BSBRSK401

Identify risk and apply risk management processes

MacVille is an Australian coffee supply business. The company imports coffee and supplies cafes and
restaurants with top quality coffee, which is produced and distributed in line with the highest social
and environmental standards. Within five years, MacVille intends to have established itself as the
number one coffee supplier for fine coffee shops and restaurants in Australia

To achieve the company vision, MacVille’s strategic directions include:

● engaging clients with excellent service to increase sales volume

● reducing expenditure and achieving financial control over expenses
● establishing MacVille as employer of choice through supporting innovative thinking,
performance management and leadership skills through training, and exemplary health and
safety performance
● establishing MacVille as employer of choice through supporting innovative thinking,
performance management and leadership skills through training, and exemplary health and
safety performance

MacVille has established a relationship with a small village in the highlands of Papua New Guinea
(PNG) that grows coffee beans. MacVille is committed to providing equipment and high-level skilled
training to the village so that the local villagers can harvest and roast the beans in-country, rather than
exporting the green beans, as they currently do. MacVille will develop the village’s capacity in
exchange for cheaper roasted beans. The costs of development are budgeted to be less than or equal to
the savings gained. The village will incorporate, with every villager a shareholder in the new venture.
The village will eventually become a completely independent supplier.

Stakeholders and project team members:

Name Position Duties/importance to operations/reason for

stakeholder interest

● Chair of FARM Committee and project

John Wu Operations
owner: full decision-making powers for
Manager
project
● overall responsibility for ensuring supply,
production, supplier relationships
● monitoring supplies
● monitoring production expenses.
 ● responsibility for overseeing, planning,
You Communications
implementation and risk management
and Training
Officer ● particular responsibilities for
implementation include communications
Project Leader and training for project team members,
board of directors, FARM Committee and
Australian staff and managers
● you will be reporting to the MacVille
board of directors and the Finance and Risk
Management (FARM) Committee.

● monitoring production to achieve

Oliver Hughes Australian Human
production targets
Resources and
Training Manager ● maintaining and overseeing staff
performance and morale.

● ensuring and monitoring safety standards,

Yosef Malouf PNG Fairtrade
and the social, economic and environmental
Consultant
impacts of MacVille operations in PNG
(contracted to
MacVille) ● does not speak local dialect.

● ensuring and monitoring MacVille

Geoffrey PNG Quality and
standards of quality and rate of production
Blanche Production Officer
to meet MacVille requirements
(MacVille ● point of contact between MacVille and
employee) PNG supplier
● does not speak local dialect.

● responsibility for monitoring and meeting

Connie Black Sales and
sales targets, understanding customer and
Marketing
client needs and concerns.
Manager

● speaks both pidgin and the local village

Harold Jones Consultant in PNG
dialect, so he can liaise with clan chief,
(contracted to Dikana
MacVille on ● high-level contacts and influence within
monthly basis) the PNG government.
Analysing and evaluating risk :

Work health and safety risk management:

All businesses, regardless of their structure or size, must have work health and safety risk assessment
that is current and meets legal obligations.

Your risk management plan should identify risks in your business. The plan will describe ways to
minimise the likelihood of an incident by including 'controls' - measures to either prevent or manage
hazards. To make your risk management plan more effective, you need to monitor the risks and
review and update the plan regularly.

A strong risk management plan, as part of a larger business continuity plan, will improve your
business resilience and help you recover from incidents.

( Risk is Extreme and likelihood moderate).

Control measure Strength Weakness

Maintain regular monitoring Preventing the violations of Unfamiliar Location and

on all the materials and the establishment and climate on souroundings
equipment that may affect company
health and safety of the
workers

Information technology (IT) risk management

Information technology (IT) plays a critical role in many businesses.

If you own or manage a business that makes use of IT, it is important to identify risks to your IT
systems and data, to reduce or manage those risks, and to develop a response plan in the event of an
IT crisis. Business owners have legal obligations in relation to privacy, electronic transactions, and
staff training that influence IT risk management strategies.

IT risks include hardware and software failure, human error, spam, viruses and malicious attacks, as
well as natural disasters such as fires, cyclones or floods.
( Risk is Extreme and livelihood Moderate)

Control measure Strength Weakness

manage IT risks by completing Reduce or manage risk, and to Lack of knowledge

a business risk assessment. develop a response plan.
Having a business continuity
plan can help your business
recover from an IT
incident.This guide helps you
understand IT risks and
provides information about
ways to prepare for and
respond to IT incidents.

Resources and responsibilities for control of risk

Risk responsible Resources

Work health and safety risk Yosef malouf Connection with PNG local
(PNG fair trade consultant) health department

Information technologies risk Oliver hughes Mass media communication

(Australian human resources
and training manager )
Reflection

Free trade

1. A Free Trade Area is hereby established. The Area consists of Papua New Guinea and Australia.

2. Subject to the provisions of this Agreement, trade between the Member States shall be

free of duties and other restrictive regulations of commerce.

3. This Article applies only to trade in goods which origin

Industry cooperation
In order to further the objectives of this Agreement, the Member States shall, as
appropriate, use their best endeavours to encourage cooperation between, and coordination of
activities of, their respective firms and industries. To this end, the Member States shall exchange
information and consult together on developments in industry within the Area, and may agree on,
and implement, if consistent with their international obligations, special measures beneficial to
the trade and development of a Member State

Tariffs and regulations

Tariffs and duty rates are constantly revised and are subject to change without notice.

Austrade strongly recommends you confirm the rates applicable to your products before selling to
Papua New Guinea (PNG).

For further information please refer to the PNG Customs website.

Tariffs and non-tariff barriers

PNG operates on a single column tariff, based on the Harmonized System. Most duties are ad valorem
assessed on the World Trade Organization (WTO) valuation code based on the Cost, Insurance and
Freight (CIF) value (Incoterms 1990).

Tariffs have in general been reducing over time as a result of the PNG Government’s tariff reduction
program. Exporters can obtain further information on this from the PNG Internal Revenue
Commission.

For quarantine related information, visit the National Agriculture Quarantine and Inspection Authority
website.

Non-tariff barriers

Import licences are not generally required although permits are needed for:

● a small range of permitted plants

● seeds
● animal products and livestock
● pesticides
● weapons and paramilitary equipment.
Prohibited goods include:

● all poultry products including eggs from New South Wales

● pornography
● recreational drugs
● some weapons.

Restricted goods include weapons and firearms (a police permit is required).

Exchange controls are set and enforced by the Bank of Papua New Guinea and the Department of
Finance.

Risk register template

Risk Likelihood Cost

Poor quality of roasted beans High $1 million

due to substandard agricultural
practices or inadequate rainfall.

Loss of Harold Jones as the Medium–High $1–2 million

only speaker and translator of
the local dialect retained by
MacVille.

Nearly zero literacy, causing High $1–2 million

inability to follow procedures
without support or oral
translation by qualified
trainers.
Monitoring and review should be a planned part of the risk management process and involve regular
checking or surveillance. The results should be recorded and reported externally and internally, as
appropriate. The results should also be an input to the review and continuous improvement of the
firm's risk management framework.

Responsibilities for monitoring and review should be clearly defined. The firm's monitoring and
review processes should encompass all aspects of the risk management process for the purposes of:

● Ensuring that controls are effective and efficient in both design and operation
● Obtaining further information to improve risk assessment
● Analysing and learning lessons from risk events, including near-misses, changes, trends,
successes and failures
● Detecting changes in the external and internal context, including changes to risk criteria
and to the risks, which may require revision of risk treatments and priorities
● Identifying emerging risks.

Risk treatment action plan

Risk treatment resources responsibility Timeline

activity

Literacy / Language Provide training for Local procedure and Jan /16
local people through local government
videos , movies and
presentation

No road access Organize a meeting to Local government Nov /15

start a discussion
about new
possibilities of
constructing road to
make easy access

Loss of the only Eligibility another Local government Oct /15

speaker person to take the
place
Risk has a dynamic context resulting from the constantly changing external and internal
environments. Organisations must monitor not only risks but also the effectiveness and adequacy of
existing controls, risk treatment plans and the process for managing their implementation.