Steps involved in risk management Process

22 QUESTIONS

QUESTION 1
Steps involved in risk management process
AX enterprise implements risk management strategy that helps firm in improving its
performance and minimising constrains to a great extent. Directors of entity have decided to
define responsibilities of all individuals clearly so that they can perform their work effectively.
Steps of risk management strategy are establishing context, identifying risk, analysing constrains,
evaluating these risks and treatment as well as monitoring and continuous communication with
stakeholders.
Review company’s existing risk management strategy
This strategy supports business in preventing from adverse effects and raising
opportunities for organisation. This is considered as the best way to encourage proactive
management. Monitoring and continuous communication will help AX enterprise in avoiding
risks and improving the overall performance of organisation.
QUESTION 2
Risk register and report representation documents are needed for effective management
of all risks. AX enterprise prepares risk management plan as per the standard AS/NZS
4360:1999. It ensures that risk is being identified clearly and it is analysed so that probability and
impact can be find out. In order to manage risk it is required to identify constrain that create
issue in business and then analysis these risk. This will help in making appropriate changes in
existing practices. Furthermore, risk need to be monitored and continuous improvements is
required to be made in order to manage risk of AX effectively.
QUESTION 3
Asset schedules, long and short term goal of firm, profit and loss account, balance sheet,
and vision statement will help AX enterprise in determining the scope of risk management plan.
QUESTION 4
A. Application of risk management plan
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Risk
Likelihoo
d
(H/M/L)
Impact
(H/M/
L)
Risk response
(Containment or
contingency strategies)
Responsibilit
y
Public image H H Effective
communication with
consumers and provide
immediate services to
them
Manager
Political M M Follow rules and
regulations and observe
market conditions
Manager,
director
Technological M M Use latest technologies
and give training to staff
members
Manager
Opportunity cost H M Build relationship with
stakeholders
Finance
manager and
leaders
Vision and business
strategy
H H Monitor progress and
make necessary
updation time to time
manager
Stakeholder relationships M M Communicate each
information clearly with
them
manager
Leadership H H Involvement of
employees in decision
making process
manager
poor communication H Conduct formal and
informal meeting time to
time
manager
2

Risk
Likelihoo
d
(H/M/L)
Impact
(H/M/
L)
Risk response
(Containment or
contingency strategies)
Responsibilit
y
lack of linkages between
the engagement activity
and the overall
departmental
L L Raise communication
among all workers
manager
lack of commitment L M Motivate people by
giving them reward and
recognition
manager
staff lacking adequate
skills
H M training manager
activities that are
duplicated
M M Effective monitoring
and proper resource
allocation
manager
time and cost overruns M M Effective monitoring manager
B. Objective to risk management plan
Objective of preparing this plan is to identify constrains to business effectively and take
appropriate action to resolve such issues.
C. Key stakeholders
Government: AX contributes in economic development and policies and regulations affect
overall operations of company as well.
Employees: Revenues, dividend policies of the firm impact on workers o great extent.
Manager: Individual is responsible for managing people in business and giving them training so
that they can perform their work effectively.
Investors: They invest their capital in organisation and expect to get high return over their
investments.
D. Inclusion/ exclusion
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Internal risks are related with staff, culture, vision, stakeholder etc. On other hand
external constrains are technologies, politics, media.
QUESTION 5
STAKEHOLDER AGENDA ANALYSIS TEMPLATE
Our Goal: To enhance engagement of stakeholders
Stakeholder Stakeholder’s
agenda for Agency
Strengths in
meeting agenda
Vulnerability resulting from
the agenda
Government Conduct business in
legal and ethical
manner
Show financial
reports and overall
performance of
company
Recognizing local capabilities
Customers To get high quality
products and
services at
affordable prices
Benefits of
company’s
products for
consumers
Building resilience
Employees To discuss benefits
for staff
Dividend policy,
profit generated by
company, career
opportunities for
employees
Less incentives to workers
Managers To motivate
managers so that
they perform well in
organization and
Growth of
business, dividend
policy, customer
satisfaction
Lack of promotion
opportunities
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conduct operations
in such manner so
that overall goal of
company can be
accomplished.
QUESTION 6
Political impact
Instable government, changes in rules and regulation impact on AX enterprise to great
extent.
 Changes in rules and regulations affect operations of AX Company and it has to make
modifications in existing practices.
 Political environment impacts on economy of country thus, consumers purchasing
behaviour gets influenced which affects overall profitability of organisation to great
extent.
Economic impact
 Inflation reduces purchasing capability of clients that negatively affect revenues of the
firm.
 Increase exchange rates enhance operational cost of the company.
Social impact
 Life style influences buying pattern of person that affects profitability of firm.
 Age impacts on attitude of person, youth like to get trendy items where old people like to
buy traditional things by considering prices.
Legal impact
 Labour laws affects motivation level of employees and impact on their retention as well.
 Tax related regulations affect export and import of organisation to great extent.
Technological impact
 Increase operating cost of company
 Improve communication among all employees that raise operational efficiency.
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QUESTION 7
SWOT ANALYSIS
SWOT Analysis: This plan will identify strength, weakness, opportunities, threats of AX
enterprise in order to raise sales of the firm.
Strengths Weaknesses
 Skilled employees
 Adequate financial resources
 Effective marketing strategies
 Efficient communication with staff
members and consumers
 Poor market research
 Poor product expansion strategy
Opportunities Threats
 Technological developments
 Globalisation
 High competition
QUESTION 8
Two critical success factors (CSF) for AX enterprise are described as below:
Market expansion
Quantifiable objective of AX is to enter into two new markets till the end of 2018. This is
considered as most essential component that helps the firm in addressing scope of risk
management plan properly. By using this CSF entity can identify the gap between actual
performance and expected performance. This will support in taking appropriate action to
improve overall efficiency of business unit so that it can enter into global market.
Human resource
6

Quantifiable objective of AX is to raise capabilities of employees and performance level
by 25% till the end of 2018. This is another CSF that supports AX enterprise in hiring right
candidates in business those who can manage people well and can improve their level of
performance so that entity can meet with its objectives.
QUESTION 9
 Effective communication with stakeholders helps the AX enterprise in increasing their
participation in organisation. By this way they will give innovative ideas to manage risk
in business unit.
 Prioritisation of stakeholders supports in enhancing involvement of these persons, by this
way they will give their full support to managers in order to manage risks well.
 Maintain transparency in order to obtain aid from all important shareholders.
QUESTION 10
A
By prioritising stakeholders company can define key people from whom risk activities
need to be discussed. Most important shareholders need to be involved in such planning.
B
 Managers
 Investors
 Employees
 Supplier
C
 Email communication method
 Organising formal meeting
 Fax
 Telephonic communication
QUESTION 11
Managers and employees need to be invited because they have good practical knowledge
about market condition and needs of consumers. This will help in making accurate risk
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management plan. Directors are responsible for all business decision thus, it is essential to
involve them in meeting. Market researcher needs to be invited because they can give detail
about previous market condition and current condition. this will aid in making correct judgement
and implementing right strategies. Investors always want high return thus, by involving them in
meeting management can identify their expectation and can frame strategies accordingly.
Parties Ways to invite them Get assistance
Managers Email, Telephonic
invitation
Mangers will give
detail about market
and consumers
requirements so that
entity would be able
to find out lacking
point in existing
practices
Employees Email invitation Employees have
direct communication
with consumers thus,
they can give
information about
their satisfaction level
and expectations. This
will help in making
changes in products
so that their
requirement can be
matched.
Director Invitation through Fax Direct has good
knowledge about
other companies thus,
they can assist by
giving ideas and
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strategies of other
competitors.
Market researcher Telephonic invitation They can aid by
giving suggestion
about existing market
condition and best
way to deal with such
situation.
Investors Telephonic invitation Investors can help by
sharing their
experiences with top
management and
showing their
expected return aim.
By this way entity
will be able to frame
activities accordingly.
QUESTION 12
 Survey
 Market research
 Questionnaire
 Feedback system
These are four major tools through which AX enterprise can identify risk and can apply
to scope.
QUESTION 13
The two techniques are taken are internal and external research which helps AX limited to
identify the internal and external risk. The internal and external risk are discussed as under-
Internal
 Dishonesty by employees
 Union strikes
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 Ineffective management
External
 Economic risks includes changes in market condition, as it results in economic downfall
which could provide unexpected loss of revenue.
 Natural risks includes the natural disasters which in turn causes distractions and effects
normal business operations.
 Political risks is consisted of changes in political environment or governmental policy
like increase in interest rate, changes in import export laws and tariffs and taxes.
Therefore, researches are done with the help of Questionnaires, surveys, one to one
communication which helps various stakeholders like managers, suppliers, employees and
investor. However, internal research helps to identify the risk inside the organization by asking
questions and one to one communication with managers and employees and external research
helps to identify the external risk by surveys
QUESTION 14
Technological risk -The likelihood of this internal risk may be between 1 in 100 – 1,000 which
indicates that it might occur at sometime in the future
Political risk – the likelihood of this external risk may be between 1 in 100 – 1,000 which
indicates that it might occur at sometime in the future.
QUESTION 15
Consequence
POLITICAL
RISK
The fluctuations in
interest rates effects
the profitability of AX
Limited. They may
effect organisation
positively or
negatively.
It causes frequent
losses to the
business
It causes huge
impact on the
business
environment as this
risk changes entire
working or business.
TECHNOLOG
ICAL RISK
If the organisation do
not update its quality
than it became
difficult to survive in
competitive market
and this may results
This risk causes
effect on individual
performance of
employee, if
organisation is not
updating its
Moving with the
trends of
technologies causes
effectiveness in the
organisation.
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in downfall in the
goodwill of AX technology
QUESTION 16
Technological risk –The possibility of technological risk will be M.
Ways to resolve risk
 To overcome the technological risk AX limited have to study external market situation
properly because it helps to know what are the technological trends which are adapting
by organizations.
 AX limited need to hire the tech savy employees which are experts in technology and
having vast advances knowledge.
Political risk : The possibility of political risk will be H , because this risk is uncertain it could
be happen at any time.
Ways to resolve risk
 To overcome the political risk organization must avoid investing in a country with high
rated risk.
 Company must purchase insurance to cover their political risk
QUESTION 17
To analyse the all sorts of risk the internal and external research is the best and
appropriate way. By carefully studying a market help organization to resolve all type risk
internally ans well as externally. The analysis of market provide AX limit to know about the
upcoming risk so that immediate actions should be taken with in time.
QUESTION 18
RISK TREATMENT SCHEDULE AND ACTION PLAN TEMPLATE
Potenti
al
Impacts Is the
Treatment
Risk
Assessm
ent
Re
spo
Timeta
ble
Monitori
ng
Reporting
11

Risk Reference
Treatm
ent
Options
Issues and
risks of
implementin
g the
treatment on
operations
to be
Implement
ed
(Y/N)
nsi
ble
Pe
rso
n
for
implem
entation
strategies
to
measure
effectiven
ess of
Risk
Treatmen
ts
Strategies to
report on
key aspects
of risk and
the impact
to AX
Severity
Impact
P
o
li
ti
c
al
ri
s
k
Follow
rules
and
regulati
ons and
observe
market
conditio
ns
Changes in
operational
practices ,e
mployee
turnover
because of
sudden
modification
s
yes M M M Ma
nag
er
2
months
Measurin
g
progress
and
discussio
n with
staff
members
regarding
improve
ments
Send written
report to
stakeholders
regarding
effects of
treatment
plan.
12

T
e
c
h
n
o
l
o
g
ic
al
ri
s
k
Use
latest
technol
ogies
and
give
training
to staff
member
s
Use latest
technologies
and give
training to
staff
members,
high
turnover of
staff,
increase
operational
cost
yes M M M Ma
nag
er
1.5
months
Performa
nce
evaluatio
n of each
employee
Send written
report to
CEO and
director
regarding
effects of
treatment
plan.
st
a
k
e
h
o
l
d
e
r
ri
s
k
Effectiv
e
commu
nication
with
stakehol
ders
Issue in
keeping
confidential
information
secure,
demotivatio
n among
staff
yes H H H Dir
ect
ors,
ma
nag
er
15 days Stakehold
er
satisfacti
on level
Send written
report to
CEO and
director
regarding
effects of
treatment
plan.
13

C
o
m
m
u
n
ic
at
i
o
n
ri
s
k
Conduct
meeting
time-to-
time
Time
consuming
thus,
production
may get
affected
Yes L L L Ma
nag
er
1
month
Performa
nce
evaluatio
n of each
employee
Send written
report to
CEO and
director
regarding
effects of
treatment
plan.
14

I
n
a
d
e
q
u
a
c
y
o
f
e
m
p
l
o
y
e
e
s
Arrange
training
and
develop
ment
program
s
Time
consuming
that impact
on
production
capability
and cost
incur
Yes H M H ma
nag
er
2
month
Performa
nce
evaluatio
n of each
employee
Send written
report to
CEO and
director
regarding
effects of
treatment
plan.
QUESTION 19
The essential key stakeholders that need to be involved in risk treatment schedule and
action plan are employees, managers, investors etc. Managers are most essential part of AX
enterprise, in order to communicate them information about risk company is required to conduct
formal meeting with them. In this meeting, authorities need to discuss about issues faced by
business and appropriate ideas through which such problems can be minimised. Top
management has to give them detail about vision and mission statement of the firm and how their
contribution can help in minimising risk.
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