BSBRSK501 Manage Risk

Introduction

Risk Management is a complex process involving various levels of investigation and assessment before providing appropriate measures that would help in controlling the impacts of the risks. The concept of risk management, in business industries, has become increasingly relevant, with the expansion of the business market and new entries of smaller organizations. The initial step to risk management needs to identify and evaluate various risk factors and prioritize them according to the objectives of the organization (Lam, 2014). Secondly, it provides plausible solutions for the various identified risk factors and implements relevant economic measures that would minimize their exposure to risks. Thirdly, it identifies the particular ways through which the risk management could be made more sustainable. Instead of a one-time solution, a good risk management plan aims at a structural change in the organizational processes that would protect the organization from external threats or challenges (Rodrigues-da-Silva & Crispim, 2014).

The Town and Country Services in New South Wales, is a large-scale Company providing a wide range of construction services since 1973. The Company provides experiential as well as practical guidance in architectural construction planning. The Company’s new venture in the four different states of New South Wales—Orange, Bathrust, Mudgee and Wagga Wagga, requires a solid and full-proof risk management plan, in order to ensure smooth execution and delivery of services. This paper aims to investigate the context and organizational processes of the objectives in order to identify the particular risks and also provide appropriate measures for controlling them.

Stage One- Establishing the risk context and identifying risks

Context

Understanding the context of the particular industry of the Company is extremely necessary as it forms the groundwork of the entire research with substantial information regarding the external industry environment of the business. A PESTEL analysis of the market industry has been conducted in order to identify the external factors that might affect the organization’s performance (Rastogi & Trivedi, 2016).

PESTEL Analysis

Political factors- The local governments of the chosen cities are highly supportive of new business enterprises coming up in the market, which works as a positive factor for the Company (Gray, Harymawan & Nowland, 2016).

Economic factors- As a central hub of most business is NSW, these cities are exposed to further economic growth and prosperity, which is economically beneficial for a new startup.

Social factors- With improvement in economy and lifestyles, there is an increased demand for professional guidance and elaborate planning in case of architectural designs for companies or households.

Technological factors- The advancement in technology has exposed the consumers to world-scale business market and raised their expectations in terms of service delivery.

Environmental factors- NSW is also one of the leading states facing stiff environmental issues related to global warming and pollution. Business corporations need to be environment-friendly in these areas (Akanni, Oke & Akpomiemie, 2015).

Legal factors- In terms of legality, the start-up businesses in these areas enjoy particular privileges and legal support in order to encourage more business interactions.

Scope

Understanding and estimating the prospect of a business concept can be considered the scope of the project. In order to clearly understand the scope of this Company expansion in 4 different states, we need to critically look at the main objectives of the organization, estimated deliverables from the project, relation shared between the objectives of the Company and its new venture, and its critical success factors.

Goals and Objectives of Business

Technological Innovation:

Improvising on the technological aspects of the organizational procedures is one of the chief aims of the Company, in order to attract the modern day customers (Dong & Martin, 2017).

New Products or Services:

Enhancing the Company’s service-delivery by launching new, innovative products and services, like providing a panel of architects as consultants for private or public constructions.

Opening New Markets:

The Company aims to open new markets with the help of TCS, so that any consumer can avail their services, without having to be physically present.

Organizational Structure:

The Company aims employ in both full-time and part-time basis. The professional architects are on a part-time contract, where as consultants are hired on a full-time basis (Albers, Wohlgezogen & Zajac, 2016).

Deliverables of Project

Deliverables is referred to the particular products and services, or quality of servicing that the Company aims to deliver to its customers (Beltagui, Darler & Candi, 2015). The Town and Country Construction Services is expanding its businesses over the states of Orange, Bathrust, Mudgee and Wagga Wagga, with the particular deliverables as their end result:

• Providing relevant construction or architectural guidance from professional architects (Zimmermann et al., 2015). This exclusive service would be available once every week, where the potential clients—business or individuals, can get in depth consultation services regarding construction purposes.
• Making systematic appointments and arrangements for meetings of the architects with the local people.
• Drawing plans or designs for architectural structures—both governmental as well as individual.
• Monitoring construction sites and on-going projects to ensure proper functioning at all levels.
• Offering mediation services between clients and their local authorities regarding disputes related to construction and planning. Offering all the services in return of respective fees.

Relevance of Project with Goals and Objectives of Organization

As compared and contrasted against the particular goals and objectives of the organization, the new venture reflects several areas that complement each other (Lamas Leite et al., 2017). The new venture of expanding the business is another attempt at enhancing their product and service-delivery, in order to achieve their organizational objectives.

Technology: One of the strategies to improvise and keep up with the technological advancements is to be creative and innovative in new business ventures in order to achieve customer-satisfaction.

Service-delivery: With further expansion of business in new markets, the Company would be able to enhance their service-delivery by adding more products and services to their deliverables.

Business Market: The Company would successfully expand the territory of their business market with new start-ups in different cities.

Organizational Structure: The Company would be able to support a mixed organizational structure that employs both part-time as well as full-time employees.

Critical Success Factors

The critical success factors of the project, as analyzed against the Company objectives and the external market industry are as follows:

• The growing business and economy in the chosen states for expansion indicate a high chance of success in the field of construction businesses(Drew, Kortt & Dollery, 2017).
• The local governmental as well as legal support in the particular states works as a huge benefit for the expansion of the Company.
• The rising demand for architectural consultation services makes up for a fairly large customer-base.
• The employment of part-time professionals, who are highly skilled and in demand, makes up for an appropriate business strategy with reduced impacts on the economy.

Stakeholders

A risk management procedure for a business organization requires us to think of the business scenario from the perspective of each stakeholder in the organizational processes. The stakeholders of the Town and Country Construction Services are briefly discussed below:

Clients or Customers: As the Company deals with providing construction services and quality guidance in architecture planning, its success is heavily depended on the satisfaction of the consumers. Consumers of the Company could either be individuals or contractors, developers.  

Suppliers and Contractors: Suppliers of intermediary raw materials or intermediary services like transportation and delivery of products, play a very important role in the process of managing organizational risks.

Internal Personnel: Internal management authorities of the Company are an important stakeholder as the strategy-building and decision-making responsibilities are carried out by them.

Project Funding Body: External funding bodies, be it governmental or non-governmental, are important stakeholders as they economically support the project in return of specific gains.

Table of Stakeholders

Stakeholders	Internal/External	Role in Process	Stake in Process
Customers	External	Creating demand for the deliverables	Specific consumer requirements and expectations
Suppliers	External	Supplying intermediary raw goods or services	Providing raw materials or delivering finished goods and services
Internal Personnel	Internal	Employment, Policy-making, decision-making, strategy-building	Economic and other value returns
Project Funding Body	External	Providing financial support for execution of processes	Benefits from Company-profits

Organizational Communication

According to (Murata et al., 2017), in order to maintain a smooth communication and understanding amongst the stakeholders of the Company, the following methods could be used:

• Staffs: Introducing employee-oriented benefits and engaging them in organizational processes apart from production.
• Internal and External Stakeholders: Holding periodic meetings and discussions to incorporate the particular feedback and grievances of each internal and external stakeholder.
• Specific teams: Appointing managers for each team, who will be in charge of maintaining coherence with the other teams in the organization and incorporate their voices.
• Technical Experts: Allowing regular guidance and support with technical experts, who can add value to the technological aspects of service-delivery

Analysis

Political factors: The political stability and support in the chosen states of NSW, is a beneficial factor in the project.

Economic Factors: The recent economic advancements not only created more affordability for consumers but also further scope of investment.

Social factors: With improvement in lifestyle and expectations, demands for professional guidance regarding construction services is on the rise.

Technological factors: Technological improvements in the field of construction services prove to be extremely useful in achieving customer-demands (Abuelmaatti, 2014).

Environmental factors: High concerns regarding degrading environmental conditions are unfavorable and need to be appropriately managed.

Legal factors: Adequate legal support for business start-ups is a huge bonus.

SWOT

Strengths: The particular areas of strength of this project include: an increasing consumer-base, legal and economic support from government and improving social and economic conditions of the market in general.

Weaknesses: The project requires heavy economic and intellectual investment, which might be a burden to the Company along with the heavy production and delivery costs.

Opportunities: Implementation of relevant strategies and CSR policies would play a significant role in the successful execution of the project.

Threats: Construction activities create further environmental damage, which becomes a burden for the project objectives.

Research

Risk to the stakeholders is a threat for the organization (Shinkevich et al., 2016). The Risk Management Policies and Strategies of the Town and Country Services emphasize on the value of the stakeholders in the organizational processes. By keeping the interests of the stakeholders in the forefront, the Company aims to achieve a significant level of success in managing and controlling the various risks to the organization and its stakeholders.

Key Findings

The key findings from the research of risk context are as follows:

• Cross-cultural issues amongst the internal employees of the organization as well as specific expectations of the consumer-base.
• Economic challenges due to heavy economic expenditure, simultaneously in four new start-ups.
• Undesirable environmental consequences caused by construction activities(Nesticò & Pipolo, 2015).
• Inadequate time period required for a large-scale expansion project like this one.

Stage two- Analyzing Risks

Risk Assessment Table

Stakeholder Feedback

With the successful completion of the risk assessment procedures, it is important to discuss it with the rest of the stakeholders of the Company. Since the Board of Directors would be responsible for strategic and financial, engaging them in a feedback conversation retrieves significant values. One important factor identified from the discussion is the preparation of budget and cost-saving techniques that would allow them to execute the project in a limited time-period (Islam et al., 2016). Taking into consideration the minutes of the discussions, further strategies and action plan will be developed.

Stage Three- Identifying Measures

Risk Management Plan

Risk	Assess Risk (L, M, H, E)	Controls	Monitoring	Timelines	Responsible
Insurance risk	H	The policies must be renewed	Proper documentation to be maintained	Every year ending	Financial manager
Customer dissatisfaction	E	Feedback to be gathered	To ensure the need of the customers are heard	All the time	Customer relationship manager
Spilling of water	M	Proper pipelines to be maintained	To ensure there is no leakage of water	All the time	Operational manager
Electricity hazard	L	Proper electricity powerpoint to be installed	To ensure there is no naked wire	Twice in every year	Operational manager

Action Plan

• In order to successfully implement the risk management plan, the strategies need to be clearly communicated to the various stakeholders of the organization.
  • Employees must be clear about Company objectives so that they can fully understand what is expected of them.
  • Suppliers must have a fair understanding of the risk management practices.
  • Investors in the businessshould be aware of the risk factors and the management efforts.
• The official documents of the risk management plan will be available at every office for further guidance and reference of the stakeholders. It would be securely uploaded on the online website for easy access from anywhere at any time (Islam et al., 2016).
• Sustainability measures for the risk management plan would infer regular monitoring at various construction sites, offices and meetings with external stakeholders, in order to maintain the relevance of the plan by adapting it with the dynamic external environment(Coombs & Holladay, 2015).

Monitor and Evaluate Risk Management Plan

The Risk Management Plan developed from the assessment of various threats and opportunities of the Company, as against its contemporary market position, needs to be evaluated and monitored closely before proceeding for implementation Mahmoudi et al., 2014). Besides the theoretical perspectives, there are significant loopholes in the practical narrative, which needs to be considered before implementing the practices. In order to properly evaluate the risk management procedures, they must be thoroughly checked with the contemporary real-life business scenarios, including existing competitors, entry of new entrepreneurs in the industry, cultural acceptance of the consumers and mutual profit of all the stakeholders.

Report on the Implementation of the Risk Management Action Plan

Due to heavy torrential rains, the new office in Wagga Wagga experienced considerable loss of property. In spite of implementing strategies like buying insurances for risks in new premises, the strategy failed as the insurance did not cover storm damages.

As the risk plan had identified the issue of not being able to afford full-time professional architects, the initial strategy was to fill the vacancies with available employees from the Head Office; however, none of the employees are available for more than a week.

The plan had also identified risk of issues related to the local councils’ compliance to adopting new measures and practices. This issue was faced in Orange, as the local council denied permit to have building over 8-storey.

Summary of Actions

• The Company has applied CSR policies and included insurance coverage for damages caused by environmental calamities (Khalid & Shafiai, 2015).
• The Company is hiring new employees through online websites like seek.com.au.
• The Company is encouraging customers to use private certifiers for easier certification processes, as per the strategies in the action plan.

Impact on Risk Factors

Though some of the risk factors could not be properly mitigated yet, some of the risks like environmental consequences are now in better control.

Research Gap

Practical loopholes like delays in certification processes were overlooked, which can be controlled by adhering to environment-friendly guidelines.

Recommendations

The risk management plan needs to be more inclusive of practical loopholes and environment-friendly guidelines (Kulczycka & Smol, 2016). They should better analyze future threats.

Risk Plan Effectiveness Analysis

The Risk Plan was partially effective in the given scenario, as some of the issues remained in the processes, which caused considerable loss of time and resources.

Evaluation of Risk Management Process

The chosen evaluation process was conclusive of particular risk management strategies but it failed to achieve the objectives completely due to certain gaps and loopholes in the analyzing process.

Conclusion

To conclude, the development of a Risk Management Plan for the Town and country Services in NSW required to undertake several processes in order to thoroughly understand its context, critically analyze its opportunities and threats, and finally devise relevant strategies and action plan to implement the required changes in the set-up, to control the impacts of these threats. A PESTEL analysis on the contemporary market environment has been conducted to understand the business market, its consumers and their expectations.

The derivations from the PESTEL analysis helped in deriving the particular Strengths, Weaknesses, Opportunities and Threats (SWOT) of the Company, completing a thorough analysis of internal factors. By using the derivations from the PESTEL and SWOT analyses, this research aimed to look at the given scenario from the perspective of a risk manager, venturing in new projects in four different cities. The identification of the particular risk factors helped in devising appropriate strategies that can mitigate or control the risk and their impact on business. The risk assessment procedure arranges the risks on a basis of priority. Finally, an action plan is laid out and discussed with the stakeholders for evaluation of the plan and further amendments.

However, during the implementation process, a number of loopholes could be found in the strategies, which led to dire consequences. Therefore, the research identified the particular gaps in the assessment and provided further recommendations to make it full-proof.

References

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