RISK MANAGMENT Essay Example

  • Category:
    Management
  • Document type:
    Assignment
  • Level:
    High School
  • Page:
    2
  • Words:
    1418

Risk Assessment

Topic: Risk Assessment for a Mobile Phone dealer Company

  1. Introduction of the Business

The business is a company involved in the sale of mobile phones to various customers. The business is imports the handsets from China, Japan and the US and stocks these products in its stores that occupy a half acre building. The business has a total of 25 employees and the clients of the business are local retailers of mobile handsets in Melbourne in Australia.

  1. Establishment of Context of risk management plan

There are a number of potential risks to which the business is exposed. By department, these risks include:

  1. Financial department risks: This refers to risks in terms of cash flow analysis, budget requirements, risks in terms of tax obligations, risks during the need to provide remuneration to employees even in times of losses and overall account management processes (Spedding & Rose, 2008).

  2. Operational department risks: this refers to the risks that will be experienced during planning, daily operational activities such as organizing the shops and attending to customer needs and communication with suppliers.

  3. Service delivery department risks: These are risks that are likely to be experienced during importation of the products from overseas countries, transporting them to the stores and transporting the products to retailers.

The main stakeholders of the business are employees in various positions such as delivery of the mobile phones to the stores during importation, those involved in stock taking and keeping record of transactions and those involves in distribution to retailers. Other stakeholders are retailers who buy the handsets from the company and sell them to final users (Sadgrove, 2005). Stakeholders also include the government that facilitates importation through legislation of laws that governs the importation of the handsets.

According to the Australian and New Zealand risk management standards, risk management plan should include establishment of the context of the risk, identification of the risk, analysis of the risks, evaluation of the risks and treatment of the risks (Koller, 2005). In these steps, communication and monitoring is significant for them to be achieved.

The strength of the legislation is that it provides a guide on how to manage risks in an organization and the steps are easy to follow. However, the weakness is that it does not provide the specific approach to deal with certain types of risks that need flexible approaches to prevent.

In this business, the success factors will include ensuring the process of stock taking for the products is successful and there is a minimal error in accounting for the products delivered or sold, effectiveness of activities of the workers by ensuring none of them steals the products and funds for expansion of operation are not misappropriated by staffs at the company. The goals and objectives of the company will be to gain maximum efficiency in its activities and attain high profitability for the welfare of its employees.

Staffs that will be involved in the risk management plan will be managers of various sections of the business such as imports sections manager, stock taking manager, sales manager and accounting manager. The plan proposed by the team for risk assessment will be approved by the director of the company and the business operator.

  1. Risks in the Business

The staffs that will participate in identification of the risks include the stocks manager, imports manager accounting manager, the cashier, external auditors and the sales manager (Graham, Kaye & Rothstein, 2006). For instance, the accounting manager will assist in auditing books, creation of profits and loss accounts, estimating financial impacts of the previous servicing and financial impacts that can be brought by risk events. The sale manager will provide market research on existing market conditions, prepare budgets and advertising campaigns. The main tools that will be used to generate a list of risks to which the business is exposed include brain storming where a number of ideas will be generated to create a large number of potential risks to which the business is exposed (Duckert, 2011). The use of the fish-bone diagram will also be used where cause and effects of a risk factor and the subsequent contributing factors are identified to come up with a list of causes and effects.

  1. Analysis of risks in the business by use of assessment matrix

The risks will be assessed by use of the risk assessment matrix shown below

The risk assessment matrix will be used to measure the ‘likelihood’ of occurrence of a risk and the ‘consequence’ of risks that the business is exposed to. The likelihood ranges from ‘very likely’ to ‘highly unlikely’ while the consequences range from ‘fatality’ to ‘negligible’ (Spedding & Rose, 2008). The likelihood and consequence will then be combined to measure the risks. For instance, the following matrix shows how the assessment can be done.

Type of risk

Consequence

Likelihood

Financial risk

Very likely

High risk

Operational risk

Minor impact

Moderately high risk

Service delivery risk

Possible

Negligible

Figure 1. Application of risk assessment matrix in measurement of risks for the mobile distributor business.

Evaluation and prioritizing the risks will involve identification of the risks that are most likely to result into high impact on the business and focusing on their prevention first. According to the above analysis, financial risk will result into high impact on the business, followed by operational risks and service delivery risks. Therefore, risk management plan will involve dealing with financial risks first.

  1. Selection and Implementation of treatments for each type of risk

Various treatment methods will be used for prevention of various types of risks. For instance, financial risks will be treated by proper management of financial records such as doing cash flow analysis and budgeting. Operational risks will be treated by planning daily operations and adhering to the plans while service delivery risk will be treated by recruiting honest employees to assist in delivery of products to customers and transportation during importation process (Sadgrove, 2005).

The risk management processes will be communicated to relevant parties by providing managers in each department to address their departments on the plan for developing risks in the company.

  1. Documents required for the risk management plan

The main documents that will be used during the assessment include risk assessment plan and the use of transaction records by the company.

  1. Monitoring process to be used by the business to monitor risk management plan

Monitoring process will ensure the risk management process is kept current and effective and areas that were overlooked in the initial processes are identified and controlled. The main actions will involve re-implementation of the initial steps, monitoring of the current risk control measures to determine their effectiveness based on changes and fluctuations at workplace and collection of data on possible hazards that might have arisen and determination of new measures of control. Workplace will also be monitored, inspections will be scheduled and ongoing measurements will be tested (Graham, Kaye & Rothstein, 2006).

  1. Evaluation of the risk management processes of the business

Risk management process in the company will be evaluated by measuring the extent to which various risks have reduced following the implementation of risk management processes. The risk management process will be considered successful if the risks prevented have reduced while unsuccessful if there is no change in the risks controlled or if the conditions of the risks have worsened.

References

Duckert, G. H. (2011). Practical enterprise risk management: A business process approach. Hoboken, NJ: Wiley.

Gaudenzi, B., & Borghesi, A. (2012). Risk management. Milan: Springer.

Graham, J., Kaye, D., & Rothstein, P. J. (2006). A risk management approach to business continuity: Aligning business continuity with corporate governance. Brookfield, Conn: Rothstein Associates.

Gray, I. (2007). The audit process: Principles, practice and cases. London: Thomson Learning.

Koller, G. R. (2005). Risk assessment and decision making in business and industry: A practical guide. Boca Raton, FL: Chapman & Hall/CRC.

Miles, D. A. (2011). Risk factors and business models: Understanding the five forces of entrpreneurial risk and the causes of business failure. Boca Raton: Dissertation.com.

Reuvid, J. (2013). Managing business risk: A practical guide to protecting your business. London: Kogan Page.

Sadgrove, K. (2005). The complete guide to business risk management. Aldershot, Hants, England: Ashgate Pub.

Shoniregun, C. A. (2005). Impacts and risk assessment of technology for Internet security: Enabled information small-medium enterprises (TEISMES). New York: Springer.

Spedding, L. S., & Rose, A. (2008). Business risk management handbook: A sustainable approach. Oxford ;Burlington, MA: CIMA.

Vona, L. W. (2011). The fraud audit: Responding to the risk of fraud in core business systems. Hoboken, N.J: Wiley.