Course Code and Title: FINE3 Risk Management

Lesson Number: 3
Professor: Jamaal Villapaña, MBA
Topic: Risk Management and SWOT Analysis
Introduction:
In this lesson, we will identify the role of SWOT analysis in risk management. Designing
an initial SWOT assessment of a company is also part of your learning in this module.
LEARNING OBJECTIVES
1. Interpret the concept of risk management.
2. Relate the importance of SWOT analysis in risk management.
3. Demonstrate ethical standards by being honest and respectful.
PRE-ASSESSMENT
Develop your Personal SWOT analysis.

Strengths Weaknesses

Opportunities Threats

LESSON PRESENTATION

Risk Management

Risk management applies to many aspects of a

business. Your business is subject to internal
risks (weaknesses) and external risks (threats).
Generally, you can control internal risks once
you identify them. However, external risks may
be out of your control.
Not all risks come from negative sources. Risks
may come from positive sources or
Prepared by: Jamaal T. Villapaña, MBA
 opportunities. Expansion and growth are
opportunities, but they also bring additional risk.

The ultimate goal is to minimize the effects of risks on your business.

SWOT Analysis for Risk Identification

SWOT Analysis –the acronym stands for Strengths, Weaknesses, Opportunities,

Threats. It’s a great tool to use in a group – either in a facilitated session or as a
brainstorm. This method is very helpful for identifying risks within the greater
organization context.

Strengths and weaknesses are generally related to issues that are internal to the
organization. Strengths examine what your organization does well or its assets, skill,
core competencies. Weaknesses are areas the organization could improve upon that is
lacking or missing from the organization.

Typically negative risks are associated with the organization’s weaknesses and positive
risks are associated with its strengths. In terms of Risk Management, we call negative
Risks as Threats and Positive Risks as Opportunities.

Opportunities and threats are usually external to the organization.

SWOT analysis is sometimes known as internal-external analysis and can be used in
combination with brainstorming techniques to help discover and document potential
risks.

Features of this technique:

The SWOT analysis identifies any opportunities for the project that arise from
organizational strengths, and any threats arising from organizational weaknesses. The
technique is particularly useful for identifying internally-generated risks arising from
within the organization. It is concerned more with the organization than the project itself.
The technique is commonly used in strategic decision making. It is normally used to
present project information to management. The SWOT analysis is sometimes used to
encourage management to alter some environmental factors from the strengths and
weaknesses sections that will directly influence the project.

Steps in Applying the Technique:

• Step 1: Identify the SWOT analysis resource(s). It is important to work with
individuals who understand the culture in which the project will function since
they will have a better sense of the strengths and weaknesses portions of the
analysis.
• Step 2: Identify and list Organizational Strengths and Weaknesses using

Prepared by: Jamaal T. Villapaña, MBA

 brainstorming. These are INTERNAL – things for which you have control
over.
• Step 3: Derive Opportunities associated with the project and Threats that
could harm the project. These are EXTERNAL – outside of business direct
ability to control.

Those responses are then presented in a four-square grid, designed to allow for
analysis and cross-reference. The grid is laid out in the following format:

From the above grid, we can identify Risks in project context both in terms of
Opportunities and Threats.
For example, opportunities might be found by leveraging organizational strengths, or
threats might arise as a result of organizational weaknesses.

In this case, Opportunities can be as under:

• Due to experienced top management, quick hiring capabilities, and a good
pay structure, a new project can be taken up in short notice; the organization
can do it because they can hire people quickly.
• Loyal clients and being a market leader will help Develop the export market.
Acquire exclusive distribution rights.
• Discovery of a customer needs that an organization can satisfy with a new
product.
• Knowledgeable Research staff means more Research and Development
projects can be undertaken.

Threats can be as under:

• Since the organization follows a heavy workload working culture along with
low bench strength. So, the threats here are “Attrition possibilities” which is
Prepared by: Jamaal T. Villapaña, MBA
 very common in high-pressure working culture environments. If attrition
happens on a high scale, the organization may have to increase their pay
packages to attract lateral hires at a faster rate.
• Low bench strength means there is no back-up if someone resigns and may
need to compensate on higher pay to lateral hires to urge them to join sooner.
• Stricter clauses in Contract to offset new regulations for proactively managing
projects.
• Highly reliant on one staff member – Risk associated with this can be
minimized by hiring consultants in advance.

Benefits :
1) Ensures equal focus on both threats and opportunities
2 ) Offers a structured approach to identify threats and opportunities
3) Focus on internal (organizational strengths and weaknesses) and external
(opportunities and threats)
4) SWOT helps quickly analyze the current state of the organization.
5) Surface real problems to share.
6) Helps to develop business requirements

GENERALIZATION

The student should have learned the importance and applicability of SWOT analysis in
initially assessing the organization’s environment. The company’s strengths and
weaknesses are internal environments, and opportunities and threats are external
environments.

Evaluation
Identify the following as to Strengths, Weakness, Opportunities, or Threats. (10 points)

1. High working capital

2. Low employee morale
3. New product development
4. Fortuitous events
5. Productive employees
6. Lack of expertise in top management
7. Sourcing from potential investors
8. Growing competition
9. Effective promotional strategies
10. Offers unknown brands

Prepared by: Jamaal T. Villapaña, MBA

REINFORCEMENT
Collaborate with your group mates and do your tasks for the Risk Management Plan.

This task should be written (please write legibly) or typewritten in the short bond paper,
and kindly observe one-inch margin and double spacing. On the top centermost of your
paper; write our subject, followed by your company name. On the left portion, write the
names of the members; and on the right portion, write your section and the date that
you finish your assignment.

Group work for Risk Management Plan – Develop your company’s SWOT analysis.

 ONLINE RESOURCES : Participant Guide – Risk Management

www.sba.gov
Risk Management Introduction,
Queensland Government.
www.riskmanagement.qld.gov.au
Organization and Management
www.pearsonhighered.com

Prepared by: Jamaal T. Villapaña, MBA