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Application of Framework for Risk Management

Question:

Discuss about the report for Business of Initiate Risk Management.

Purpose and Support of the Risk Management standard AS/NZS ISO 31000:2009

The risk management standard ISO 31000:2009 stands for providing principles and guidelines on risk management (Iso.org 2016). The standard can be applied in an organization throughout their operations, strategies, processes, functions, projects, assets, services and activities. The main purpose of the standard is to help an organization achieve resilience (Bostonconsulting.com.au. 2016). The guide shall help the organization recover quickly from the tough times.  The guide shall help an organization attain proactive management that prepares them for risks or circumstances that would cause loss. The guide shall help the manager in thinking ahead and plan for the worse (Bsigroup.com. 2016). The guide assists decision-makers in understanding and implementing risk management strategies. The principles mentioned in the guide shall help in gaining the stakeholders trust and confidence. The managers can make rational decisions and plan accordingly. The standard also has greater certainty in the prevailing market conditions (Iso.org 2016).

Application of framework for risk management- One of the critical elements of risk management is to develop strategy. The top-level managers can develop a coherent strategy by utilizing the available resources through financial derivatives (uwa.edu.au. 2016).

Principles for managing risk- The guide shall help in creating value by taking into consideration the overall decision making process. The strategy shall be structured and systematic (org.au. 2016).

Enhanced risk management attributes- The organization shall fully be accountable for developing controls. The organization shall also lay emphasis on continuous improvement in the risk management process (gov.au. 2016).

Guide to establishing and implementing effective risk management process- The guide shall be helpful in establishing efficient risk management process as it identifies risk and stakeholders. The other steps for risk management and reporting shall be based on the establishment of context and risk identification (Iso.org 2015).

Risk management context- Risk management shall involve continuous identification of risks that emerge. Allowances shall be made for the risks that do not exist as soon as they shall be taken care of (org.au. 2016).

Blue Horizon’s flagship café in Hay Street has the opportunity to expand itself and manage new store in Red Hill. The scope of risk management for Blue Horizon business is to identify risks and reporting the same to the CEO providing recommendations. The risk management strategy shall be applied at all levels of the organization such as operations, strategies, processes, functions, projects, assets, services and activities. The different functions of the business such as human resources, occupational health and hazards (OHS), local governance and compliance issues shall be assessed. The strategy shall harmonize the processes in existing and future (Wiewiora et al. 2013). The risk management report shall identify the critical success factors so that the success or efficiency can be assessed based on the identified variables. The scope of the report also extends to the identification of relevant internal and external stakeholders with their role in the process. Risk identification is the first and foremost step in the risk management process. Based on the risk identification, the risks shall be analyzed, evaluated, treated, monitored and communicated (Agarwal et al. 2013).

Principles for Managing Risk

Communication- Good communication is extremely important. The board of directors must communicate the expectations to the senior management. The senior management must communicate with the café employees. The café employees must put their issues forward to the management (Chong 2014).

Support and commitment from top level management- The top management plays a critical role in making decisions and managing risks. The top management influences the success level of the organization. The business process change shall be authorized by the top management (Young & Conboy 2013).

Organizational culture- The culture plays a critical role. The culture of existing Stirling’s Café might be different from Blue Horizon and it is necessary to adapt to the new organizational culture (Verbano & Venturini 2013).

Organizational structure- The current structure of Blue Horizon consists of Board of Directors, senior management team and the café employees. The new structure may be different in pattern, authority and communication (Subramaniam et al. 2015).

Information technology infrastructure- The organization shall consider IT as a basis of information and connector

Stakeholders:

Stakeholder

Internal/external

Role in process

Issues or concerns

Penny Binskin

Internal

Chief Executive Officer

There could be loss of reputation of the organization. It could also affect the promotion aspects adversely.

Ron Langley

External

Landlord and Counselor

There is a potential loss of tenant.

James Manson

Internal

Store supervisor

He may lose his promotion if the processes are not managed efficiently.

The Board of Directors

Internal

The directors determine of the risks are acceptable or not. They set standards or expectations from the lower levels of management. They effectively control the elements, procedures and processes.

The board may undergo reputational damage if the strategic processes do not go on track.

Senior Management  Team

Internal

The senior management implements policies and control. They also evaluate the areas with significant risks. They are responsible for reviewing the risk management strategy.

The board may undergo reputational damage if the strategic processes do not go on track.

Café Employees

Internal

The café employees are responsible for communicating with the senior member regarding the risk management policies. They manage or control the risk as advised by the senior management.

The employees in the café may lose their employment at Blue Horizon Pty Ltd. if the management undertakes the management of new store at Red Hill at the existing Stirling’s Café.

Federal Government

External

They are responsible for imposing laws on efficient water usage and penalizing the companies for excessive water breaches.

The company may be liable for heavy taxes and penalties up to $50,000 if it uses excessive water.

Risk Identification:

Risk

Explanation

1.       Banking Risk

The current financial risk at Horizon Pty Ltd does not protect the company against fraud and financial misappropriations. The organization does not have adequate control over making bank deposits, cash payments, cash withdrawals or keeping a sales record. The organization does not have proper rules that govern bank deposits that make it risky for robbery as $4000 was kept overnight. Additionally, there is no safe in the premises. This could be dangerous to the employees in the café as there was 50% chance of break-ins and the consequence of the same could be moderate.

2.       Travel Risk

The store location was two-hours away from the central bakery plant that made it difficult to reach within time from Red Hill to Perth. As the pastries were freshly prepared, the delivery could be made after the morning rush making the business impractical. There is also a concern about getting the company-branded supplies through as quickly as a CBD Perth store could. Also, the meetings arranged for managers on a weekly basis did not finish until the evenings that made it risky to travel back. The manager runs a risk of accident as the roads were steep narrow up the range and a longer distance.

3.       By-Law Compliance Risk

Since the Stirling’s Café was a family-run store, some family members were employed as staff members. James, the store supervisor was responsible to run the operations of the store. Mr. Stirling would authorize wages but any staff member could authorize delivery. There is a fault in the compliance as there could be wrong deliveries if a specific person does not take care of it.  Also, it was reported by Hames that the policy and procedures are handled verbally and are not written down. The staffs would be shown the manner in which work was supposed to be done.

It is observed that the store currently uses 41,500 litres water a week. The water is wasted as the staffs run dishwashers only when it is half-full, the toilets are used in a single flush system, the fruits and vegetables are washed under fast-running tap. Also, the staffs were instructed to keep the non-native flowering plants in the courtyard fully watered. The organization wastes water thereby ending up paying huge amounts of taxes and costs due to the local law legislation.

4.       Human Resources Risk

There is no established process for taking care of the occupational hazards or injuries that may occur at work. The computer system that stores personal and confidential data of the employees is not protected with a password. Therefore, it can be accessed by anyone. The calculations and records of the wage and superannuation was incomplete as it was multiplied with ‘in the hand’ amount. The fit-out of the café looked old and broken. The chairs were unstable and the carpet was worn and taped over with gaffer tape.

References

Agarwal, R., Randhawa, K. & Josserand, E.L., 2013. Strategically aligning a culture ofopen innovation'in organizations. ANZAM.

Anand, G. & Sameera, G. 2012. Importance of Risk Analysis and Management – The Case of Australian Real Estate Market. Risk Management - Current Issues and Challenges.

Bostonconsulting.com.au. 2016. BCG in Australia & New Zealand Risk Management. [online] Available at: https://www.bostonconsulting.com.au/expertise_impact/capabilities/risk_management/default.aspx [Accessed 9 Jul. 2016].

Bsigroup.com. 2016. ISO 31000 Risk Management. [online] Available at: https://www.bsigroup.com/en-AU/ISO-31000-Risk-Management/ [Accessed 9 Jul. 2016].

Choi, Y., Ye, X., Zhao, L. & Luo, A.C., 2016. Optimizing enterprise risk management: a literature review and critical analysis of the work of Wu and Olson. Annals of Operations Research, 237(1-2), pp.281-300.

Chong, S., 2014. Business process management for SMEs: an exploratory study of implementation factors for the Australian wine industry. Journal of Information Systems and Small Business, 1(1-2), pp.41-58.

Governance.uwa.edu.au. 2016. Policies and procedures : Governance : The University of Western Australia. [online] Available at: https://www.governance.uwa.edu.au/procedures/policies/policies-and-procedures?method=document&id=UP12%2F1 [Accessed 9 Jul. 2016].

Hayne, C. & Free, C., 2014. Hybridized professional groups and institutional work: COSO and the rise of enterprise risk management.Accounting, Organizations and Society, 39(5), pp.309-330.

Standards.org.au. 2016. Standards Australia. [online] Available at: https://www.standards.org.au/Pages/default.aspx [Accessed 9 Jul. 2016].

Strong, B., Cater-Steel, A. & Lane, M., 2014. Prudential risk management of IT sourcing strategies: a case study of an Australian bank.

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, pp.407-417.

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, pp.407-417.

Verbano, C. & Venturini, K., 2013. Managing risks in SMEs: A literature review and research agenda. Journal of technology management & innovation, 8(3), pp.186-197.

Wiewiora, A., Trigunarsyah, B., Murphy, G. & Coffey, V., 2013. Organizational culture and willingness to share knowledge: A competing values perspective in Australian context. International Journal of Project Management, 31(8), pp.1163-1174.

www.finance.gov.au. 2016. www.finance.gov.au. [online] Available at: https://www.finance.gov.au/sites/default/files/COV_216905_Risk_Management_Fact_Sheet_FA3_23082010_0.pdf [Accessed 9 Jul. 2016].

Young, M. & Conboy, K., 2013. Contemporary project portfolio management: Reflections on the development of an Australian Competency Standard for Project Portfolio Management. International Journal of Project Management, 31(8), pp.1089-1100.

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My Assignment Help. (2017). The Purpose And Support Of AS/NZS ISO 31000:2009 For Risk Management Is Essay-worthy.. Retrieved from https://myassignmenthelp.com/free-samples/business-initiate-risk-management.

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[Accessed 15 July 2024].

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My Assignment Help. The Purpose And Support Of AS/NZS ISO 31000:2009 For Risk Management Is Essay-worthy. [Internet]. My Assignment Help. 2017 [cited 15 July 2024]. Available from: https://myassignmenthelp.com/free-samples/business-initiate-risk-management.

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