Scope
In every organization, many projects need to be done at the same time. In any business, not all projects are similar to each other for that reason according to the complexity and unique features of the project help to determine the risk factors of the project. In this study, the risk of the banking sector is the main point for discussion. This discussion includes a thorough risk analysis, which can help to identify the existing and the external risk that can affect the performance of the organization. The scope of the discussion is included in the in this study. This study includes a thorough literature review, which can help the critical evaluation of the risks. This study also includes risk model and theoretical analysis of business risk management. The chosen company for this discussion is HSBC bank. The focus of this study is to analyze risks for this company.
The main reason for the risk analysis is to understand the project and associated risks, which can help to understand the success rate of implementing any project plan. The main focus of the risk analysis is to determine the risks and taking proper measures for overcoming the risk factors. The risk analysis includes evaluation of the existing risks, planning the necessary action according to risk. The uncertainty of any project can be identified by the risk analysis. The clarity of the stakeholders can also be identified by risk analysis. The necessary responsibilities and roles, which are required for preventing the risk can be identified by the risk analysis. In this discussion, the risk analysis is mainly focused on the existing and the other aspects of risks for the chosen organization HSBC bank. In the bank, there are many risk factor existed, which can become a barrier to expanding the business and can harm the reputation of the bank. In order to identify the reasons for occurring risk and the existing risks which can harm the company, this analysis is the focus of the study. The risk analysis can be done by using different model and theories which are relevant for the organization.
The risk analysis is crucial for any successful outcome for any project or any organization. Identifying the issues is not only focus on the risk analysis. The risk analysis needs to include all the profit and the stakeholder position of any organization. In the banking sector, the risk can occur from both external and internal threads. An analysis of the existing risks is required for identifying the risks and categorizes the risks. An internat5ional bank, HSBC can face many risks from outside or inside of the company (Burns, 2016, P. 45). Expanding the bank branch into any other country also can become the cause of occurring risk. Planning any new project or expanding the business needs a proper risk management methods, for that the risk analysis is necessary. Awareness of own strength and weakness need proper analysis, which can help to understand the position of the company. Continuity of business can ensure the operating power of the business facing any serious loss.
Understanding the subject matter
Banking sector faces different types of risks, such as the external and internal risks. The external risk HSBC bank can face the economy fall of the country. The other banks can offer attractive plans, which can cause the risk for the bank. The internal issues can appear which can affect the work of the bank such as the dishonest behavior of the employees. Fraud Cases, illegal loan scream, and others. According to the report about the Business Charity Business in the Community, the HSBC bank faces some frequent issues regarding the disruption of customers, which can become a huge problem for the company. Environmental changes can also affect the performance of the business (Brindley, 2017, P. 23). The bank needs to protect the confidential file about the business idea and the reputation from the competitors. In this era, the data are stored in the cloud storage, which can become a tread of the attack of cybercrime. The negligence of checking all documents of the customers can become a thread. Trade debt of non-payment method can affect the financial condition of the bank and can become the cause of facing the loss of the company.
The bank can take certain measures for preventing any kind of loss. Protective and focus work can save the bank form any disruption occurred for the customers. The main focus of the bank is to attract the customers and making an easy process for a better understanding of the customers and making good relation in give comfortable and ensuring the customers about the safety of their belongings (Cleden, 2017, p. 123).
Any project implementation needs a proper risk analysis for measuring the uncertainty and for managing the risk according to the risk factor. The risk can be defined as identifying the uncertainty of any process of a project identifying any influence of factors, which can affect the performance of any organization (Hillson, 2017, p. 57). Any project can be accomplished without proper measurement of risks. Risk can give a proper idea of the certainty and the uncertainty of completing any project and the possible measures can help to complete the project successfully. The risk can be controlled by taking proper measures. In the banking sector, the risks can occur through an external and internal cause. The risks can occur for external and internal reasons. An example of internal risk the dishonesty of any employee can harm the reputation of the bank. The illegal money lending can harm the trust of the customers and can accuse the bank of the embezzlement. This type of situation can harm the reputation of the bank and the financial condition of the bank, which can harm the customer relationship with the bank. A multinational bank like HSBC faces some external risks also (Istrate et al. 2015, p. 151). The banking risks can be identified by interest rate risks, credit risks, risks of liquidity, operational risks, market risks, and the reputational risks
The concept of project risk
The External risk can be the cyber attack, environmental, political risks, the market competition can be referred to as the most important risks faced by the bank (Hopkinson, 2017, p. 11). The market planning and the other confidential documents of the bank are mainly stored in the cloud storage, which can be hacked by the professional hackers and the leaked information can harm the bank in many ways. The marketing strategy and the investment policies need to secure any data breach can harm the bank the policies of the bank. The multinational banks have many branches over the world, which can become the cause of occurring risks. In many countries, there are potential competitors available to bath the market of the bank. The risk analysis needs to be done according to the market analysis of every branch of the bank. The bank policies can cause risks regarding the customer relation and the customer satisfaction, in order to prevent that the bank needs to be flexible in preventing this type of situation. The bank can face the risks regarding the foreign exchange transaction risk.
The bank can face various types of risks, which includes legal, systematic, financial and the reputational risks. Analyzing the risks needs proper theoretical discussion for the proper analysis of the risks. The identification of the risk is the main part of the risk analysis. Without proper identification of risk, the risk cannot be analyzed and evaluated.
The risk evaluation can be identified as the process of determining the significance of every risk. The first step in identifying the risks can be the project context. The banking sector multinational bank like HSBC, the risk analysis can be done by the qualitative and quantitative method of risk analysis.
The qualitative analysis can be defined as a probability-based analysis, which can help to prioritize the risks and categorize according to the necessity of the risks. This research can help to understand the point of view of the staff of the bank and help to know about any existing internal issue, which can harm the bank (Lam, 2014, p. 31).
In the bank sector, quantitative analysis can also perform in order to know about the position of the bank and the necessarily required change to prevent any type of loss. This analysis helps to know about the statistical measurement of occurrence any risks, which also can help to identify the probability of the risk.
Theory of project risk
Prioritize the risks can be possible by identifying the most powerful impact of the risks. The response of the risks needs to be done according to the priority of the risks. For minimizing the threads the priority needs to be considered. The response of the risks needs to be planned by professional way in order to maintain the position of the bank as well as for securing the financial position of the company (Marcelino-Sádaba et al. 2014, p. 335). The goal of the risks analysis needs to discriminate the risk according to the necessity. The response to the risk needs to do an analysis of the probability of own risk and the risk of the competitors.
The evaluation of the risks needs to be suitable for the specific area of the risk occurring. The evaluation of the risks needs to done by assigning the most reliable, knowledgeable and the skilled resources in order to do a proper evaluation of risk. In the case of a multinational bank like HSBC, the risk evaluation needs authentic information for the proper analysis of the risks (Nicholas and Steyn, 2017, p. 43).
In order to evaluate the risks, the risk management plan is necessary for using proper techniques for assessing the risks. The risk register is necessary for evaluation of the risk. This risk register can help the employees of the bank to rate the risks according to the priority of the risks. This can help to scale the risks and select the criteria according to the risk importance. The rating method of the risk evaluation can generate the importance of the risk be categorizing the risks as high, low medium. The probability method of the risk evaluation can also help the risk evaluation by evaluating the impact and the relevant consequences of the risks.
The risks of the project need to be categorized according to the project plan. The mode of risk can be made by following certain steps, which includes some methods for analysis and planning the risk management. In the multinational bank, HSBC the project risk model needs to be constructed according to the identification of the risk.
The management plan of risk is necessary for finalizing the method of managing the risk of a certain project or business; the management plan can be different for each project plan.
The identification of risks for each individual project is necessary; this can help to find the opportunity to make the proper risk analysis. In the bank sector, the risk identification is most necessary for identifying possible threads (Falkner, and Hiebl, 2015, p.l 125).
Risk evaluation
Qualitative analysis of the risk can help the assessing process and the priority of the individual risks for each project. This reach is mainly based on the probability and the potential occurrence of any risk, which can become a thread for the organization. For the banking sector, the qualitative analysis can help to understand the point of view of others and the necessary changes required for preventing any risk (Kendrick, 2015, p. 53).
Quantitative risk analysis can help to identify the risk s statistically, which can help to understand the position of the bank. This risk analysis can help to know the high priority risks and the necessary measures can be taken to prevent the risk. Banks like HSBC need to follow this analysis method for identifying the market position. This statistical method can help the bank to know the most necessary thread and give the opportunity to do further analysis according to the risk (Haimes, 2015, p. 45).
Only identifying the risks cannot prevent the risk occurrence, but needs for an alert prioritization of risks according to the sensitivity and responses to risk factors. Such responses need to be effective and need to follow contingency actions for reducing the overall risk of the project.
The planned responses of the risks need to be implemented for getting a solution. The implementation process of the responses must be conducted according to the plan. The risk responses management need to be done by prioritizing the risks.
Monitoring the progress of the actions taken to prevent the risks needs a regular monitoring, which can help to identify the usefulness of the responses and the required analysis of the risks. It helps to identify the effectiveness of the evaluation process of risks and the prevention methods of the risks (Havenvid et al. 2016, p. 87).
Figure: Project Risk Model
(Source: ownerteamconsult.com, 2018)
Evaluation of the risks needs a critical analysis of all the risk factors. In the banking sector, the risks can affect the bank and the customers of the bank. Ensuring the profit of both customers and the bank management is the main focus of the critical analysis of the risk. The strategies need to be decided according to the complexity of the risks. The HSBC bank also can face a different kind of risks and in order to prevent the risks and the impacts of the risks the analysis needs to be done critically. The external risk can be occurred by the market risk, the risk of the data breach and the economic situation of the country (Qazi et al. 2016, p. 1185). However, in order to prevent the data breach, the confidential information and the cloud system of the bank need to be secured. However, the online banking system needs to get proper access from anywhere in the world, which requires minimum firewall protection for easy access.
Project risk management considered one of the major aspects of management. In order to run banking organization, project managers required to identify the project related risk. As commented by Sadgrove (2016, p.11), the risk that can be faced by HSBC organization can include unexpected loss of capital. In terms of profitability, the risk of the banking can be measured by scale of certainty. In terms of risk, organizational profitability and non-profitability are equal. Project risk remains undeveloped discipline those distinct from financial, operational risk management. In terms of HSBC bank, risk can include credit risk, operational risk, market risk, regulatory risk, and environmental risk.
Credit risk
This type of risk can occur in respect to particular asset that can be defaulted in part or full on obligation to HSBC bank that has relation with the asset (Salmela, 2016, p. 189). Credit risk refers to the loss arises from the outright default because of unwillingness of the consumer. It can create issue to meet the commitments that have relation with trading, lending, hedging, or any other financial transaction. This risk also can occur because of potential borrower fails to meet the obligation of the bank.
Operational risk
This type of risk has association with organizational activity. It can occur because of failed process or system that has relation with external events (Wu et al. 2014, p. 5). This type of risk also includes legal risk that can occur because of trading error, system failure, and fraud. Direct loss can result as business decrement.
Market risk
Market risk of HSBC banking project can create possibility of loss that can arise because of change variables like foreign exchange, interest rate, commodity, and equity price. Market risk can also include volatility degree of bond, equity, security, foreign exchange. These things change daily loss and profit over particular time.
- A planned strategy of risk reduction initiatives should be performed and assessing the impact of such actions. Their aim is to focus on greater-priority risks and also calls for changing needs in the way to progress.
- An aim to consider the residual risks while tracking and establishing the way to manage the contingency and other uncertainties.
- Reducing individual risks by giving a person adequate resources and authority in order to carry out the assigned plan.
In order to minimize the market risk, HSBC organization can use proper risk management tool that would help the investor to protect investment. Marketing risk of HSBC bank can be minimized by understanding financial and corporate tools (Zhang et al. 2018, p. 1). Risk can be managed by direct risk influence and behavior, which shapes the organizational available options. Risk can be controlled by using information related to the banking project properly. Diversification is another important way to manage banking project risk. Governance system needs to be utilized and monitored properly in order to mitigate the project risk.
Conclusion
Risk analysis of the project needs to be done for ensuring the uncertainty of the project. In this study, the risk analysis is done for the international bank HSBC. in the banking sector, the risks can occur from externally and internally in order to prevent that this study can help. This study can help to conclude the scope of the risk analysis and the different type of risks can occur. A thorough understanding of the risk of the project and the possible issues of any bank sector project is discussed here. A thorough literature review has been included in this study, which helps to identify the concept of the project risk, and the necessary theory required for the risk evaluation. The literature review also includes risk management model, which can help to follow the proper steps for managing the risks. This theories and models help to construct a risk evaluation method for the bank. A critical analysis is included in this study, which can help to conclude the risk management and the methods for minimizing the risks
References
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ownerteamconsult.com(2018), Introduction to Project Risk Management, viewed :07/07/2018 https://www.ownerteamconsult.com/introduction-to-project-risk-management-part-1-planning/
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