FACULTY OF ACCOUNTANCY (AC220)

GROUP PROJECT MAF 682

RISK MANAGEMENT CYCLE

GROUP: NACAB 9B

PREPARED BY:

NO GROUP MEMBER’S NAME STUDENT ID

1 NURUL ARIFAH BINTI ALIAS 2021513761

2 SYAZA NISHA AFEENA BINTI ROSHAIREE 2020202128

3 ELLY ZURINA BINTI MOHAMAD 2019839734

4 ADREENA NATASYA BINTI BADIUZZAMAN 2020330657

PREPARED FOR:

DR. INTAN WAHEEDAH BINTI OTHMAN

DATE OF SUBMISSION:

21 JANUARY 2024
TABLE OF CONTENTS

PAGE

1 ACKNOWLEDGEMENT 3

2 INTRODUCTION TO THE RISK MANAGEMENT CYCLE 4

3 DISCUSS CURRENT ISSUES, PROBLEMS AND IMPLICATIONS 5-7

RELATED TO CLIMATE CHANGE IN BUSINESS ORGANIZATIONS.

4 EXPLAIN CHALLENGES IN MANAGING ENVIRONMENTAL RISKS 8-11

IN BUSINESS ORGANIZATIONS.

5 PROPOSE RECOMMENDATIONS FOR EFFECTIVE ENVIRONMENTAL 12-13

RISK MANAGEMENT BY BUSINESS ORGANIZATIONS.

6 BRIEFLY EXPLAIN HOW THE RISK MANAGEMENT CYCLE CAN BE 14-16

APPLIED TO THE SELECTED ISSUE, DEMONSTRATING A
PRACTICAL UNDERSTANDING OF THIS CRITICAL PROCESS.

7 CONCLUSION 17

8 REFERENCES AND ARTICLES 18

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1.0 ACKNOWLEDGEMENT

We would like to extend our heartfelt gratitude to all those who contributed to the successful
implementation of risk management in this report. Managing risks effectively requires the
dedication and collaboration of various individuals and teams, and we are truly thankful for
your valuable contributions.

Special appreciation goes to Dr Intan Waheedah Binti Othman for your expertise and
commitment in conducting thorough risk assessments. Your insights and proactive approach
significantly enhanced our ability to identify and mitigate potential challenges.

I would also like to acknowledge the support from our group members for their valuable
input in developing robust risk mitigation strategies. Your collaboration ensured that our risk
management plan was comprehensive and aligned with our report goals.

Furthermore, my appreciation extends to our family members for their ongoing commitment
to monitoring and adapting to changing risk scenarios. Your diligence in implementing risk
response plans has been instrumental in maintaining the project’s success.

Lastly, I express my gratitude to all team members and stakeholders who remained engaged
and proactive in addressing risks throughout this endeavour. Your collective effort has played
a crucial role in achieving our objectives while navigating potential obstacles.

Thank you all for your dedication, expertise, and collaborative spirit in making risk
management an integral part of our success. Last but not least pray for us for the final exams
to pass with flying colours.

Amin Ya Rabbal Alamin.

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2.0 INTRODUCTION TO RISK MANAGEMENT CYCLE

At the heart of strategic risk management lies the risk management cycle, a pivotal
framework guiding organisations through the intricate process of identifying, assessing,
mitigating, and adapting to potential risks. In the dynamic realm of contemporary business,
where uncertainties abound, a nuanced comprehension and effective application of this cycle
are imperative for fostering resilience and ensuring operational continuity. This essay delves
into the integral components of the risk management cycle, elucidating its significance,
practical implementation, and crucial role in guiding businesses through a continuous and
proactive decision-making process in the face of uncertainties. As we navigate an
ever-shifting landscape of challenges, the risk management cycle emerges as a foundational
tool, providing a structured approach to navigate uncertainties and pave the way for sustained
success.

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3.0 DISCUSS CURRENT ISSUES, PROBLEMS AND IMPLICATIONS
RELATED TO CLIMATE CHANGE IN BUSINESS ORGANISATIONS.

Malaysia is a tropical country, and some of the significant consequences of climate change
include overall temperature increases and precipitation changes. Wet seasons provide the risk
of flash floods caused by strong storms, which also cause soil erosion and landslides, causing
damage to land and buildings. The dry months are expected to be significantly hotter,
potentially leading to lengthier droughts. ͒Climate change also endangers residents' health,
since rising temperatures can cause heat strokes in both indoor and outdoor workers. Other
than that, the other climate change is the sea level rise. This climate change can have a bad
impact on businesses and organisations. It's also causing a lot of economic losses to the
country.

The first issue related to climate change is the high temperature resulting in heat
waves. This makes the weather hotter and negatively impacts the workers, especially their
health. The heat waves can have bad influences on indoor and outdoor workers, such as;
dehydration, mental health, respiratory disease, heat cramps, and heat stroke. This will impact
the workers' concentration and productivity to cope with the heat. This has been proven in a
recent study by Mullins and White (2019) concluded that the high temperatures hurt mental
health and proposed that sleep disturbance is the main cause of it. This is one of the studies
that examine the effects of high temperatures on an individual's behaviour from a variety of
angles and dimensions. Other than that, Baylis (2020) stated that the hot temperature did hurt
various mood indicators when the temperature was above 30*c. This study is done by
collecting data from Twitter. Furthermore, the World Health Organization (WHO) stated that
the human being thermal comfort range is between 18 to 24*c. This means that indoor
employees can control their temperature by setting the air conditioner. But, outdoor
employees only have clothes on them to protect them from cool temperatures but not high
temperatures. This may lead to outdoor employees' health being impacted by heat waves and
reduce their productivity and concentration. This will hurt the organisation and business. The
businesses that are affected by high-temperature weather and heat waves are agriculture,
construction, transportation, manufacturing, tourism, and many more.

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 The second issue of climate change is flooding. Floods are a common climate change
in Malaysia especially during monsoon season. This happens every year between October to
March. Storm and flood occurrences are predicted to become more severe due to climate
change. More frequent consequences include flooding-related structural damage, inventory
loss, irreplaceable document loss, data loss from water-damaged computer drives, damage to
expensive gear, and business cars that might require hundreds of thousands of dollars to
repair. Floods did cause a lot of casualties and economic losses. A major economic loss
because of floods is the disruption and downtime of businesses. When floodwaters destroy a
commercial building, activities could stop completely. Days or weeks may pass during this
downtime, costing the company significantly in lost income and other expenditures.

The Edge Malaysia article has reported that a big-scale flood in the year 2021 caused
big losses to the economy and people. This is based on information released by BNM on
Wednesday, March 30, in its Financial Stability Review for the second half of 2021, the total
projected economic losses resulting from the floods in December 2021 were RM6.1 billion.
This includes losses affecting automobiles (16%), residences (26%), the commercial sector
(25%), and governmental assets and infrastructure (33%). Rather than that, during that time
the business not only suffered loss because of the shutdown of business during flood and
damages of infrastructure. But the business also suffers loss because of theft activities by
flooding victims. For example, a Malay Mail article stated that, in the year 2021 during the
flooding, the Mydin suffered hundreds of thousands of ringgit due to a flood wreck in the Sri
Muda store which excluded the loss suffered from looting. In conclusion, flooding did hurt
most industries and businesses in affected areas.
The third issue is sea rises. The main reason for the sea rise problem is because of
global warming. Global warming causes the melting of ice sheets and glaciers increasing the
sea volume as it adds water to the ocean. Other than that, global warming also results in the
thermal expansion of the sea’s water. This is because the ocean's volume increases as it
becomes warmer. This process is responsible for around half of the sea level rise in the last 25
years. Other than that, the increase in the sea volume will have an impact on the surroundings
by increased erosion and flooding, sand, and beach shifting, and estuaries, lagoons, and
coastal lakes experiencing changes in water quality.

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 It also harms biodiversity and geography. The industries and businesses that will
receive most the impact are agriculture, tourism, and fishing. In Asia News Network,
Universiti Malaysia Terengganu (UMT) vice-chancellor Prof Datuk Dr Mazlan Abd Ghaffar
has stated that the global warming and sea rise phenomena did affect the size and population
of the fish. The study shows a decrease in fish size and population when global warming
increases. This study has been conducted at coaster areas and the ocean. This proves that the
sea rise due to global warming can negatively impact the fishing industry and future food
supply. Therefore, the government and authorities should be well prepared to control this
problem before this issue could have an impact on the economy and ecosystems.

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4.0 EXPLAIN CHALLENGES IN MANAGING ENVIRONMENTAL RISKS IN
BUSINESS ORGANISATIONS.

Managing environmental risks in business organisations, particularly in the context of climate

change and high temperatures, poses several challenges. These challenges require strategic
planning, adaptation, and proactive measures to mitigate potential negative impacts. Here are
some key challenges:

​ Increased Physical Risks:

● Extreme Weather Events: High temperatures can lead to more frequent and severe
heat waves, storms, and other extreme weather events. Businesses need to assess the
vulnerability of their assets and operations to these events, considering potential
damage and disruption.
​ Financial Impacts:
● Increased Operational Costs: High temperatures may lead to increased cooling
expenses, changes in energy consumption patterns, and the need for resilient
infrastructure. Businesses must factor these costs into their financial planning.
​ Insurance Challenges:
● Limited Coverage: Traditional insurance may not cover all climate-related risks.
Businesses may find it challenging to obtain affordable and comprehensive insurance
coverage for potential environmental damages.
​ Long-Term Planning and Adaptation:
● Uncertain Future Scenarios: Climate change introduces uncertainties in predicting
future weather patterns and associated risks. Long-term planning becomes challenging
when faced with unpredictable changes in the climate.
​ Collaboration and Communication:
● Coordination Across Stakeholders: Climate change risks often require collaboration
with various stakeholders, including government bodies, communities, and other
businesses. Effective communication and coordination can be challenging,
particularly in complex global supply chains.

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Addressing these challenges requires a holistic approach that integrates environmental risk
management into the overall business strategy. Proactive measures, ongoing monitoring, and
a commitment to sustainability are crucial for navigating the complexities posed by climate
change and high temperatures.

The second issue is the climate change caused by flooding. Managing environmental risks,
specifically those arising from climate change-related flooding, presents unique challenges for
business organisations. Addressing these challenges requires a comprehensive strategy that
considers both immediate and long-term impacts. Here are key challenges associated with
managing environmental risks related to flooding in business organisations:

​ Physical Asset Vulnerability:

● Property Damage: Flooding poses a significant risk to physical assets such as
buildings, equipment, and inventory. Organisations with facilities in flood-prone areas
face the challenge of safeguarding these assets against water damage.
​ Supply Chain Disruptions:
● Supplier and Transportation Risks: Floods can disrupt supply chains by affecting
suppliers or transportation routes. Businesses must assess the vulnerability of their
supply chains and implement strategies to ensure continuity in the face of flooding
events.
​ Data and Information Management:
● Loss of Critical Data: Flooding can result in the loss of crucial data stored on-site or
in data centres. Businesses must implement robust data backup and recovery
strategies to prevent data loss and ensure business continuity.
​ Regulatory Compliance:
● Environmental Regulations: Businesses operating in flood-prone areas must adhere to
environmental regulations related to water management. Compliance with these
regulations becomes challenging during and after flooding events.
​ Climate Change Adaptation:
● Long-Term Planning: Organisations must adopt a forward-thinking approach to
climate change adaptation, considering future flood risks and incorporating resilience
into their long-term strategic plans.
​
​

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 ​ Employee Safety and Well-being:
● Health and Safety: Ensuring the safety and well-being of employees during flooding
events is a challenge. Organisations must have robust emergency response plans in
place, including evacuation procedures and support systems for affected employees.

These challenges require a proactive and integrated approach, involving risk assessments,
emergency preparedness, stakeholder engagement, and sustainable business practices.
Businesses that prioritise resilience and adaptation strategies are better positioned to navigate
the complexities associated with environmental risks from flooding.
Managing environmental risks related to sea-level rise poses significant challenges for
business organisations. As climate change accelerates, the impacts of rising sea levels
become more pronounced, affecting coastal businesses and those with global supply chains.
Here are key challenges associated with managing environmental risks from sea-level rises in
business organisations:

​ Infrastructure Vulnerability:
● Coastal Facilities at Risk: Businesses with coastal facilities face the challenge of protecting
infrastructure from sea-level rise. This includes manufacturing plants, warehouses, and other
critical assets that may be susceptible to flooding.
​ Supply Chain Risk Assessment:
● Supplier and Vendor Vulnerability: Identifying and assessing the sea-level rise vulnerability
of suppliers and vendors across the entire supply chain is complex. Global businesses may
struggle to evaluate the risk exposure of diverse suppliers.
​ Stakeholder Communication:
● Transparent Reporting: Communicating sea-level rise risks to stakeholders, including
investors and customers, requires transparency. Businesses may face challenges in effectively
communicating complex environmental risks and adaptation strategies.
​ Community Impact:
● Local Community Relations: Businesses operating in coastal regions must navigate
community relations. Sea-level rise adaptation measures may impact local communities, and
businesses need to engage proactively to address concerns and foster positive relationships.
​
​
​

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​ Biodiversity and Ecosystem Impact:
● Environmental Stewardship: Businesses operating in coastal areas may face challenges
related to the impact of sea-level rise on local ecosystems. Maintaining a commitment to
environmental stewardship while adapting to changing conditions is crucial.

Navigating these challenges requires a proactive and collaborative approach. Businesses need
to integrate sea-level rise considerations into their risk management strategies, engage with
stakeholders, and invest in resilient infrastructure to ensure long-term sustainability and
adaptability in the face of climate change.

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5.0 PROPOSES RECOMMENDATIONS FOR EFFECTIVE
ENVIRONMENTAL HIGH TEMPERATURE, FLOOD AND SEA LEVEL
RISE IN RISK MANAGEMENT BY BUSINESS ORGANIZATIONS.

The monsoon season in Malaysia, spanning from November to March, significantly

increases the risk of floods due to intense and prolonged rainfall associated with the Northeast
Monsoon. This phenomenon impacts regions such as the east coast of Peninsular Malaysia, Sabah,
and Sarawak. The interplay between monsoons and floods is evident through factors like swollen
rivers, flash floods in urban areas, and the recurrent challenge of managing flood risks. Malaysia
employs proactive measures such as early warning systems and resilient infrastructure to mitigate
the impact on communities, emphasising the need for understanding and addressing this annual
climatic dynamic.
In an era marked by the escalating impacts of climate change, business organisations are
confronted with the urgent need to adapt and fortify their risk management strategies against the
triple threat of high temperatures, floods, and rising sea levels. Effectively navigating this intricate
environmental landscape demands a comprehensive and integrated approach that encompasses
adaptive infrastructure, early warning systems, community engagement, and strategic partnerships.

Integrated Climate Risk Assessments:

The foundation of a resilient risk management strategy lies in conducting rigorous climate risk
assessments. Businesses must consider the complex interplay of high temperatures, flooding, and
sea level rises. Leveraging scientific data, local climate models and expert insights enables
organisations to pinpoint vulnerabilities specific to their geographical locations.

Adaptive Infrastructure Planning:

Constructing adaptive infrastructure is paramount in mitigating the impacts of extreme weather
events. Elevated structures, flood-resistant buildings, and resilient coastal facilities should be
integral parts of architectural considerations. The incorporation of climate-resilient features in
construction and maintenance projects ensures a steadfast response to both rising temperatures and
potential flooding.

Early Warning Systems and Monitoring:

To facilitate timely responses, businesses should invest in early warning systems that provide
real-time alerts for floods and extreme heat events. Implementing sophisticated monitoring systems

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for sea levels, temperature changes, and weather patterns enhances the organisation's ability to
detect and respond rapidly to evolving climate conditions.

Emergency Response and Evacuation Plans:

Developing robust emergency response plans is imperative, considering the multifaceted risks
associated with high temperatures, floods, and sea level rises. Regular testing of these plans ensures
organisational readiness and includes evacuation procedures, communication protocols, and
strategies for safeguarding personnel, assets, and critical data.

Green Infrastructure and Natural Defences:

Investment in green infrastructure, such as porous surfaces and green roofs, is a proactive measure
against flooding and urban heat island effects. Incorporating natural defences like mangroves and
wetlands acts as a protective buffer against rising sea levels and storm surges.

Climate-Resilient Energy Systems:

Transitioning to renewable energy sources is not only environmentally responsible but also
mitigates vulnerability to temperature extremes. Implementing backup power solutions ensures
operational continuity during extreme weather events, contributing to both sustainability and
resilience goals.

Water Management Strategies:

Developing comprehensive water management strategies addresses the dual challenges of flooding
and water scarcity during high-temperature periods. Employing water-efficient practices,
stormwater management systems, and flood control measures demonstrates a commitment to
responsible environmental stewardship.

Community Engagement and Partnerships:

The engagement of local communities is essential in building a collective front against climate
risks. Organisations must collaborate with local governments, non-governmental organisations
(NGOs), and community groups to co-create solutions that enhance overall resilience.

Continuous Learning and Adaptation:

Cultivating a culture of continuous learning within the organisation is essential for staying ahead of
evolving climate risks. Regular reviews and updates of risk management strategies, informed by

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lessons learned from past incidents and emerging environmental data, ensure adaptability to
dynamic conditions.

6.0 BRIEFLY EXPLAINS HOW THE RISK MANAGEMENT CYCLE CAN BE

APPLIED TO THE SELECTED ISSUE, DEMONSTRATING A PRACTICAL
UNDERSTANDING OF THIS CRITICAL PROCESS.

Applying the risk management cycle to address the complex challenges of high temperatures, floods,
and sea level rises involves a systematic approach. Here's a brief overview of how each phase of the
cycle can be applied to these environmental risks:

1. Identification:
● High Temperature
Assess historical temperature data, local climate patterns, and projections to identify risks
like heatwaves and impacts on infrastructure.
● Floods
Identify flood-prone areas by analysing topography, historical flood data, and climate models.
● Sea Level Rises: Evaluate coastal vulnerabilities, considering factors like current sea levels,
land subsidence, and potential storm surges.

2. Assessment:
● High Temperature
Evaluate the potential consequences on health, energy consumption, and infrastructure.
● Floods
Assess the likelihood and severity of flooding, considering its impact on operations, supply
chains, and facilities.
● Sea Level Rises
Assess the long-term risks to coastal assets, infrastructure, and the overall resilience of the
business.

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3. Mitigation:
● High Temperature
Implement heat-resistant infrastructure, provide heat stress training, and optimise
energy-efficient solutions.
● Floods
Invest in flood-resistant structures, establish early warning systems, and develop evacuation
plans.
● Sea Level Rises
Consider elevating structures, implementing natural defences, and contributing to coastal
ecosystem preservation.

4. Monitoring:
● High Temperature
Set up temperature monitoring systems for real-time alerts and track heatwaves and extreme
temperature events.
● Floods
Utilise real-time monitoring for river levels, rainfall, and weather forecasts.
● Sea Level Rises
Implement monitoring systems to track sea level changes and storm surges.

5. Response and Recovery:

● High Temperature
Develop response plans for immediate actions during extreme heat events, such as adjusting
work schedules and providing cooling stations.
● Floods
Establish emergency response plans for evacuations, supply chain adjustments, and post-flood
recovery.
● Sea Level Rises
Have plans in place for coastal retreat or adaptation, including relocating critical infrastructure.

6. Review and Continuous Improvement:

● High Temperature
After heat events, review response effectiveness, identify areas for improvement, and adapt
strategies for future occurrences.

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 ● Floods
Conduct post-flood reviews to enhance evacuation procedures, infrastructure resilience, and
overall flood response.
● Sea Level Rises
Regularly review coastal vulnerability assessments, update adaptation plans, and learn from any
sea level rise-related events.

7. Adaptation:
● High Temperature
Stay informed about evolving climate conditions, update risk assessments, and adapt strategies
to address changing heat patterns.
● Floods
Adapt response plans based on updated flood risk assessments and emerging climate data.
● Sea Level Rises
Continuously adapt strategies to address long-term sea level rise trends, considering updated
scientific projections.

This cyclical approach ensures that businesses remain resilient in the face of high-impact
environmental risks, continuously learning and adapting to evolving conditions.

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7.0 CONCLUSION

In conclusion, the effective application of the risk management cycle to address the
multifaceted challenges posed by high temperatures, floods, and sea level rises is paramount for
fostering resilience and sustainable development. By systematically identifying, assessing, and
mitigating risks associated with each environmental issue, organisations and communities can
proactively navigate the complexities of these climatic challenges. The implementation of practical
strategies, such as resilient infrastructure, early warning systems, and community engagement, is
crucial for minimising the impact on lives, property, and ecosystems.

Furthermore, the cyclical nature of the risk management cycle allows for continuous learning
and adaptation. Regular reviews and updates based on evolving environmental data and lessons learned
from past incidents ensure that strategies remain relevant and effective. This adaptability is key in the
face of changing climate patterns and emerging risks associated with high temperatures, floods, and sea
level rises. Ultimately, a comprehensive and integrated approach to risk management, encompassing all
stages of the cycle, is essential for building adaptive capacity and mitigating the adverse effects of
environmental challenges. As we navigate an era of increasing climate uncertainty, the commitment to
proactive risk management not only safeguards against immediate threats but also contributes to the
broader goals of sustainability and the well-being of both present and future generations.

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8.0 REFERENCES

https://www.malaymail.com/news/malaysia/2023/05/18/report-parts-of-malaysia-at-risk-of-disappe
aring-due-to-global-warming-induced-sea-level-rise/69811

https://asianews.network/ocean-warming-depleting-fish-reducing-size-malaysian-study/
https://www.malaymail.com/news/malaysia/2021/12/21/mydin-boss-says-hundreds-of-thousands-of
-ringgit-lost-in-flood-wrecked-sri/2030008i

https://theedgemalaysia.com/article/bnm-december-2021-floods-highlight-significant-underinsuranc
e-flood-risk

https://www.360factors.com/blog/five-steps-of-risk-management-process/#:~:text=There%20are%20fi
ve%20basic%20steps,finally%2C%20the%20risk%20is%20monitored.

https://www.pttep.com/en/Sustainability/Governance-For-Sustainable-Business/Risk-And-Crisis-Mana
gement.aspx

Blaikie, P.; Cannon, T.; Davis, I.; Wisner, B. At Risk: Natural Hazards, People’s Vulnerability and
Disasters, 1st ed.; Routlege: London, UK, 1994.

Hiwasaki, L.; Luna, E.; Syamsidik; Shaw, R. Process for integrating local and indigenous knowledge
with science for hydro-meteorological disaster risk reduction and climate change adaptation in coastal
and small island communities. Int. J. Disaster Risk Reduct. 2014, 10, 15–27.

Hooli, L.J. Resilience of the poorest: Coping strategies and indigenous knowledge of living with the
floods in Northern Namibia. Reg. Environ. Chang. 2016, 16, 695–707.

Mercer, J.; Kelman, I.; Dekens, J. Integrating indigenous and scientific knowledge for disaster risk
reduction. In Indigenous Knowledge and Disaster Risk Reduction: From Pratice to Policy; Shaw, R.,
Sharma, A., Takeuchi, Y., Eds.; Nova Science Publishers: New York City, NY, USA, 2009; pp.
115–131.

Manda, M.Z. Where there is no local government: Addressing disaster risk reduction in a small town in
Malawi. Environ. Urban. 2014, 26, 586–599. [CrossRef]

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