Principles of Assessment and Rules of Evidence

Answer 1

According to the “Australia/New Zealand Standard for Risk Management (AS/NZS ISO 31000:2009)” risk can be defined as “the effect of uncertainty on objectives”(Finance.gov.au 2018). In other words, it can be said that risk can be seen as the factor which deters the organizations or individuals to achieve their set objectives or goals. This is drastically different from the earlier definition of risk wherein risk was defined as anything whose occurrence had an impact on the objectives.

Answer 2

Risk management can be defined as the process of identifying, analyzing, evaluating, categorizing and formulating different kinds of strategies for the effective mitigation or the resolution of risks that an organization faces (Sadgrove 2016). Wu, Chen and Olson (2014) are of the viewpoint that the prospects of an organizations depends greatly on the extent to which it is being able to mitigate the diverse business risks which it faces.

Answer 3

The five benefits of risk management are listed below-

• An effective risk management plan enables the organizations to achieve the objectives that they have outlined for itself in a much effective manner (Hopkin 2018).
• The cost incurred for the completion of different kinds of projects is comparatively low because of effective management of different kinds of risks (Wu, Chen and Olson 2014).
• An effective internal as well as external risk management plan not only improves the performance of the employees but of the organization itself (Hopkin 2018).
• The critical situations can be effectively managed through the effective use of these risk management plans (Wu, Chen and Olson 2014).
• The plan enables the organizations to categorize the different risks on their priority basis and likely impact (Sadgrove 2016).

Answer 4

The primary purpose of the “AS/NZS ISO 31000: 2009 Risk Management Principles and Guidelines” is to improve the standard of risk management policies as well as frameworks which are being used for management of different kinds of risks (Finance.gov.au 2018).

Answer 5

The first principle of the “AS/NZS ISO 31000: 2009 Risk Management Principles and Guidelines” is “Creates and protects value” as per which an effective risk management plan should help an organization to attain a higher level of growth through an improvement of existing policies followed by it (Finance.gov.au 2018). The second principle “Be an integral part of organizational processes” states that the organizations need to integrate these plans into corporate governance framework followed by it (Finance.gov.au 2018). More importantly, the various operational and other kinds of decisions taken by the organization should take into effective consideration this plan.

Answer 6

The three examples of potential impacts of risks are-

• Financial impact, which can affect the profitability of an organization
• Reputational impact, which can affect the reputation of an organization
• Health and safety which can pose a serious threat to the wellbeing of the employees

Answer 7

The steps that can taken for analyzing risks are given below-

• Identification of the factors that have given rise to the risk
• Assessment of risk score
• Formulation of a contingency plan
• Personal accountability
• Timeline

Answer 8

The three sources of information that can be used to gather information on potential risks are listed below-

• Analysis of the business environment in which an organization is operational
• Competitor analysis
• Analysis of the current industry situation

Answer 9

The five options for controlling risk are listed below-

• Formulation of effective strategies or measures for the mitigation or resolution of the risk on the basis of its nature
• Effective implementation of the risk management plan which has been formulated for the mitigation of the risk
• Use of contingency plans for the resolution of risks which threaten the overall success of a project
• Taking the initiative to identify the risks at the very initial stages of a business project
• Use of effective monitoring mechanisms to not only facilitate the identification but also control of these risks

Answer 10

The five ways in which an organisation can minimise risk are listed below-

• Effective planning of the different projects so as to minimize risks
• Formulation of different kind of contingency risk management plans
• Regular business environment audit to understand the kind of risks that they are facing
• Formulation of risk management strategies on the basis of the impact that these risks are likely to have on the business of the organization
• Effective implementation of these risk management strategies

Answer 11

Three examples of tools or techniques that could be used to identify risks as part of a risk assessment process are-

• Root cause analysis
• Risk exposure calculator
• Cause and effect diagrams

Assessment Task2 Part A – Risk management project

Agreement by the student

PESTLE analysis

Strengths and weaknesses of the company’s existing retail approach

The critical success factors on which the business expansion project of NatureCare Products would depend are-

• Diversification of the product line of the company
• Use of cost leadership strategy to offer the best quality products to the customers and that at very affordable prices.
• Incorporating the male individuals and females individuals belonging to age brackets other than the ones that the organisation is currently focusing on within the targeted customer base of the company
• Increasing the number of stores in which the products of the concerned company would be available

The goals or objectives for the business expansion project undertaken by the organisation under discussion here should be-

• To increase the market share held by the company by more than 10%
• To earn a higher amount of revenue
• To increase the current customer base of the company by more than 20%

Assessment Task2 Part B – Risk management project

The main fulcrum of discussion of this meeting will be the ways through the risks that NatureCare Products is facing currently can be mitigated or reduced in the most effective manner. This is important since the risks that the organisation is currently facing is not only adversely affecting the business prospects of the concerned organisation but at the same time is threatening the business expansion project as well. Thus, the mitigation of these risks is of paramount importance from the perspective of the organisation and this is precisely the main reason why this meeting has been organised.

The major risks that the organisation NatureCare Products is facing currently are listed below-

• Financial risks because of its inability to capitalize on the opportunities offered by the other demographics of the overall population
• Risk due to the over-emphasis of the company on the organic and eco-friendly cosmetic products which are expensive than the other cosmetic products and thus many customers do not opt for them
• Existing customers of the company are switching over to the other brands because the products offered by the company are available at very few stores
• The company also faces a high level of risk because of the changing buying pattern of customers

In addition to the above mentioned ones, there are other risks as well that the company is likely to face for the process of its business expansion project-

• The company lacks a Project Manager and thus there is a risk involved in the project of expansion since the planning of the expansion might not be done in an effective manner.
• The high price charged by the company would act as a disadvantage for it in the new business market since the customers generally opt for the products which are cost effective
• The products offered by the company are designed keeping in view the requirements of one demographic of the entire population. This is likely to act as a risk for the concerned company in the new business market

   There are various steps that the company under discussion can undertake to mitigate the adverse effects of these risks-

• Taking help from Project Managers to plan the entire project of expansion in an effective manner
• Using the strategy of cost leadership to offer cost effective quality products to the customers
• Extending the customer base of the company to incorporate other demographics of the population as well

Assessment Task2 Part C – Risk management project

Risk Treatment Plan or Action Plan

Assessment Task3 Part A – Risk treatment implementation and evaluation

One of the major risks that the retail business expansion of the organization NatureCare Products faces is the fact that they might not get suitable employees for their new business centres. The organisation, thus, needs to take the initiative to offer to desired as well as right kind of training to the employees so that they are being able to perform as per the expectation of the organisation. This is likely to require the concerned organisation to offer both formal as well as informal kinds of trainings to the customer service representatives.

It is seen that customer service representatives are required to speak in a polite or formal manner with the customers and listen as well as understand their problems or grievances. Thus, the organisation would have to provide this training to the employees so that they are being able to handle the customers in an effective manner. On the other hand, the customer service representatives are also required to record the problems of the customers and pass them on to the concerned departments. The concerned organisation would also have to offer training to the employees so that they are being able to do this work in an effective manner. Thus, it can be said that for the effective resolution or mitigation of this risk the concerned organisation would have to provide both formal and informal training to the employees so that they are being to handle the customers in an effective manner.

List of Questions

The rationale of the organisation behind offering these trainings to the employees should be to not only improve the quality of services which are being offered to the customers but also to improve the fortunes of their business. The organisation can offer this training to the employees within the conference and training rooms that they have. However, this is likely to cost the organisation a substantial amount of capital since the training would need trainers and other additional resources like computers, projectors and others. The estimated duration of this training would be around 15 days.

Assessment Task3 Part B – Risk treatment evaluation

I would like to say at this juncture that the overall process of risk assessment was not an easy one since I needed to analyse the different aspects of the organisation to understand in an effective manner the risks that it faced. However, the staff inputs and other information were really very helpful and helped me to identify the majority of risks. I am confident that I have identified if not all then atleast the majority of the risks that the organisation is likely to face on the score of its expansion.

I would like to say that the process indicated in the NatureCare Products current risk management policy and procedures sufficient to guide the risk management process used for the business expansion project were adequate. I am of this opinion since the main ideas or the key points that I needed to take into consideration were provided by the documents itself.

I personally believe that the principles of risk management in the NatureCare Products risk management policy and procedure are consistent with AS/NZS ISO31000:2009 Risk Management Principles and Guidance since they clearly confirm to “the effect of uncertainty on objectives” definition of risk.

Yes, there are specific procedures for the provision of training to staff on risk management since unlike the other kinds of training wherein individuals are given training to improve their performance for this training the individuals are taught to identify the risk and work towards their mitigation. I personally believe that with the framework of risk management process there should be provision for the mitigation of non-market risks as well. In addition to this, the organisations need to have their own individual risk management department for the effective mitigation of different kinds of risks.

References

Australia.gov.au. 2018. Welcome to Australian Government. [online] Available at: https://www.australia.gov.au/ [Accessed 25 Nov. 2018].

Finance.gov.au. 2018. AS/NZS ISO 31000:2009 Risk Management – Principles and Guidelines. [online] Available at: https://www.finance.gov.au/sites/default/files/COV_216905_Risk_Management_Fact_Sheet_FA3_23082010_0.pdf [Accessed 25 Nov. 2018].

Hopkin, P., 2018. Fundamentals of risk management: understanding, evaluating and implementing effective risk management. Kogan Page Publishers.

Sadgrove, K., 2016. The complete guide to business risk management. Routledge.

Wu, D.D., Chen, S.H. and Olson, D.L., 2014. Business intelligence in risk management: Some recent progresses. Information Sciences, 256, pp.1-7.