BSBRSK501B Manage risk

by RAMPREET SINGH
task 1
For the provided case study, you will assume the role of the risk manager/assessor, and you are required
to review the provided MacVille Risk Management Policy and complete a written report for your
manager (your assessor) that addresses the following steps.

• Scope – Identify the scope of risk management required in your identified role.

• Goals – Identify and describe the critical success factors, goals or objectives for areas included in
scope.

• Stakeholders – Identify internal and external stakeholders, their role in the process, and any
issues or concerns they have. Present this using the table format provided.

• Analysis – Complete a PEST analysis and a SWOT analysis for the planned operations of the
business.

• Research – Review and summarise the research information provided in the case study, as well
as any literature available that is relevant to this scenario.

• Describe – Complete the analysis of risk for the scenario by summarising the scenario and
associated risks, accompanied by checklists, diagrams or flowcharts that support the summary.
After you have completed the above steps, you need to meet with your trainer and discuss the draft
report you have developed, especially your understanding of the critical success factors and goals (you
should check that your trainer agrees with your findings).

As part of your discussions you also need to discuss and identify how you can communicate with
stakeholders about the risk management processes in this scenario and invite them to participate in
discussions to further identify risks associated with the scenario.

• Summarise: In dot-point form, summarise the discussions with your manager. This should
include any recommendations your trainer made to you.

• Develop: a draft of the communication your manager suggested you use for consultation with
stakeholders.

• If your trainer suggested a phone call, you should include a draft script of information
that you need to share with stakeholders.

• Whatever the form of communication, it must clearly ask stakeholders for input, and
invite them to assist in the identification of risk for this scenario.
Case Study: Scenario
As part of their overall strategy in the Australian beverage market, MacVille Pty Ltd have developed a
chain of cafes in the Central Business District (CBD) of Brisbane, Queensland and the CBD of Sydney,
NSW. The board of directors have made the decision to expand their operations in Queensland with the
purchase and re-branding of the existing Hurley’s cafe in Toowoomba on the darling downs 130km west
of Brisbane.

You are currently the assistant manager of their flagship Brisbane Queen Street store, and have been
given the opportunity to manage the new store in Toowoomba. The CEO for MacVille’s cafes in
Queensland is Paula Kinski.

She has assigned you the task of managing the risks involved with the operational aspects of this take-
over. A copy of her email is attached.

Email from CEO – Paula Kinski

From: CEO – P.Kinski

To: Assistant Manager – Queen Street

Re: New Toowoomba store

Congratulations on your new appointment. Prior to taking up your position as manager of our
Toowoomba store located in Ruthven Street, the board has asked that the risks in this project be
appropriately managed. I want you to undertake this task as it will give you significant insight into the
store’s operations, it will ensure a smooth transition to the MacVille systems and will encourage you to
give ongoing support for our risk management initiatives.

I would like you to approach this task in three stages and meet with me at the end of each phase to
review your work and discuss your plans for the subsequent phases. The three stages in this risk
management task will include:

• Review.

• Analyse and plan.

• Monitor.
Your primary risk management focus is directed to the ongoing operations of the Toowoomba cafe. The
strategic and investment risks of this project are being managed by the board. To this end, you are to
consider any risks that could impact on human resources management, financial operations, OHS, our
supply chain and the local governance and overall compliance issues.

By way of background, MacVille has agreed to employ all existing staff on three months probation. The
current supervisor James Mansfield, has been offered the position of 2 nd in charge and he has accepted.

While settlement on the purchase of the business is not for another few weeks, the seller has agreed to
grant us full access to the store’s operational processes and store information. You should liaise weekly
with the Queensland management team here at head office concerning the marketing, finance and store
management functions that you are investigating. I will set up a regular meeting for you.

Head office has a report on a similar expansion conducted by the NSW team that may help you in your
research. You may need to review other statistical information and engage specialists to help you with
your investigation. The legal firm Goldsmith Partners are advising MacVille on the Hurley cafe acquisition
and would be available to help you with legal or any compliance issues.

The landlord of the shop in Toowoomba, Ron Langford, is also a local councillor and has offered his
assistance in getting established in Toowoomba. He has offered his email address for correspondence
(ron.langford@tcc.com.au).

Once I have received and discussed your risk review report, we can move onto the next stage of the risk
management process.

Regards

P.Kinski
CEO MacVille Cafes (Qld)

Site visit – Toowoomba

You received permission from Paula to travel to the Toowoomba store to start your research. Paula had
cleared it with James Mansfield the current senior supervisor who will spent most of the day with you
helping answer your queries.

You arrived at the cafe and noted the two hours of drive time that it took to get to the cafe from the CBD
of Brisbane. You met with James who took you through a complete overview of the store and the
surrounding area. He was OK with the idea that you needed to take notes in preparation for a report.

Paula had also arranged for you to meet with Ron Langford in his office later that afternoon.

Hurley’s Cafe
After lunch, you went over your notes to revise and edit key concerns and significant events that you had
written down earlier.

• The location of the store on the corner of the two main streets of the city makes easy access for
local customers and highly visible for tourists.

• The long drive from Toowoomba to Brisbane would make attending the weekly managers
meeting difficult considering many meetings did not finish until into the evening after
refreshments. There is also manager training sessions that need to complete over the next 6
months in conjunction with a few other assistant managers. Navigating the steep narrow climb
up the range with trucks blocking the way is quite difficult even in daylight hours. Being a
competent driver you feel that it would be unlikely that you would be involved in an accident,
but it still concerns you considerably.
• The two hour delivery would make fresh pastry deliveries from the company’s central bakery
plant impractical. The pastries would arrive after the morning rush. These are a key part of the
MacVille assortment.

• There is also a concern about getting the company branded supplies through as quickly as a CBD
Brisbane store could.

• Hurley’s cafe was a family run store and some family members were employed on the staff.
James was engaged by the family to supervise the operations of the store and Mr. Hurley as
manager would authorise wages but anyone can authorise deliveries.

• When asked about written policy and procedures manual, James said that Mr. Hurley set the
policy and procedures verbally and on the few days each week he was in the store he would
show the staff how to do things the way he wanted them done.

• Water use – Running the dishwasher when only half full. Washing fruit and vegetables under a
fast running tap. Toilets all used the single flush system. Dual flush would cost about $7,500 to
upgrade. The dishwasher was always set to full wash and had a Water Efficiency Labelling and
Standards Scheme (WELS) rating of 3. The more water efficient 5-6 star dishwashers cost about
$6,000 and above. James explained that Mr Hurley instructed the staff to keep the non-native
flowering plants in the courtyard fully watered. The store currently uses 41,500lt a week.

• James spoke about the cafe attracting a large % of retirees because of the easy access to busses
and the stores central location.

• The same staff member that completed the cash register balancing also completed the bank
deposit form and did the banking as well. The banking was not done every day and often $4,000
was kept on the premises overnight in the cash register. There was no safe. There is a bank two
shops away but the Hurley family bank is a couple of blocks away and there was not always time
to do the banking.

• James replied to you question about the possibility of break-ins saying that there was a 50%
chance of it happening and the risk was moderate.

• Not all takings from the cash register by family staff members were recorded.

• The fit-out in parts looked old and unattractive, with some chairs unstable and broken and some
parts of the worn carpet was simply taped over with gaffer tape.

• One of the staff was a qualified chef who had developed an innovative and popular range of rice
wraps that were tasty, gourmet and healthy. None of the other cafes in the area offered these.

• No established process for dealing with injuries that happened at work.

• James gave a brochure about an innovative frozen par-bake cooking system that was under the
limit set by council for an exhaust system yet it cooked fresh bakery items in 30 minutes from
frozen par-baked pastries.

• The computer with all the stores employee details, and financial records was not password
protected and anyone could access the information.

• James’s response to your question about the lack of sales promotion techniques was that he
could not get the staff interested in the activity so he stopped trying to make it happen.
 • The employee detail form requested information about the employee’s entire past health issues.

• The wage and superannuation records seemed to be incomplete with many calculations being
worked out by the number of hours worked multiplied by a set ‘in the hand’ amount.

• James also provided a brochure about a company that could come and set up WIFI in the cafe so
that customers could use their computer notebooks and connect to the internet while they were
dining in the cafe.

Meeting with Ron Langford

In the afternoon you met with Ron Langford in his office to discuss the cafe, council by-laws and aspects
concerning the surrounding district. You took notes that included the following significant information.

• Ron explained that there were opportunities for opening more cafes in the surrounding shopping
centres like Wilsonton, Clifford Gardens and K-Mart Plaza.

• Ron handed you an extract from a government report ‘Economic Brief.’

• Ron explained that the Federal Government was now introducing legislation that backs up the
local by-law concerning efficient water usage, particularly by industries. The current by-law has
fines of up to $50,000 for excessive water breaches. Ron did explain that the council was giving
some time to ‘make good’ under certain circumstances on a case by case basis. Ron also agreed
with the idea of installing a water tank in the court yard for the cafe to use and would help get it
built.

• Ron explained that Toowoomba was obviously a place for retirees and the population was
growing.

• Ron spoke about the Federal Government’s National Broadband Network being rolled out in
Toowoomba that would allow efficient and effective video streaming and teleconferencing.

• Ron spoke about the current by-law that was due for implementation on the 1 st of next month
allowing cafes to expand their footpath dinning and so put more tables and chairs outside their
premises.

• Ron also spoke of the fact that representatives of a large international chain of coffee shops had
been making enquiries around town about opening a store in the Toowoomba CBD.

Queensland management team meeting

Soon after you got back from your research trip to the Toowoomba store, you were attending a meeting
with the Queensland management team and Paula gave you the report “Report into the acquisition and
re-branding of the NSW expansion store”. Paula said that there may be some things to learn from the
NSW experience. In the report you noticed the summary.

Key problems identified:

• Lack of internal controls, particularly over cash handling, monitoring and recording.

• Failure to meet compliance standards in OHS, Privacy and Industrial relations law.

• Lack of written policy and procedures to guide staff in carrying out their duties.
 • Lack of a professional business culture in the family run business.

• Failure of the business to monitor the external environment and find opportunities and threats
to the business.

Case Study: Risk management policy

MacVille risk management policy

Purpose
Risk is inherent in all business activities. The aim of this policy is not to eliminate risk, rather to manage
the risks involved in all MacVille activities to maximise opportunities and minimise adversity.

Effective risk management requires:

• a strategic focus

• forward thinking and active approaches to management

• balance between the cost of managing risk and the anticipated benefits

• contingency planning in the event that mission critical threats are realised.

Policy
MacVille will maintain procedures to provide a systematic view of the risks faced in the course of our
business activities.

• Establish a context: The strategic, organisational and risk management context against which the
rest of the risk management process in MacVille will take place. Criteria against which risk will be
evaluated should be established and the structure of the risk analysis defined.

• Identify risks: Identification of what, why and how events arise as the basis for further analysis.

• Analyse risks: The determination of existing controls and the analysis of risks in terms of the
consequence and likelihood in the context of those controls. The analysis should consider the
range of potential consequences and how likely those consequences are to occur. Consequence
and likelihood are combined to produce a priority rating for the risk.

• Treat risks: For higher priority risks, MacVille is required to develop and implement specific risk
management plans including funding considerations. Lower priority risks may be accepted and
monitored.
 • Monitor and review: Oversight and review of the risk management system and any changes that
might affect it. Monitoring and reviewing occurs concurrently throughout the risk management
process.

• Communication and consultation: Appropriate communication and consultation with internal

and external stakeholders should occur at each stage of the risk management process as well as
on the process as a whole.

Table of Stakeholders:
Stakeholder Internal/external Role in process Stake in process
The board Internal Responsible for Potential assets
overall management tangible and
intangible of the
company
Paula Kinski Internal Ensure the project his CEO position in
outcomes align with MacVille’s cafes in
and/or advance the Queensland
MacVille Pty Ltd’s
mission, plans, and
operations
Senior management Internal identify and evaluate Potential assets
team risks; tangible and
implement policies intangible of the
on risk company
management;
review and update
the risk
management
strategy
FARM committee External Concerns the their reputation in
marketing, finance the field
and store
management
functions of the new
toowoomba store;
are required to
report at board
meetings on internal
controls;
 oversees internal
audit, external audit.
Ron Langford External assists the Assistant his landlordship
Manager to get the with the cafe
cafe established in
Toowoomba
James Mansfield External help MacVille to his 2nd in charge
achieve their position
business goals
Hurley’s staff External carry out what they Their salaries and
are required to do their jobs, which
are on three
months probation
Goldsmith External helps the Assistant their reputation in
Manager with legal the field on
and compliance consultation
issues

PEST Analysis

political economic socio-cultural technological

• Obtained an representatives of a Toowoomba was the Federal
extract from a large international obviously a place for Government’s
government chain of coffee shops retirees and the National Broadband
report had been making population was Network being rolled
‘Economic enquiries around growing out in Toowoomba
Brief’ town about opening a that would allow
• the Federal store in the efficient and effective
Government Toowoomba CBD video streaming and
was now teleconferencing
introducing
legislation that
backs up the
local by-law
concerning
efficient water
usage,
particularly by
industries.
• the current by-
law that was
due for
implementatio
n on the 1st of
next month
allowing cafes
to expand
their footpath
dining
SWOT Analysis

strengths weakness opportunities threats

• the cafe • driving • the location of • There is a
attracts a condition in the store are concern about
large % of Toowoomba in good getting the
retirees concerning • james company
• one of the • delivery of prepared to branded
staff was a fresh pastry set up internet supplies
qualified chef from the for the cafe through as
who had company’s quickly as a
developed an central bakery CBD Brisbane
innovative and plant store could
popular range consumes too • Hurley’s cafe
of rice wraps much time was a family
that were • No written run store and
tasty, gourmet policy and anyone can
and healthy. procedures authorise
• have an manual deliveries.
innovative available. • water usage is
frozen par- • staff were not high
bake cooking interested in • the banking
system sales was not done
promotion every day and
techniques often $4000
and James was kept on
stopped trying the premises
to make it overnight
happen • not all takings
• the wage and from the cash
superannuatio register by
n records family staff
seemed to be member were
incomplete recorded
• some chairs
were unstable
• no established
process for
dealing with
injuries that
happened at
work
• computer was
not password
protected
• the employee
detail form
requested
information
about the
employee’s
entire past
health issues.
Site visits:
Who
James Mansfield and me
Ron Langford and me
The senior management
team with me
the FARM Committee with
me
Risk checklist:
1. Human Resource Risks
inconvenient meeting and
training assess
unhealthy employment
system
2. Financial Risks
banking not done in time
possibility of break-in
cash flow not recorded
3. WHS Risks
No written policy and
procedures manual
the fit-out in parts looked old
workplace injuries
employee personal privacy
Where
Hurley’s cafe in Toowoomba
in Ron’s office
at MacVille Pty Ltd
at MacVille Pty Ltd
the long drive from
Toowoomba to Brisbane may
cause trouble for managers
some family members were
employed on the staff and
anyone can authorise
deliveries
money left on the premises
50% chance of break-in
not all takings from the cash
register by family staff
members were recorded
Mr Hurley set the policy and
procedures verbally
some chairs are unstable and
broken and some carpet is
taped over with gaffer tape
no established process for
dealing with injuries that
happened at work
the employee detail form
requested information that
about the employee’s entire
Extracts
a complete overview of the
store and the surrounding
area
discuss the cafe, council by-
laws and aspects concerning
the surrounding district
discuss issues raised by
James Mansfield and Ron
Langford and the report on
previous NSW expansion
I replayed the concerns of the
senior management team.
check/ not check
check/ not check
check/ not check
check/ not check
check/ not check
check/ not check
check/ not check
check/ not check
check/ not check
 past health issues

4. Supply Chain Risks

delivery delivery of fresh pastry would check/ not check
take too much time

5. Local Government and Compliance Risks

water usage low water efficiency check/ not check
incomplete employment the wage and superannuation check/ not check
record records seemed to be
incomplete
confidential information the computer with all check/ not check
record employee details and
financial records was not
password protected

Recommendation:
On communication: Use Multiple Channels for Organizational Communication;Make Important
Messages Repetitive; Focus on Listening; Get Your Message Across; Handle Communication
Problems
On consultation:communicating business needs and priorities (use a mixture of team meetings,
newsletters, emails or intranet site); seek views and opinions from affected employees, either
individually or through their representatives (team or individual meetings, online intranet forum,
surveys).Encourage a two-way flow of information; review and improve strategies for
communication flow of ideas and information.
On managing stakeholders:
With a clear understanding of your Stakeholders, engaging and communicating can be achieved
through a variety of channels based upon who the stakeholder is.
High power, interested people: Manage closely. Best channels: Issue, Change Logs, Status
Meetings
High power, less interested people: Keep satisfied. Best channels: Steering Committee, Board
Meeting Updates
Low power, interested people: Keep informed. Best channels: In-Person, Video, Email Updates
Low power, less interested people: Monitor. Best channels: Send Email, Status Reports
On managing risks: Create the right culture;Clarify responsibilities and rules;Use suitable reward
systems;Focus on the business objectives; Recognize the limitations of risk assessments;Put
business managers in the driver’s seat; Demand integrated management information; Make
sure rules are enforceable;Align internal audit with the business.

task 2
likelihood of risks
risks likelihood
banking risk 3 possible
 manager’s travel risk 4 likely
by-law compliance risk 4 likely

consequence of risk
risks consequence
banking risk 2 minor
manager’s travel risk 5 catastrophic
by-law compliance risk 3 moderate

priorities
consequence insignificant minor moderate major catastrophic
likelihood
rare
unlikely
possible banking risk
likely by-law manager’s
compliance travel risk
risk
frequent

risk level
manager’s travel risk=4*5=20
by-law compliance risk=4*3=12
banking risk=3*2=6

options to treat these risks:

banking risk manager’s travel risk by-law compliance risk
• Making it a company • install a • Install a water tank
policy to bank every telecomferencing and reduce
day and eliminate the system. dependence on
need to carry • finish management council water.
overnight. meetings at 3:00 pm. • install dual flush
• change banks to the • change assistant toilets.
nearer one to avoid management times to • introduce new
the long walk. the morning. processes on water
• insure overnight cash use and conservation.
holdings

The reasons behind these treatments:

According to SWOT analysis, the cafe needs written policy and procedures manual to improve
performance regarding to banking risk and by-law compliance risk. So the managers and
employees can refer to the manual when they have no clues on what or how to do the work.
After analysing all risks’ likelihood and consequence, we understand the organization can
improve greatly with suitable treatments. The whole team is willing to abide by the company
rules.

Risk management plan

risk assess risk controls monitoring timelines responsible

(L,M,H,E)
 banking risk M Making it a store Within 3 financial
company policy manager months controller
to bank every
day and
eliminate the
need to carry
overnight.
change banks
to the nearer
one to avoid the
long walk.
insure overnight
cash holdings
manager’s E install a MacVille Pre- CEO and
travel risk telecomferencin board settlement MacVille
g system. board
finish
management
meetings at
3:00 pm.
change
assistant
management
times to the
morning.
by-law H Install a water Goldsmith opening week MacVille
compliance tank and reduce Partners board
risk dependence on
council water.
install dual flush
toilets.
introduce new
processes on
water use and
conservation.

I will communicate my risk management plan to others in the workplace through meetings and
training sessions. Not just informing them what we need to do, but instead, letting them to
understand every single reason behind my plan. In this way, they could carry out the plan more
effectively and even could contribute their own ideas.

task 3
risk risk level plan implementation outcomes evaluation
Banking risk-- moderate -Insurance with -The financial initially initially rated
theft of cash Suncorp company controller had rated as as moderate
left on for the cash on taken out moderate reduced to
premises $5,000 the now low low. It can be
premises -Open an account insurance cover due to cash eliminated by
with the nearest on cash held on rarely kept 100%
bank premises on the compliance
-Policy and overnight from premises with the
 procedure the opening company law.
requirement to week as
bank daily. planned.
-The company
bank account
was opened
about 2 weeks
after opening at
the bank across
the street.
-The training on
daily banking
has been
successfully
completed.
Manager’s extreme -Management -The weekly initially initially rated
travel risk-- meetings to finish management rated as as extreme
physical 3:00pm meetings are extreme and reduced
injury -Install finishing close still high to high
teleconferencing. to 3:00pm. due to rare because of
-Management -The assistant with the the continued
training shift to management change in travel.
morning half day training has time Introduction
sessions been shifted to travelled of tele-
the mornings conferencing
allowing the would reduce
manager to this risk to
leave before zero.
12:00PM.
By-law high -Apply for time to -The dual flush initially initially rated
compliance ‘make good’. toilets are rated as as high and
risk-- -Policy and ordered and in high now reduced to
reputation/bra procedures to stock moderate moderate but
nd loss and change work -The 5 star due to could be
fines practices. rated (WELS) unlikely reduced
-Install water dishwasher was likelihood again to low
saving devices installed with the by having
such as native -An external installed plumbers
plants, tank, dual audit was water install the
flush toilet completed and saving tank and the
systems, 5-6 star presented to devices dual flush
(WELS) the board 6 and toilets.
dishwasher months after processes
settlement.