on benefits of the customers, employees, high standard of risk management and corporate governance. The café followed legislations and laws like the FairWork Act (fairwork.gov.au, 2018).

Answer 2a and 2b:

S.L.No.	Risks	Risk analysis	Likelihood	Consequences
1.	Financial risks	The management of the Hurley’s Café did not handle cash responsibly and deposit cash in bank. There have been reports of thefts. Accounting entry was not carried out properly.	High	Severe
2	Environmental risks	Wastage of water.	High	medium
3	Legal risks	There was no written agreement between the café and the employees which would leave scope for future conflicts. The Toowoomba Council would be bringing in laws to curb wastage of water which would lead to increase in expenditure.	High	high
4	Data theft risks	Data could be entered by any member which exposed the café to data risks	High	Severe
5	Market risks	Entry of new restaurants into the Toowoomba region including multinational restaurant chain.	High	Medium

  

The numerical value for the market risks can be measured in terms of business losses however, the risks in terms of environmental risks and data theft risks, the loss would be so huge that they cannot be perceived in terms of money.

Answer 2d:

S.L.No.	Risks	Risk analysis	Suitable treatments
1.	Financial risks	The management of the Hurley’s Café did not handle cash responsibly and deposit cash in bank. There have been reports of thefts. Accounting entry was not carried out properly.	1.      Accounts should be handled by professional accountants. 2.      Cash should be deposited in the bank on regular basis.
2	Environmental risks	Wastage of water.	1.      The dishwasher should checked in terms of water flow. 2.      A bigger filter should be installed.
3	Legal risks	There was no written agreement between the café and the employees which would leave scope for future conflicts. The Toowoomba Council would be bringing in laws to curb wastage of water which would lead to increase in expenditure.	1.      Written agreements should be maintained with every employee. 2.      Wastage of resources should be curbed.
4	Data theft risks	Data could be entered by any member which exposed the café to data risks	1.      Access to data should be restricted. 2.      The data should be protected by password.
5	Market risks	Entry of new restaurants into the Toowoomba region including multinational restaurant chain.	1.      Aggressive promotion of Hurley’s Café. 2.      New product development.

Answer 2e(i):

            The risk identification and assessment would likely be effective because it explores the different types of risks the Hurley’s Café was facing due to inefficient management. The risk management recognises risks like financial risks and market risks. This would enable the management of the MacVille Café take appropriate steps once the acquisition is finalised.

Answer 2e(ii):

            The risk management steps would be feasible for the MacVille Café because it would be backed by the financial power of the café once the acquisition in finalised.

Implementation information

Answer 3:

Risk	Assess risk (score)	Controls	Monitoring	Action priority (1–5)	Timelines	Responsible
	Financial risks	1.                  Accounts should be handled by professional accountants. 2.                  Cash should be deposited in the bank on regular basis.	Accounts managers	1	6 months	Accounts managers
	Environmental risks	1.      The dishwasher should checked in terms of water flow. 2.      A bigger filter should be installed.	Directors	1	12 months	Directors
	Legal risks	1.      Written agreements should be maintained with every employee. 2.      Wastage of resources should be curbed.	Finance manager and legal department	2	3 months	Finance manager and legal department
	Data theft risks	1.      Access to data should be restricted. 2.      The data should be protected by password.	Technological manager	1	3 months	Technological manager
	Market risks	1.      Aggressive promotion of Hurley’s Café. 2.      New product development.	Marketing department	3	12 months	Marketing department

 Answer 4:

            The risk analysis report would be submitted to the board of directors and the CEO.

Part B:  Answer 1:

Risk management plan for one key risk: Brand recognition:

There are certain risk management treatments necessary to implement with an intention to deal with the risk of brand recognition among the clients. Therefore, all these risk treatments are to be followed by the company or the cafe to provide good quality pastries to the customers:

The treatments are as follows:

• The company should maintain a manufacturing set up for the Hurley cafe post acquisition;
• The company ought to manufacture warehouse to store the products and serve them at any time to the customers whenever any demand has been posted;
• Required promotions are to be taken by the company for all their good products.

All these steps will help the company to make its products available to customers post acquisition of Hurley and boost the goodwill.

Task 3:  Answer 1:

            The MacVille Café was a café based in Queensland, Australia having its only second branch in Sydney, also situated in Australia. The café offered coffee and gourmet style food offering. Benefitting customers with its superior food products was at the heart of the business principle of the café. The café operated under a very management and was seeking to expand in Toowoomba by acquiring the Hurley Café. While, MacVille followed a very strict risk management system, its future acquisition, the Hurley Café followed a very slack risk management system (Subramaniam et al. 2015). One can infer that the former would have to invest immense capital to beef up the risk management mechanism of the Hurley’s Café.

Answer 2(a)(i):

            The risk management plan encompassed different types of risks starting from financial risks, to markets, data thefts to environmental risks. The risks were recognised after in depth investigation of the business operations of the Hurley’s Café. The risks were analysed on the grounds of impacts they would have on the MacVille if they were passed on to the café.

Answer 2(a)(ii):

            The implementation of the risk management plan as per the risk management plan maintained and followed by MacVille was placed under senior managers. For example, the financial risks would be supervised by the accounts department while the market risks would be viewed by the marketing department (Lundqvist, 2015). This supervision of specific risks under appropriate department ensured their effective implementation of the strategies to manage them.

Answer 2(a)(iii):

            The outcome of the risk management plan would be efficient management of the risks identified in the table above. For example, as shown in the previous tasks, that two steps can be taken to deal with financial risks. The first step was accounting by experts and regular depositing of cash into bank (Gatzert & Schmit, 2016). This would ensure more efficient financial management and reduction of cash theft. Similarly, using of password and selective access of staff to data would prevent reduction in data theft.

Answer 2(a)(iv):

            One can evaluate the risk management strategies which MacVille proposed for its future subsidiary the Hurley’s Café was appropriate. 

References:

31000:2009, I. (2018). ISO 31000:2009 - Risk management -- Principles and guidelines. Retrieved from 

Bromiley, P., McShane, M., Nair, A., & Rustambekov, E. (2015). Enterprise risk management: Review, critique, and research directions. Long range planning, 48(4), 265-276.

Brustbauer, J. (2016). Enterprise risk management in SMEs: Towards a structural model. International Small Business Journal, 34(1), 70-85.

Burns, P. (2016). Entrepreneurship and small business. Palgrave Macmillan Limited.

Gatzert, N., & Martin, M. (2015). Determinants and value of enterprise risk management: empirical evidence from the literature. Risk Management and Insurance Review, 18(1), 29-53.

Gatzert, N., & Schmit, J. (2016). Supporting strategic success through enterprise-wide reputation risk management. The Journal of Risk Finance, 17(1), 26-45.

Hoyt, R. E., & Liebenberg, A. P. (2015). Evidence of the value of enterprise risk management. Journal of Applied Corporate Finance, 

Lasserre, P. (2017). Global strategic management. Macmillan International Higher Education.

Lundqvist, S. A. (2015). Why firms implement risk governance–Stepping beyond traditional risk management to enterprise risk management. Journal of Accounting and Public Policy, 34(5), 441-466.

McNeil, A. J., Frey, R., & Embrechts, P. (2015). Quantitative risk management: Concepts, techniques and tools. Princeton university press.

Olson, D. L., & Wu, D. D. (2015). Enterprise risk management(Vol. 3). World Scientific Publishing Company.

Subramaniam, N., Wahyuni, D., Cooper, B. J., Leung, P., & Wines, G. (2015). Integration of carbon risks and opportunities in enterprise risk management systems: evidence from Australian firms. Journal of Cleaner Production, 96, 407-417.

Sweeting, P. (2017). Financial enterprise risk management. Cambridge University Press.

Welcome to the Fair Work Ombudsman website. (2018).