Scope of risk management required in my role
1.
MacVille was an Australian café serving high quality coffee and gourmet food based in Queensland. The layout of the restaurant was that of café style environment where its staff members served the customers. The vision of the café was to provide high uqlaity food products and superior services to its customers to enhance their satisfaction. This focus on customers in fact, formed a part of the values of the café alongside safety, teamwork and excellent performance. The firm was expanding in Queensland and New South Wales. Paula Kinski was the CEO of the firm. The firm had a very stringent risk management policy which functioned under the supervision of the directors and senior managers (McNeil, Frey and Embrechts, 2015).
2.
a.The risk management policy of MacVille Café was designed, managed and operated the risks the café could encounter. The risk management policy of the firm functioned according to the guidelines ISO 31000:2018 which replaced ISO 31000:2009. The policy embraced the apex management, the store managers and the subordinate employees of the café. The risk management policy of MacVille included WHS Policy, Harassment Policy and Return to Work Policy. The purpose of the ISO 31000:2009 was to ensure risk management among organizations functioning in Australia (iso.org 2018).
b.The scope of risk management in the role of assistant manager consisted of assessment of the risk concerning newly acquired subsidiaries like the Hurley’s Café. The scope of risk management of store managers then expanded to meeting and discussing the present risk management standards in those subsidiaries with the finance, audit and risk management (FARM) team. It also involved Goldsmith Partners in the capacity of legal advisors to MacVille pertaining to risk management (Chance and Brooks 2015).
c.The critical success factors of the risk management at MacVille Proprietary Limited stood on two pillars. The first pillar consisted of strong support the junior managers and the store managers received from the senior managers. Moreover, the firm had a FARM committee which looked after the risk management both within the present business operations of the MacVille and in the future acquisitions like Hurley’s Cafe. The second pillar of success of risk management of MacVille was its strong communication network which allowed smooth communication of risk related between superior and subordinate employees (Bromiley et al. 2015). The support and involvement of Paula Kinski provided a more profound base to risk management of the company. The goals of the risk management of MacVille consisted of minimizing of risks within its present business operations and also in case of future business operations like Hurley’s Café.
d:
|
Stakeholder |
Internal/external |
Role in process |
Stake in process |
|
Management |
Internal |
Forms risk management policies |
High |
|
Employees |
Internal |
Executes the strategies formed by the management |
High |
|
Government bodies |
External |
Forms the risks management laws and policies which are applicable on all business organisations |
High |
|
Subsidiaries |
External |
Contributes to the revenue generation of the company |
Medium |
|
Customers |
External |
Purchase food products from the café and generate revenue |
High |
|
Suppliers |
External |
Provides raw materials to the café for production of finished goods (food products) |
High |
e:
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Political: 1. The government of Australia is politically stable and makes laws for the industries like food industry, to which MacVille belongs. 2. The government forms laws pertaining to areas like risk management and acquisition of subsidiary companies which provides guidelines to all the business organisations. 3. The government provides support for expansion of business by providing facilities like footpath dining and internet connection. |
Social: 1. Australia has a large population of aged and retired people who enjoy dining at expensive café style restaurants. 2. The Australian society is experiencing increase awareness for environmental aspects like wastage of water in restaurants which in turn is encouraging the government to form laws to curb the practices. |
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Economical: 1. Australia is economical strong which means the Australians people, including the retired people have sufficient disposable income to afford dining in café style restaurants. 2. The economy of Australia provide rich network of banks which provides financial support to the business operations of companies. 3. The country provides sufficient business expansion opportunities to the business organisations by acquiring other firms which increases the assets in turn. |
Technological: 1. The market of Australia is technologically advanced which in turn support the risk management operations in the business organisations. 2. The country provides the business organisations with internet facilities which enable them to develop a strong information and communication network to hold conferences between the geographically distant locations. 3. The country provides scopes for innovations even in the small restaurants like Hurley’s Café. |
SWOT analysis of MacVille:
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Strengths: 1. MacVille has operations in Queensland and New South Wales which means the restaurant serves a huge customer base which contributed it with high revenue generation. 2. Its acquisitions of Hurley’s Café proved its strong capital base. 3. The company had strong risk management system. |
Weaknesses: 1. Its subsidiaries like Hurley’s did not maintain high risk management practices and their acquisition would require huge investment on MacVille’s part to beef up the risk management of the former. |
|
Opportunities: 1. MacVille can expand into new areas. 2. Introduce innovative food products to suit the preferences of the different customer segments like Australian retired customers and tourists. 3. The restaurant firm can enforce its own high risk management standards on its subsidiaries as well. |
Threats: 1. New laws like environmental laws to check wastage of water in restaurants enacted by the Toowoomba Council would require the subsidiaries of MacVille like Hurley’s Café to reduce their wastage promptly. Non-compliance of the subsidiaries would ultimately attract penal charges for MacVille since it is the holding company (tr.qld.gov.au 2018). 2. New restaurants including international chains are seeking to enter its markets. They would challenge the revenue generation and customer share of the subsidiaries like Hurley’s Café. |
f.The research method to gain information on the SWOT and PEST analysis was secondary research. It involved study of legislations, regulations and business environmental factors including risks. The researcher has consulted a wide range of books, articles and official websites of the Government of Australia to gain substantial information pertaining to the mentioned areas (CODE 2014).
g.An analysis of the risk management of Hurley’s Cafe reveals that there is gross lack of concern from the side of the management of the café in the area. First, the café was run by family members which also included the staff members. The restaurant lacked written employee policies which left chances of future disputes over employment conditions and wages. The wasted a lot of water which attracted environmental risks and left avenues open for attracting penal actions from the Toowoomba Council. The family owing the Hurley’s Café did not practice regular depositing of cash into the bank and there have been thefts. This exposed the café before financial risks. The staff of the café did not market the products. Considering the fact that new restaurant chains were eyeing Toowoomba, lack of marketing among the staff of Hurley presented risk of restaurant losing its customers to these new restaurants (Oh and Oetzel 2017). Thus, this situation presented sustainability risks before the Hurley’s Café.
|
Risks |
Particulars |
Stakeholder concerned |
|
Financial risks |
The earnings were not dropped into banks on regular basis. |
Employees, management of MacVille Café and Hurley Cafe |
|
Wastage of water |
Water was wasted |
The Toowoomba Council, MacVille Café, society |
|
Employment policies not written |
The family held no written records of the employment of its employees as many of them were family members |
MacVille on acquiring Hurley’s Café would require to form new employment contracts which may lead to conflicts. |
|
Sustainability risks |
Lack of marketing from the Hurley’s Café against newly arriving restaurant chains |
MacVille would have to spend immense amount of money to market the products of Hurley in the initial stage. |
|
New Message |
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November 19, 2020 |
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From: Ash To: James Mansfiled, Ron Langford CC: CEO – P. Kinski Subject: Risk conditions at the Hurley’s Café Dear Sir/Madam, Please find attached a table highlighting the risk management conditions at the Hurley’s Café, which MacVille is looking forward to acquire.
It can be pointed out that present risk management methods at the Hurley’s Café is not up to the mark and would attract future business implications. It is an earnest request to you to go through the same and contribute towards further development of the same with your valuable inputs. Regards, Assistant manager, Queen Street Store |
Risk Analysis Report
4.
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New Message |
|
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November 19, 2020 |
|
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From: Ash To: CEO – P. Kinski CC: Subject: Request for a meeting to discuss risk conditions at the Hurley’s Café Dear Madam, It is an earnest request to your good self to allow me an appointment to discuss with you the risk management conditions at the Hurley’s Café which MacVille is looking forward to acquire. It would be of tremendous business significance for MacVille as well and hence it is a kind request to your good self to allow me an appointment with you to discuss the risks identified and the further risk management process. Regards, Assistant manager, Queen Street Store |
As per the findings of the risk analysis table of the Hurley’s Café discussed above, the critical success factors of the acquisition would be the position of café and the availability of retired Australian customers and the tourists. The strategic location of the cafe would enable MacVille Café generate immense revenue by serving these two groups of customers (Com 2016).
As pointed out in the risk management table, the Hurley’s Café followed a low quality risk management process. This strategy in its present standard poses serious financial, environment, human resource and sustainability threats as already discussed. The low quality risk management would have serious implications on MacVille if it acquires Hurley’s Café in its present risk management status (Deresky 2017).
The stakeholders of both MacVille and Hurley’s Café should be communicated regarding the risk management level at the latter. They should invited to participate in discussions regarding the risk management standards at Hurley’s and put ethical pressure on them to improve their risk management.
The CEO of MacVille Café should support the risk management activities and provide his valuable suggestions and inputs in identifying new risks.
- The CEO has contributed towards identifying the risk of acquiring Hurley’s Café.
- It has also been recommended that the stakeholders should put ethical pressure on Hurley Café to improve their risk management.
Part A:
MacVille Café Pty Limited was café style restaurant located in Queensland, Australia which served gourmet food and coffee to its customers. The company followed a very stringent risk management policy which came under the purview of apex management and senior directors. The firm was expanding its business in New South Wales and looking forward to acquire Hurley’s Café.
|
Risks |
Likelihood |
Consequences |
Suitable treatment options |
Reason for effective and feasible |
|
Financial risks |
High |
Major risks |
1. Depositing all cash in bank on regular basis. 2. Installation of safe for keeping petty cash. |
Decrease in theft and proper management of cash, improved financial management. |
|
Wastage of water |
High |
Major risks |
1. Installation of water reservoir. 2. Efficient usage of dish washer. |
Reduction of water wastage would save the amount the café spends to acquire water supply services and also save it from future legal charges that the Toowoomba Council was likely to impose. |
|
Employment policies not written |
Low |
Minor risks |
1. Written employment policies. 2. Setting up of an HR department |
Less disputes and reduced turnover of employees |
|
Sustainability risks due to lack of marketing |
High |
Catastrophic risks |
1. Marketing of products of Hurley in advance. 2. Introduce more innovative products. |
More revenue generation and profitable exploitation of Toowoomba restaurant market. |
|
Classification |
Low [1] |
Medium [2] |
High [3] |
Extreme [4] |
|
Insignificant [1] |
1 |
2 |
3 |
4 |
|
Minor [2] |
2 Employment policies not written |
4 |
6 |
8 |
|
Major [3] |
3 |
6 Financial risks |
9 |
12 |
|
Catastrophic [4] |
4 |
8 Wastage of water |
12 Sustainability risks due to lack of marketing |
16 |
|
Risk |
Assess risk |
Controls |
Monitoring |
Action priority |
Timelines |
Responsible |
|
Financial risks |
1 |
1. Depositing all cash in bank on regular basis. 2. Installation of safe for keeping petty cash. |
Accounts department |
1 |
6 months |
Accounts department |
|
Wastage of water |
2 |
1. Installation of water reservoir. 2. Efficient usage of dish washer. |
Floor manager |
2 |
1 month |
Floor manager |
|
Employment policies not written |
3 |
1. Written employment policies. 2. Setting up of an HR department |
HR |
3 |
1 month |
HR |
|
Sustainability risks due to lack of marketing |
1 |
1. Marketing of products of Hurley in advance. 2. Introduce more innovative products. |
Apex management |
4 |
12 months |
Apex management |
The risk analysis report should be communicated to the board of directors aklong with the risk analysis report shown above.
The Hurley’s Restaurant should promote and market its food products in and around Toowoomba to encounter the sustainability risks the restaurant would face from the international restaurant chains which were eyeing to enter the region.
MacVille Café was a Queensland based café style restaurant offering gourmet style food and high quality coffee. The restaurant chain was expanding into new markets like New South Wales and as a part of its expansion strategy, MacVille was eyeing to acquire Hurley’s Café in Toowoomba. The restaurant followed a very strict risk management strategy while Hurley did not.
a (i)
The risk management implementation plan would take into account the four initial risks recognised namely, financial risks, wastage of water which caused environmental risks, lack of written employment contract which left scope of dispute between employees and employer (MacVille Café after acquisition) and sustainability risk stemming from the lack of marketing efforts on behalf of Hurley’s Café.
|
Risks |
Consequences |
Plan implemented |
Outcomes and evaluation |
|
Financial risks |
Major risks |
Depositing all cash in bank on regular basis Installation of safe for keeping petty cash. |
Decrease in theft and proper management of cash, improved financial management. |
|
Wastage of water |
Major risks |
Installation of water reservoir. Efficient usage of dish washer. |
Reduction of water wastage would save the amount the café spends to acquire water supply services and also save it from future legal charges that the Toowoomba Council was likely to impose. |
|
Employment policies not written |
Minor risks |
Written employment policies. Setting up of an HR department |
Less disputes and reduced turnover of employees |
|
Sustainability risks due to lack of marketing |
Catastrophic risks |
Marketing of products of Hurley in advance. Introduce more innovative products. |
More revenue generation and profitable exploitation of Toowoomba restaurant market. |
References
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