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Likelihood of Identified Risks

Question:

Describe about the timing risk, margin risk, financial risk and environmental risk.
 

In assignment 1 the risk, which have been identified for Blue horizon are Timing risk, Margin risk, financial risk and Environmental risk. These are the risk associated with running a business. In this given assignment 2, the likelihood, consequences, possible risk treatment plan and importance of each risk is being discussed.

The likelihood of the above four risk occurring is discussed in the table below:

Timing risk

This risk is related with travelling long distance, which may disappoint the customer. If Blue horizon is opening outlets in very remote places then it will not be economically beneficial for them to travel such long distance (Jain et al. 2013). Even they will not be willing to lose so much time in travelling as they have other works in their hand the suppliers will also not be willing to supply raw materials to such long distance on a regular basis.

Margin risk

The purchase and re-branding of existing Stirling’s cafe in red hill will give rise to availability of branded materials and quality chefs. There is only chef in the store and in case if the chef is not able to attend any day due to any emergency then the café will not be able to provide good quality foods to their customer.

Financial risk

This risk is associated with the banking system. There is a bank two building away the café but the stirling’s family bank is away couple which makes it inconvenient to deposit excess cash remaining in the store every. So, there is a high chance of cash embezzlement as almost $4000 remains in the cash box overnight at the café premises.

Environmental Risk

This risk is associated with water storage and usage. The store uses 41500 liters of water weekly. There is a lot of wastage of water in the store as the vegetables and fruits are washed under a fast running tap, the dishwasher starts washing when it is only half-full ( Simwinga 2015). Due to single flush system in toilet and regularly watering the plants in courtyard lot of water is wasted which is a major environmental issue related to the store.

The consequence of the risk which are likely to occur in the store are assessed in the table below:

Timing risk

This type of risk will result in loosing of customers. The managers will not find it suitable to travel 130 km to attend weekly meetings in Red hill since most of the meeting did not complete within evening. Supplies of pastries to such long distance will deteriorated its quality and it may not remain fresh.

Margin Risk

Non-availability of branded material and good quality chefs in Red hill will result in decline in the quality of the food and will lose customers in long run (Berkyto et al. 2014). Most of the local customers come to the store because of its quality and if Stirling’s café is not able to maintain it then it will be difficult for Blue Horizon to maintain its brand name in future.

Financial Risk

If cash remaining at the store at the day end is not deposited on a daily basis then there will be high chance of theft of cash. Embezzlement can be done by the outsiders or even by the internal staffs. The stores will also lose interest on cash not deposited in bank.

Environmental Risk

If the local authority or government comes to know about the wastage of water in the store then they put a restriction on the even cancel their license if this becomes a major issue.

The treatment plan of minimizing and nullifying the risk indenfies in assessment 1 are discussed in the table below:

Timing risk

The store must try to attract local customers residing there by giving attractive offers. It must also give benefits to managers who are organizing local corporate meetings in the café. The store must give unlimited access of wifi so that managers can attend live conference with persons at distance places. Stirling’s cafe must focus on the supply chain for timely delivery of food product so that it remains fresh when serves to customers (Hoffmann 2012).

Margin risk

Stirling’s café should enter into agreement with branded food suppliers so that raw material is supplied on a regular basis and Just in time by providing them with various benefits (Robinson 2013). The store must advertise to appoint some good quality chefs offering them good remuneration as there is only one chef .

Financial risk

Stirling’s café should open its account in the bank, which is just two building away from the store so that they are able to deposit the remaining cash in the store every day in their bank account (Tracy et al. 2014). This will reduce the chance of cash theft or loss.

Environmental risk

The sore must reduce its consumption of water by minimizing wastage of water. They should implement dishwasher which starts washing when it is full, multiple flash system in the toilet and low speed tap for washing vegetables and fruits. Watering of plant should also be minimized to save misuse of water

According to their importance each risk is prioritize in the order given below:

Rank

Risk

Importance

1.

Environmental risk

This is the most vital risk associated with the store as local authority has implemented a fine of $50000 for misuse of water. The management of  Blue horizon must install the water tank in the store immediately as there is a lot of water wastage in Stirling’s cafe.

2.

Margin risk

This is the second most vital risk associated with Stirling’s café. It branded supplies and good quality chefs are not available then the store will lose customer and they will not be able to survive in the market (Green 2015). So this risk must be the major priority of the Blue horizon management

3.

Financial risk

It this risk is not nullified then cash lose will affect the store immensely and management will have a negative impact on the staffs of the store. Interest loss on cash not deposited is also a major financial loss to be dealt crucially by the management

4.

Timing Risk

As the managers are not willing to attend weekly meeting by travelling long distance the store is losing business. Also proper supplies are not available due to distance problem. These are very crucial risk associated with the store and management of Blue horizon must deal with these properly.

The process used for assessing the likelihood, consequence and priority of the above-identified risk are those, which are used for analyzing the risk, associated with cafeteria. The problems related to supplies, environmental risk attached with cafes and availability of branded materials is analyzed. Quality chefs are the most important criteria for success of a café. So risk relating to availability of good quality chef is assessed here. Water wastage is one of the most important issue in today’s world for which government of implementing new polices so this risk has been taken into for this assignment.

The options suggested for treating the risk are likely to be effective and feasible for the organization because it given keeping in mind the problems related to the cafeteria (St Germain et al. 2014). Agreement with supplies will reduce the chance of late delivery and the freshness of the product will not be hampered. Installing water tank will reduce the wastage of water and solve the environmental risk. Opening bank account nearby will nullify the chances of cash loss.

Action plan for implement the above risk treatment are as follows:

  • Setting up unlimited wifi access will help managers coming to the store to attend online conference with persons at a distance location.
  • Setting up a supply chain and just in time technology will help the store to get food products and raw material at required time.
  • Installing the water tank as earliest will minimize or nullify the wastage of water which is currently a major issue related to the store.
  • Appointing an experienced chef immediately by giving good remuneration will improve the quality of the food served to their customers and will attract new customers also.
  • Opening bank account in nearby branch as soon as possible will facilitate regular deposit of available cash in the store. This will nullify the chances of cash embezzlement.

Respected Mr. Penny Binskin,

According the decision made by the management of Blue horizon to acquire Stirling’s cafe the analysis of various risk associated with it is to be analyzed first. Four risks have been identified and assessed based on which following suggestions are given to minimize the risk.

The management of Blue horizon must immediately install a water tank to minimize water wastage, open a nearby bank account to minimize the chances of cash loss and theft, make agreement with suppliers for

timely delivery of supplies, appoint chef with high skill, knowledge and experience to increase its food quality. 

References

Berkyto, M., Chiba, S., Fietcher, L., Kuan, E., Li, S. and Mow, R., 2014. Beyond organic@ Beaty's Café.

Green, P.E., 2015. Enterprise Risk Management: A Common Framework for the Entire Organization. Butterworth-Heinemann.

Hoffmann, P., 2012. Innovative supply risk management. In Supply Management Research (pp. 79-104). Gabler Verlag.

Jain, M., Agrawal, A., Ghai, S.K., Truong, K.N. and Seetharam, D.P., 2013, September. We are not in the loop: resource wastage and conservation attitude of employees in indian workplace. In Proceedings of the 2013 ACM international joint conference on Pervasive and ubiquitous computing (pp. 687-696). ACM.

Robinson, J., 2013. Beyond the Blue Horizon: how the earliest mariners unlocked the secrets of the oceans by Brian Fagan 313 pp., 40 b&w illustrations, maps Bloomsbury Publishing plc., 50 Bedford Square, London WC1B 3DP, 2012,£ 20 (hbk), ISBN 978 1408825068.

Simwinga, F.C., 2015. Urban Water supply utilization: A case study of Wusakile Township, Kitwe.

St Germain, S.W., Farris, R.K., Whaley, A.M., Medema, H.D. and Gertman, D.I., 2014. Guidelines for Implementation of an Advanced Outage Control Center to Improve Outage Coordination, Problem Resolution, and Outage Risk Management. Idaho National Laboratory External Report. INL/EXT-14-33182.

Tracy, J.A., Cornell, S. and Berry, L.C., The Travelers Indemnity Company, 2014. Methods and systems for providing customized risk mitigation/recovery to an insurance customer. U.S. Patent 8,731,978.

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