Risk Management Process: Steps, Standards, And Stakeholders - A2 Milk Company Essay.

1 Review organisational processes, procedures and requirements for undertaking risk management in accordance with current risk management standards
1.2 Determine scope for risk management process
1.3 Identify internal and external stakeholders and their issues
1.4 Review political, economic, social, legal, technological and policy context
1.5 Review strengths and weaknesses of existing arrangements
1.6 Document critical success factors, goals or objectives for area included in scope
1.7 Obtain support for risk management activities
1.8 Communicate with relevant parties about the risk management process and invite participation.

Identification and analysis of risks

The risk management process at a2 Milk Company follows five main steps in risk management. The first step involves the identification of the risks that may affect certain projects and their outcome. This can be done through a review of the relevant literature, conducting questionnaires and interviews, through SWOT and PEST analysis and public consultation. Secondly, the risks are analyzed to determine the likelihood and consequences of each of the identified risks. The third step involves the evaluation and ranking of the risks (Aven, 2016).   

This is done by determining the magnitude of each risk and examining whether the risk is grim enough to affirm treatment. In the fourth stage, the managers prepare contingency plans and risk mitigation strategies to treat the highly ranked risks (Aven, 2016).  The last step involves monitoring and reviewing of the risks. In this stage, the action plans are reviewed from time to time to determine whether they have a positive impact on risk management. Also during monitoring, the managers can determine if there are new risks in the organization.

1. Explain the purpose and key elements of the current risk management standards, AS/NZS ISO 31000: 2009

ISO is a multinational organ charged with the achievement of standardization, reliability and consistency in risk management by enhancing standards that would apply to all types of risks (Kerzner & Kerzner, 2017). The current risk management standards have the following key elements:

• One vocabulary for risk management. This means that all the stipulations used in risk management should be consistent with the fundamental process to ensure that regulation in the standard is practical and rational.
• Performance criterion. This element states the key principles of effective and efficient risk management.  A successful risk management process should be based on the best available information, be timely, systematic and structured. Moreover, a valuable risk management process should explicitly address uncertainty and be part of decision making.
• The procedure of risk management. It includes one, risk identification, two, risk analysis, three, risk evaluation, four risk treatments and five, monitoring and reviewing of risks.
• The support for managing risks. This element requires that organizations integrate risk management in their decision-making process.

Question 2a) List down the information that you will need to analyze, to develop the scope and the context for your risk management process for your chosen organization.

• Information on the past experiences of the company
• The level of technology in The a2 Milk Company
• The legal requirements of the company
• Information about the existing and prospective comp[editors in the market

Question 2b. Do the SWOT AND PEST analysis for your chosen organization

SWOT ANALYSIS

Question 3. Name at least three internal and external stakeholders and identify their issues or concerns regarding the risks within your business

Internal stakeholders may include Managers who are decision makers in the company and have the responsibly of managing risks (Pheng, 2018). Employees:  They also identify the risks in the company and report to the manager's Owners of the company: The owners have the overall responsibility of the organization. 

External stakeholders of a2 Milk Company include the lenders, suppliers, competitors, debtors, creditors and customers.  Outside stakeholders have a significant role to play in the risk management process. They have vital information about the company, and they can provide informed ideas that could be used in formulating an effective risk management process.

Question 4: Briefly describe how you will communicate with relevant stakeholders about the risk management process within your area of responsibility and how you would obtain support for risk management from these stakeholders.

Firstly, conduct interviews with the stakeholders to understand their needs and preferences. Secondly, the risks are identified and assigned to the owners. Look for an appropriate person to analyze, monitor and respond to the risks (Jepson, Kirytopoulos, & London, 2018). Lastly, after identifying the risk owners make them aware of what they should do to manage them. The communication should be simple, clear and precise to the stakeholders.

Question 5: Why is it important to invite relevant stakeholders and seek their participation in the risk management process?

Evaluation and ranking of risks

Both internal and external stakeholders of a2 Milk Company may have useful information and ideas that can be used creating an effective and efficient risk management process. They are aware of what happens inside and outside the company (Carvalho,& Rabechini Junior,2015). They deal with the products, customers and the resources of the company. This means that they can know the possible source of risks in the organization.

Question 6:  List all information sources that you may get from your internal and external research that will assist in risk identification process.

• Risk reports and registers
• Audit reports
• Internal and external reviews
• Stakeholder analysis
• Business impact analysis
• Brainstorming
• Working groups
• Review of literature
• Consulting the public
• Questionnaires and interviews

Question 7: Identify three tools or techniques you used to generate a list of risks that apply to your scope in consultation with the relevant parties

• Interviewing the relevant stakeholders
• SWOT and PEST analysis
• Probability and impact matrix.

Question 8: Identify at least three risks or hazards from your chosen place of work, analyze them and determine their potential impact and likelihood from the scope of risk management.

1. Use the following table for your response

Using the above risk matrix level, identify the risk rating and prioritize them by their risk rating.

Question 9. Complete a table of risks for selecting the appropriate treatment for the above three identified risks. On this table, provide at least two treatment options for each risk and then select the most appropriate option for treating each of the risks.

Question 10 a)   Develop an action plan to implement each of the required treatment for the identified risk based on their priority rating.

How would you communicate the risk management action plan to the relevant stakeholders within your organization?

Firstly, hold a meeting with the relevant stakeholders and review the action plan before its implementation. The risk owners are informed of what they are supposed to do to manage the risk, and the necessary resources are allocated to them.

Question 11a) how will you ensure that all the documents related to the risk management process are in order and appropriately stored?

Risk management process documents are one of the most vital resources of an organization. They show that the risk management process was carried out correctly. Moreover, the documents for risk management process also provide a basis for the most significant areas that require risk management strategies (Cagliano, Grimaldi & Rafele, 2015) . Therefore, the documents should be stored in a place that is only accessible by the relevant authority. Also, the storage of the documents should enhance easy accessibility whenever they are required and ensure periodical revising and reviewing when needed. All the new documents should be stored separately from the old documents to avoid confusion and allow easy identification.

11b)  how would you monitor your action plan for implementing risk treatment?

Monitoring should be done by all members of the organization according to their responsibility in the company. As a manager, it is necessary to carry out periodic reviews of your risk management action plan to make sure that there are no new risks in the company (Cagliano, Grimaldi & Rafele, 2015) . It also helps to ensure that the action plan is working in managing the target risk. If it is not working, the manager identifies another action plan that could be used to treat the risk.

11 c) Describe the measure of success that you would look to evaluate your risk management process

Improvement in the value of the shareholders and a reduction in the cost of capital is one of the most critical success measures in the risk management process. Debt rating agencies and other regulators can distinguish between different organization’s risk management capabilities (Cagliano, Grimaldi & Rafele, 2015). A form that can apply an effective risk management process can achieve a lower cost of capital over time.  If a firm’s reputation is growing in the market due to its ability to manage risks than its competitors in the market, the valuations of its shares are likely to increase, and its borrowing costs decrease accordingly.

References

Aven, T. (2016). Risk assessment and risk management: Review of recent advances on their foundation. European Journal of Operational Research, 253(1), 1-13.

Cagliano, A. C., Grimaldi, S., & Rafele, C. (2015). Choosing project risk management techniques. A theoretical framework. Journal of Risk Research, 18(2), 232-248

Carvalho, M. M. D., & Rabechini Junior, R. (2015). Impact of risk management on project performance: the importance of soft skills. International Journal of Production Research, 53(2), 321-340.

Jepson, J., Kirytopoulos, K., & London, K. (2018). Insights into the application of risk tools and techniques by construction project managers. International Journal of Construction Management, 1-19.

Kerzner, H., & Kerzner, H. R. (2017). Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons.

Pheng, L. S. (2018). Project Risk Management. In Project Management for the Built Environment (pp. 159-176). Springer, Singapore.