Risk Assessment: A Strategic Analysis of McDowdeswell's Operations

This report delves into a strategic risk analysis of McDowdeswell's operations, a leading fast food chain with over 3600 restaurants globally. It examines the company's operations management, identifies key risks through internal and external analysis, and develops a comprehensive risk assessment plan. The report explores risk identification, prioritization, mitigation strategies, responsibility allocation, monitoring, and contingency planning. It also analyzes the impact of risks on cost, scope, schedule, and performance, providing justifications for recommended strategies at operational, tactical, and strategic levels. The study concludes with a comprehensive understanding of McDowdeswell's risk landscape and the importance of proactive risk management for sustainable success.

Assignment 3:- “Risk Assessment”
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Table of Contents
Introduction.....................................................................................................................................................................4
LO4 Conduct a strategic risk analysis on the operations functions of an organisation..................................................6
Company overview....................................................................................................................................................6
Operations Management............................................................................................................................................6
P8 Devise and carry out a strategic risk analysis of an organization using risk identification and mapping.................8
Risk Assessment Plan................................................................................................................................................8
Risk Identification....................................................................................................................................................10
Level of priority.......................................................................................................................................................11
Plan mitigation.........................................................................................................................................................12
Allocate responsibility.............................................................................................................................................12
Monitoring and contingency planning.....................................................................................................................14
Risks (A Look Back)................................................................................................................................................15
Risk classification....................................................................................................................................................16
Areas to be considered.............................................................................................................................................18
M4 Develop contingency plans and strategies to minimise the risk highlighted in the strategic risk analysis............22
Risk Contingency Planning......................................................................................................................................22
Benefits and Significance of Risk Contingency Planning.......................................................................................22
Risk assessment strategies.......................................................................................................................................24
D3 Provide valid justification for recommended strategies at operational, tactical and strategic level.......................26
Conclusion....................................................................................................................................................................27
Reference list:...............................................................................................................................................................28
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Introduction
The report study is aimed at analysing the operations management of McDowdeswell’s and its
risk assessment factors. In the reported study, the risk assessment plan has also been discussed
which includes of the following things such as: risk identification, level of priority, plan
mitigation, allocate responsibility, monitoring and contingency planning respectively. In the
financial world, the concept of risk management refers to the practice of determining the
potential risks that may take a toll in the future, analyzing and assessing them and finally, taking
precautionary steps for curbing down the negative effects of the risks. When a business entity
makes the decision of investing, it invariably gets exposed to a number of financial risks. The
amount, intensity and level of such risks are dependent on the traits of the financial instrument.
The common financial risks come in the form of high volatility of the capital, recession, high
inflation, bankruptcy and market problems.
In addition to this, the risk assessment strategies have also been identified in this assignment that
includes of the various functional levels as well as stakeholder’s relationship in case of planning
mitigation. Thus for minimizing as well as controlling the exposure of such financial risks, the
managers and the business investors have to delve deeper into the concept of risk management.
During times of financial turmoil, lack of proper risk management plan can cause havoc on the
business and may even lead to irreparable damage. The level of risk is linked to the different
classes of assets and liabilities involved in the business.
The following report is based on the risk analysis of the activities of managing the operations and
assessing the risks in the McDowdeswell for achieving the strategic goals and objectives of the
business. The operational activities within the company are linked with strategy, designing,
controlling and finally managing the quality of products which enhances the brand value of
McDowdeswell. This company is an internationally famous fast food chain that serves good
quality foods to millions of food lovers. This report also includes an internal and external factor
analysis of risk for identification of the factors influencing an organisation. McDowdeswell is
striving to establish a corporate image and offering pleasant and fast services at a competitive
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pricing. They are adopting various strategies in order to reach out to the domestic as well as
international customers and fulfilling their needs and demands.
Furthermore, the report study is aimed to understand all businesses are susceptible to the risks of
unexpected events such as natural calamity, injury to the employee or consumer, loss of funds
through fraud means or theft and damage to the properties can cost money or even permanent
end to the business. By considering the potential threats and risks and by having the right plan in
hand, the business can not only save money but also shield the organisation’s future. The most
important aspects of the right business risk management plan which include of the following
things. Moreover, the main objectives of report study are as follows:
 Identification of the risk or understanding what might go wrong
 Analysis of the risk or determining how it may affect the business
 Controlling the risk or understanding what can be done for preventing loss and
recovering the loss, in case it already takes place
 Treating the risk or identifying the means of paying for the risks
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LO4 Conduct a strategic risk analysis on the operations functions of an organisation.
Company overview
McDowdeswell is a leading chain of fast food retail with over 3600 eateries in different countries
of the world. Their primary objective is to offer quality and delicious foods to customers along
with pleasant services at a very reasonable cost. This strategy is attracting millions of consumers
and this is aiding the business to employ many individuals. In the past, this business faced a lot
of threats and challenges owing to change in customer demands and a lack of educated
management systems.
The common products of this company include chicken hamburgers, French fries, desserts and
salads etc. With such services and quality products, McDowdeswell has more than 37000
workers in various parts of the world. This food chain has expanded to other continents like Asia,
Europe, Africa, the USA and South America. The primary reasons behind the success of the
organisation include fast service, reasonable price, limited menus and quality control. Though
McDowdeswell is becoming successful in running the organisation on a large scale, it is facing
many challenges in the supply chain. They are also facing the threats of copied menus and
competitive pricing of the rival business. McDowdeswell is also taking up measures to recycle
and manage the waste products. They are also improving their packaging and recycling their
materials in order to use the resource optimally. The operation managers of McDowdeswell are
planning to boost their business and as a result, they are considering all the aspects that can help
the business to reach new heights. Thus, they are considering the risk factors as well which may
prove to be a threat for the growth and development of the business (Davis et al. 2018).
Operations Management
The operations management refers to the area which is concerned with controlling and
redesigning of production activities such as production of goods and services. The environment
within and without the business are inclusive of various factors and forces that casts an impact on
the management of the business and significantly effects the decision-making process. In order to
have a comprehensive analysis of the business environment of McDowdeswell, it is crucial to
conduct a risk analysis of an organisation. According to the views and thoughts of the author
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Jacobs, et. al. (2014), the study of operations management is very crucial for the business
organisations in order to have an appropriate planning, organising and supervising of the key
activities and resources of organisation. A manager of an organisation plays various functions
and the operations management is among one of them (Jacobs, et. al., 2014).
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P8 Devise and carry out a strategic risk analysis of an organization using risk identification
and mapping.
The report is aimed at carrying out appropriate strategic risk analysis of McDowdeswell with the
help of significant risk identification as well as mapping technique and method (Aven, 2015).
For analyzing such purpose the report study comprises of risk assessment plan and the following
things which are specified below. Strategic risk analysis is very crucial and significant for the
organization in order to determine the risk factors as well as aspects which are impacting the
organization directly and indirectly (Aven, 2015).
Risk Assessment Plan
In all businesses there are threats that are hard to mitigate and in such cases, the project manager
of the concerned organisation should be equipped with the right contingency plan along with the
risk response plan to be utilised when the contingencies fail.
The risk assessment planning is a means of determining how the threats of a business can be
reduced and eliminated while increasing the impact of the opportunities (Kerzner and Kerzner,
2017). The project managers are required to work in such a way so that they can protect the
business from all sorts of threats and help the business thrive even if there’s presence of any
threat. Also, they must cause the opportunities to take place at the right time so that the business
can utilise them and achieve new goals. It is crucial to get rid of all the risks within the business
owing to resource limitations and time constraints. The project manager is also in charge of
reviewing the risks all through the business. It is important to understand that neither the
qualitative nor the quantitative risks end once the manger starts working on the project (Kerzner
and Kerzner, 2017).
The four ways to handle risk are specified underneath:
 Avoid: The business managers must try to find out the cause which, in turn, can eliminate
the threat altogether. Having a contingency plan in hand is a methodical approach of handling a
crisis. The review team members should arrange for regular training for the employees so that
everyone knows their exact steps when risk arises
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 Mitigate: There must be some risks that cannot be totally avoided and they should be
reduced to such an extent so that its negative impacts do not harm the business in any way. The
contingency planning is indispensible for all business organisations since it prepares the
company to respond optimally when high risk occurs
 Transfer: Through the risk transfers, the business can transfer the risks to some other
business organisation or any other party. Some of the most common examples of risk transfers
include guarantees, warranties and purchase of insurance. Strategies have to be framed up to
interact with the people who have invested in the business.
 Accept: When there is no possibility to transfer, mitigate or avoid risk, then there is a
need to accept risk. Before accepting risk there is a need to assess the alternatives associated with
the risk.
The factors which are involved in the risk assessment panning consist of Exploit which
highlights the fact that it is important for the business managers to change the project or add or
subtract work in such a way so that the business can exploit the opportunities. Another important
factor is Enhance which highlights the fact that there should be a rise in the probability as well as
the positive effects of the risk factors. Finally the last factor is Share which highlights the fact
that the company may even choose the allocate its ownership of the opportunities to other parties
In the context of McDowdeswell, it is significant to take a look at the risk analysis in an order to
identify the sources and type of risk so that they can be handled in the correct manner while
preventing any harmful effects on the company reputations and profits. Finally, McDowdeswell
must try to control and monitor their risks through detecting the occurrences of the various risk
triggers while also identifying and monitoring the residual risks (Menoni and Margottini, 2011).
It is very important to keep factors like identification of risk along with analysis of the risk
factors in the Risk Response plan. The business should try to assess how effective their planning
is and collect and communicate their risk status among all employees. It is a continuous process
where it is important to identify if there is presence of any additional risks and recommend the
corrective actions. Lastly, McDowdeswell should also perform trend and variance analysis and
make use of the contingency reserves so that the approved changes can be adjusted (Menoni and
Margottini, 2011).
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Risk Identification
Risk identification is the continuous procedure which is adopted by the business. Under this
process the organizational manages and makes a list of potential risks and their traits. The result
of this identification are typically jotted down in a risk register which includes a list of the risks
along with their sources, potential risk response and categorising them. This information can be
used for analyzing the risks which can later help in creating the risk responses.
Identifying the sources of risk by category is considered to be the significant method of
exploring the risk related to a project. Few of the examples of categories for potential risk are
mentioned underneath (Beaglehole et al 2011):
 Technical: The risk which takes place due to technical issues like loss of manpower,
experts and professionals. The damages in machines, blast of machines, sudden breakdown etc.
are the technical risk which usually arises in the factories and companies
 Cost: Cost is another source of risk. Some risk results in extreme losses which creates a
huge cost on the company. When there is a risk it is associated with the cost. On the basis of the
cost the risk is classified into two heads high cost and low cost risk (Hawkes, 2012).
 Schedule: A schedule is the most important thing which is associated with the risk. It is
another source of risk. Schedule determines the time period of a risk. Schedule risk analysis
shows a statistical assessment of a project schedule.
 Client: Client can also be a source of risk. This source of risk is common in banking
sector. There is a risk to client portfolios due to investing in a wrong fund or share (Beaglehole et
al 2011).
 Political: The another source of risk is political atmosphere which give rises to election
wars, oppositions, battles etc. among the general population and political leaders.
 Environmental: The risk can arise from environment too. Cyclone, flood, calamity,
thunderstorm or any other kind of natural calamity is the source of environmental risk. Generally
environmental risk cannot be avoided it can only be mitigate in a limited manner (Bommer et al.
2015).
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 People: People can be a source of risk as people have ego clashes. Business operated in
society so the business is required to fulfil the social obligations. If the business will not look
into the needs of the society there will be disputes, strikes, lockout and damages to the property
(Bommer et al. 2015).
Level of priority
There is a certain level of priority when it comes to the operational managers for the threats and
the weaknesses that they face over the period of time in the company. Having the company face
the threats from the competitors and other sectors of the company can be used for bringing down
the company and get the company at risk (Chen et al. 2013). The company MacDowdeswells
face various threats from the society and that they are unable to get the proper and effective
growth of the company. The company MacDowdeswell is one of the fast food retailer stores and
they are growing with 3600 restaurants all around the world. The main strategy of the company
is to provide the quality food to the people who are visiting the restaurants. Out of all the
competitors who are there in the market they are the one who is considered to be one of the top
fast food selling retail stores. The main strategy of the company is to have the brand image and
the brand value for the company in order to maintain the growth and hold the position which
they are holding for the company over the past few years (Hawkes, 2012). Therefore, for the
challenge and competition which they faced over the years, there are certain strategies which are
being created so that they are able to get the proper and effective results from the market. There
are various challenges which are being faced by the company and they are the reasons why the
company have the following weaknesses. They are the one which is being considered to be the
reason which can bring the company down and they may not be one of the best companies in the
world. Following are the challenges which the company faces and they need to be improved and
they are (Hawkes, 2012):
The product development of the company is low, other than that the reputation of the company
was poor when it comes to the fast food chains in various parts of the world (Ingram et al. 2013).
There were many laws which were being set and they are the unfavorable labour law which was
hampering the work and the ethics of the people and the employees working for the company.
Furthermore, there were taxes which are way higher than most of the other companies in the
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market and they are deliberately minimizing the number of actions which can be taken and they
are hampering the company growth and the development of the company. Therefore, the
company needs to put few things on the topmost priority list so that they are able to get the most
of it and they are able to have the better and most effective growth of the company (Hawkes,
2012). Some of the things which the company needs to put them in priority are the lowing of the
interest rates so that the company is able to hold the company employees. Other than that
employees and the customers are to be kept on the topmost so that they are able to maintain the
best relationship with the employees and the customers (Beaglehole et al 2011). There are
various labour laws which are being put forward and they can be minimized so that the
employees of the company are not pressurized and are able to be more productive and help the
company be one of the best companies in the market in terms of the fast food manufacturing
companies.
Plan mitigation
The risk mitigation is the term which can be used and they are able to reduce the extent of the
exposure of the company at risk and they are able to have the less likely occurrence of the risks.
There are various methods which could be used for the development of the higher level of
mitigation strategy for the company (Bommer et al. 2015). The mitigation of the risks can only
be done if the risks of the company are properly identified. There are different steps which can
be considered for the management of the risks in the company process. In the management of the
risks, it can be found that proper risk identification is one of the best methods for the growth of
the company. The next thing which can be done is analyzing the impact of the risk. One of the
most important things which the company needs to be done is that the company have to prioritize
the risks. Prioritising the risks can help the company so that the risks and the problems can be
mitigated.
Allocate responsibility
Before starting any project, it is very important for every member of an organisation to become
aware of three important facts. These include who is their superior whom they have to report,
what are their responsibilities and what is the required level of authority to make decisions. If all
these facts are cleared then the project moves on smoothly. Hence it is very important to allocate
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the responsibilities to each member before starting any project. If each members roles and
responsibilities are clearly defined then more chances of collaboration and work sharing is
achieved. This reduces the chance of misunderstandings which results in disputes among the
employees and the authority. If management succeeds to communicate to their team members
their definite responsibility and accountability then a strong teamwork develops which result in
the development and progress of the organisation itself. The essential part of a project manager’s
role is delegation. It is very important to make the appointed people aware of their role and
responsibilities. The RACI model is of a great help in this case. In the operation of any project,
many people are involved. To avoid the confusing situation of who is responsible for what, who
should take a decision, how to know the level of responsibility all these create the commotion in
the working place. The RACI model is a very effective tool in this situation. The RACI Model is
a tool which is used to identify the roles and responsibilities to avoid the confusion which takes
place in the operation of the project. The word RACI stands for responsible, accountable,
consulted and informed.
The responsible person is the one who makes the decision and he is fully responsible for getting
the work done. According to the prescribed rule responsibility lies to one person only. He may be
a technical architect or a business analyst. The person who is responsible for the proper and full
completion of the task is accountable. He is a single person who is often a project sponsor or
project executive. The consulted are the people who give information for the project. These are
often experts of subject matter. The informed the people are those who are regularly informed
about the project progress. When all the people involved in the project know their role and
responsibilities it is easier for them to complete the work efficiently.
A RACI matrix supports the RACI model. A RACI matrix is usually used to discuss, agree and
communicate the various roles and responsibilities. Various steps are followed to create a RACI
matrix. Firstly it is necessary to identify the whole task involved in delivering the project. These
tasks are then listed on the left hand side of the chart. Then all the project roles are identified and
are listed at the top of the chart. Then the chart is finally completed by identifying who has
responsibility and accountability. Then the people who will be consulted and informed are also
listed. Then it is made sure that each task has only one responsible and one accountable person.
Then sharing, discussing and agreeing are done with the stakeholders on the RACI matrix before
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starting the project. The Project Management Institute or PMI also use various RACI model. The
various RACI model are RSI-responsible, sponsor and informed. Other variations include
RASCI-here s means support, RCIO-here o means omitted and RACI-VS-here v means verify
and s means signatory
Monitoring and contingency planning
Risk- based monitoring or RBM is a clinical trial -monitoring technique. In order to identify
signals it takes bits of the help of many tools and dashboards. In RBM the frequency of
monitoring is reduced because data is only verified at high risk sites. The three steps are being
outlined by FDA guidance for RBM approach. The first is the detection process of the critical
data. Secondly, a risk assessment should be conducted taken into consideration of the risk and
also its origin and efficient methods should be framed to prevent further risk, side-by-side
resolving the prevailing risk. The traditional approach of regularly visiting the working site is no
longer followed in RBM. The main purpose of the traditional approach of regularly visiting the
sites was to make sure the safety of the patient and also for quality data. But the efficient RBM
approach can improve this procedure while using the resources efficiently. It is through
challenging to implement RBM but it is possible if certain steps are taken by the sponsor. Firstly
it is important to identify the greater risk area (Ingram et al. 2013).
Then roles and also written operational instructions should be assigned to the staff. Then
decision trees should be created. Next, the relationship between clinical and operational data
should be mapped. Then to well organise the activities, between the project team members a
monitor plan should be composed. In the end, all the team members should be well trained on
RBM strategies. The person who is assigned to design or to maintain a risk mitigation model
should be aware of available multiple techniques and tools. RBM gives the opportunity for
centralised monitoring (Ingram et al. 2013). Conducting effective clinical research is very
expensive, so RBM is its solution. By moving away from on site visit and 100% source data
verification or SDV, RBM focuses more on centralised data collection and monitoring. The
future seems bright for RBM. Nowadays many Industries have stopped to move for alternative
monitoring approach instead they follow RBM approach.
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It is a clear fact that no one can fore tell the future but businesses prepare themselves for ‘what if
this happens in future'. For this contingency planning is done by the organisations. Contingency
planning includes the unknown certainties like fires, riots and even earthquakes. The operational
ability of an organisation is affected by contingency. The main purpose of contingency planning
is to return to normal working operations as soon as any unusual events get over. The
contingency planning protects the company’s resources, and also gives definite responsibilities to
the staff in the context of the recovery. It is in the hand of senior leadership for contingency
planning (Hawkes, 2012). Often a contingency plan coordinator is being appointed by the
organisation that has full responsibility for maintaining and developing the plan. For the
contingency planning firstly the functional area which is very important for business operation is
identified. Then how the unusual event can affect that area and what action should be taken and
which resources should be used is taken into consideration. Along with the resources and
documents also the role of employees in the unusual event is taken into consideration. The
education plan is also implemented to keep employees aware of the prevailing changes and also
to make them aware of their definite role and responsibilities. So, monitoring and contingency
planning is very important for an organisation to grow and develop in future. It is through
monitoring that business risk is assessed and contingency planning helps to overcome these risks
(Hawkes, 2012).
Risks (A Look Back)
This section of the report study includes assessing of the assessment 1 in which the analysis of
company’s internal and external factors have been made. In case of analysing the risk factors it is
essential to conduct the internal and external analysis of the company. From the study of SWOT
and PESTLE analysis conducted in the assessment first it has been analysed that The factors that
appear as strength to McDowdeswell are name of the brand, its financial performance, proper
training and employee development, market expansion, affordable cost, fast services, high shares
in market and rising levels of consumer satisfaction. The factors that can be deemed as
weaknesses of McDowdeswell include low development of product, lack of management of
franchise, limited product options, unfavourable laws concerning the labours, high rates of
indirect taxes and interests, being a part of a disintegrated industry and bad reputation of working
within the fast food chains. The division of financial services is also improving which is aiding
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the management of McDowdeswell to compensate the costs as well as benefits. Moreover, there
are increasing market shares, improved customer base and expansion through more fast food
outlets (Walker, 2013).
On the basis of the company’s internal and external analysis it has been examined that there are
certain risk to which the company is exposed to which are as follows:
 strategic risks
 economic risk
 operational risk
 accident risk
 competition from local businesses
 currency fluctuations
 heavy investments
 vague cost leadership areas
 altering attitudes of people
 decreasing export demands
 tough competition
 recession and inflation
Risk classification
All the business organisations are very much aware of the risk elements that can occur in the
business. Hence they contain many risk elements while operating their business. .When we talk
about business risk it actually means the chance of inadequate profits or of losses which can
occur due to any uncertainties. These uncertainties include the consumer preferences; the
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changes brought in government policy, strikes, and increased competition among the competitors
and also the changes in taste in the Consumer.
There are basically two types of risks.
1. Internal risk
2. External risk
The internal risk occurs from the activities which occur within the organisation, while the
external risk occurs from the activities that occur outside the organisation. The factors
responsible for internal risk can be controlled easily. They include technological factors, physical
factors, human factors and operational factor. Whereas the external risk that occurs outside the
organisation cannot be controlled. They include economic factors, natural factors as well as
political factors (Beaglehole et al 2011).
For example, a situation might occur for the business owner, that he may face different types of
risk like the risk faced due to the irregular supply from materials, labour instability, risk in
production, the breakdown of any machinery. Risk can also occur due to the fluctuation of
market price and due to the changing fashion trends. Risks can also be relating to the company’s
assets. There can be a loss of company's assets due to flood, earthquake, riots, political
instability, war or even fire. So, it is clear that risk in business can occur depending upon the type
and size of the business (Beaglehole et al 2011).
The risk is classified into 4 heads:
 Catastrophic: the catastrophic risk is the total loss in which there is loss of life,
equipment or machinery. Such form of risk can’t be avoided or controlled. This risk is faced
mainly by the big business houses. For example: Economic risk is the risk which is relevant with
the finance. These risks are mainly linked with the whole monetary transactions which are done
in an organisation. The continuous variations in the price of production and operational cost
create up the economic risk.
 Critical: this form of risk is accidental. Here the risk arises due to the accidents. The
damage of machinery or equipment due to accident comes under the ambit the scope of critical
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risk For example: The accident risk consists of the natural disaster which is reliant upon the
nature of risk and also from the place where the organization is situated.
 Moderate: this form of risk is generally of minor level. The loss of machinery or
equipment due to minor accidents falls under the form of moderate risk. For example: The
operational risk which is linked with the entire operational function and administrative function
of the company. The operational risk consists of the whole operating system of the company.
 Minor: minor risk is the risk which is more than the negligible risk but less than
moderate risk. Minor risk results in minor injury or illness. For example: the legal risk is the risk
which is associated with the varying regulations and rules of the government. The company
always makes it a point to modify to the existing regulations and rules of the government for its
sustainability and also to incredulous the risk factor.
 Negligible: under this risk the damage is probably less than the accident or incident level.
This risk is almost zero as the amount of loss occurred is negligible. Such risk can be controlled
and managed easily. For example: The strategic risk usually arises from the business
environment, from investor relation and also from the transactions. As for the business
environment, it consists of buyers and sellers (Chen et al. 2013).
Areas to be considered
On the basis of the overall risk assessment of the report study, it has been analysed that there are
some of area which is needed to be focused and considered for analysing the risk (Wang, et. al.,
2012). This is so because each and every risk has its significant impact on the organisation which
is required to be estimated on the following areas and grounds stated below:
 Cost – The risk has a high impact on the cost of products and services of company. The
cost includes of both the direct as well as indirect cost. However, there are some hidden
cost to the company which is not estimated at the time and duration of planning risk
mitigation. The estimated cost figure has been stated below:
Risk identified Category Degree of Probabilit total Cost
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risk y budget
high rates of taxes Possible Medium 10% 80000 8000
altering taste of the customers probable High 15% 80000 12000
limited products
impossibl
e Medium 15% 80000 12000
too many franchises Possible Low 5% 80000 4000
Inflation
impossibl
e Medium 15% 80000 12000
From the above tabular presentation it has been observed that the budget forecasting for the
risk management process is a necessary approach for the organisation. Identifying risk
factors and addressing with proper preventive measure would be effective to reduce the
overall effect of risk on cost, quality, scheduling and scope. Therefore the risk could be
identified based upon the corresponding effect on the functional process. The main objective
of the risk management plan is to induce positive risk in the process while avoiding negative
risks. The above budget forecasting process enables the Mcdowdeswell’s management to
distribute the risk factors into various segments such as impossible, possible and probable
factors. Each of these factors would be distributed into low, medium and high probability
ratios. Therefore the budget allocation would be depending upon the probability of the risk
factor that has a huge negative effect on the organisational function. The risk management
budget allocation for the current financial year is $80000 and the budget estimation for the
risk management has been mentioned in the above section.
 Scope – The scope leads to providing of the potential impact of risk on the final products
and services of the company. The risk assessment tool and technique has a great potential
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scope in the recent era as many of the food retailer companies are coming up with new
projects and ventures that is related to the establishment of quality food and services for
its customers (Wang, et. al., 2012). The risk assessment helps in identifying the risk and
its relative cost to the final product. The impact of scope can be measured through
reduction of the number of studies which has been completed and those which are not
providing deliverables for example IND. The scope of final product can be measured and
in case it does not deliver the superior value services to the customers a corrective action
can be taken care off.
 Schedule – Schedule refers to the listing of activities and resources according to the
respective time frame and cost incurred. Scheduling is very essential aspect when it
comes to assessing of risk and often results in eliminating of risk identified. The impact
of risk is scheduled and on basis of it the elevation of risk can be made possible. For
instance – Scheduling of delay leads to frequently resulting in the increment of cost as
well as can also result in decreasing the quality of food products and services. It is also
assessed that the schedule delay may lead to or may not lead to creating impact on the
critical path in case of the projected cost and activities of final and end date of company’s
products and services (Walker, et. al., 2010).
 Performance or Quality – The assessment of performance as well as quality is more often
perceived as impact category which often seems to be reduction among the quality aspect
in products and services. Performance or quality is often a choice in context of mitigation
of risk. In addition to this, short-cuts as well as low cost replacements are some of its
ways that has been used for reducing the cost impact. In case when the performance as
well as quality is not analysed or documented properly through the project sponsor it can
lead to creating significant risk within the operations of business organisation. Moreover,
it is also examined that such type of mitigation strategies that is aimed at reducing the
quality aspect of products and services can result in causing dissatisfaction as well as
disappointments among stakeholders (Walker, et. al., 2010).
All of these following areas are needed to be considered while going for analysing the risk
assessment factors and its significant impact on the company. Cost, scope, schedule and
performance or quality are the most significant factor that helps in analysing the risk and
provides with the ways and measures for reducing such type of risk within the company. The risk
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mitigation strategies and planning is also related with such areas as it describes about the cost
associated and its further scope in the real practices (Suter II, 2016).
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M4 Develop contingency plans and strategies to minimise the risk highlighted in the
strategic risk analysis.
Risk Contingency Planning
In the words and ideas of the author Menoni and Margottini (2011), risk and contingency
planning are two inseparable factors of a business. Contingency planning of a business is
generally considered its last resort and should be taken seriously for the high impact risks at
times when it is not possible to avoid or prevent an unwanted event. Contingency planning is
often used in managing projects and in planning business continuity. The contingency planning
is indispensible for all business organisations since it prepares the company to respond optimally
when high risk occurs. This also includes unplanned events or at times when an important person
fails to deliver his duties (Menoni and Margottini, 2011). A contingency plan can also be
referred to as a backup plan, which gets activated in the event of anything undesirable which
may disrupt the optimal functioning of the company and casts a threat to the employees. The
main aim of this planning is to safeguard the businesses’ interests, minimizing damage and
keeping the employees, customers and other stakeholders as safe as possible. A business may
have never come across a situation where it might have to use the contingency plan but it is
always important to keep one at hand and train the employees on the steps and measures that
need to be taken when the need arises (Suter II, 2016).
Benefits and Significance of Risk Contingency Planning
Following are the benefits of contingency planning (Ankley, et. al., 2010):
 Minimizing loss: When a business organisation experiences a dismembering of its
functions, owing to a calamity like natural disaster or power breakdown, a contingency planning
can help in minimizing the adverse effects of the risk factors. For instance, in case of
McDowdeswell, the data rerouting plan can help in retrieving lost information and mass
accessibility of sensitive data, escape route for the workers can save their lives if there is a fire
breakout or demolition of the establishment and supervisory duties can help in managing the
employee at all levels. The major difference between a business that is just surviving and the one
that folds itself lies in the planning of surging the production along with the ability to run the
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business even after being bogged down by unforeseen circumstances. Some organisations tend to
stay away from devising a proper contingency plan owing to the costs associated with it. But
considering the cost of production loss and employee casualties, the cost of planning a risk
contingency and maintaining it is minimal (Ankley, et. al., 2010).
 Preventing panic: Whether there is an accident or a natural calamity or some unforeseen
circumstance, the first reaction of people is that of panic. Having a well-documented risk
contingency plan can aid the employees to make a quick move to the recovery mode rather than
waiting for the instruction from higher authority. When the employees are equipped with the
knowledge of what their next steps should be and who they should report for instructions, it can
help in maintaining order within the business. For McDowdeswell, it is important to have a clear
idea about the emergency exit and steps to be taken in case there is an unwanted situation. This
can help the managers to pay attention to the recovery operations for preventing further loss.
 Offering comprehensive insight: Though business managers have the knowledge about
handling a crisis, these plans are not quite comprehensive. With the help of a contingency plan,
the managers in charge are compelled to assess and evaluate all the crucial ramifications in the
event of an unwanted disaster. Having a contingency plan in hand is a methodical approach of
handling a crisis. For McDowdeswell, creating a contingency plan will invariably offer a sight of
the bigger picture rather than a series of disintegrated steps (Lim, et. al., 2012).
Thus, in case of McDowdeswell, it is important to create the contingency plan rather than
waiting for an unwanted situation to arise. The business managers should be proactive and put
the plan in its place even though there is scant chances of a risk occurring. It would also pay to
have a contingency team who can activate the needful plan from time to time. The review team
members should arrange for regular training for the employees so that everyone knows their
exact steps. It is also crucial to have the right equipment and maintain them (Lim, et. al., 2012).
Steps involved in risk contingency planning
The following three steps are critical to the creation of risk contingency planning. These are:
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1. Assessing the risks: Before the business tries to develop the contingency plan, it is
important to detect the potential risks that are faced by a particular business organisation
(Akkerman, et. al., 2010).
2. Identifying the crucial functions: For detecting the risk factors, it is first important to find
out functions within the organisation. This will help in answering the critical questions which, in
turn, can help in preparation of a contingency plan.
3. Identifying the risk factors: Finally, the business organisation should identify the risk
factors and classify them under natural disasters, product problems, supplier issues,
governmental issues, legal issues and employee issues (Akkerman, et. al., 2010).
Risk assessment strategies
The risk assessment helps an organisation to become aware of the various issues relating to
business and it also helps the organisation to understand the uncertainties to make the best
assessment possible (Thompson, et. al., 2011). The risk assessment includes the top risk,
integrated risk management and also assign risk ownership. The risk assessment which is done
very efficiently proves to be very advantageous for an organisation. One study has proved that
those companies who shift risk management leadership and collaboration to the first line of
Defence have more chances of becoming successful. These companies are called front liners. To
enhance their profit and revenue growth the front liners companies use very effective risk
management strategies (Thompson, et. al., 2011).
For a deep Impact, the organisation should utilise the risk assessment findings into their decision
making process relating to their business. The risk assessment should be done very efficiently. If
any uncertainties occur then the Organisation should take quick action to overcome it. To assess
the risk factor annually is very beneficial for the organisation (Whittington, et. al., 2013). The
company should carefully plan the action which it should take to manage the risk efficiently. The
company should inculcate the pieces of information and findings of effective risk information
into their strategic decisions. The total insights of risk assessment make it easy for the team of
Management to understand the risk information. Integrating the risk guidance into the
organisation is very important. It is not enough to just put measures in place. One has to see to it
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that these are working so, regular monitoring the business is very necessary to understand and
face a new risk if they occur (Whittington, et. al., 2013). The management should prepare a list
of all the business risk, then make an assessment of its impact, then evaluate the current assets
and then an action plan should be framed to deal with them. A good risk assessment plan should
be updated regularly; it should be a living document reflecting new situations, new risk and new
Strategies and plans (Hopkin, 2017).
The leaders who are not involved in risk assessment plan may consider it irrelevant only. Hence
it is up to the head authority of the organisation to make its leaders and employees aware of the
risk and its effect. A group discussion is very important to gather qualitative information to deal
with the risk factor. A realistic view of risk management should be adopted. Often the
management finds it difficult to accept risk assessment findings. They sometimes think these
risks can never happen. So, here the risk scenario analysis should be done to deal effectively with
the risk factor. Hence these strategies will definitely help to assess the risk, and these are also
important for the business strategy and to achieve the business objectives (Hopkin, 2017).
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D3 Provide valid justification for recommended strategies at operational, tactical and
strategic level
There are various steps which are being involved when it comes to the mitigation of the risks.
They are planning of the mitigation of the risks, the implementation of the plans so that the
mitigation of the risks and then lastly monitoring the implementation of the strategy or the
mitigation process (Menoni and Margottini, 2011). The customers are very health conscious
about their health. Other than that there are fluctuations in the currencies and thus they are
hampering the company and thus they are facing the loss (Van Weele, 2010). There are other
companies in the market and they are posing great threats and competition to the company. They
need to maintain the balance between the quality of the food and price that they are offering to
the consumer. They need to change the attitudes of the people so that they are able to minimize
the complexities of the company and make the MacDowdeswell more productive (Diabat et al.
2012). In order to retain the consumers, they need to maintain the quality of the food and invest
more in the present menu and food that they are presenting to the consumers. This is one of the
methods which can be used so that they are able to maintain the customer relationship and thus
hold the people they are serving every day. Using the method they will not be able to eradicate
the competition in the market, rather it can be used for mitigating the competition level and hold
on to the position for the next few years in the market (Van Weele, 2010).
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Conclusion
From the overall assessment of the above report study, it has been concluded that the most
popular item that is sold under the name of McDowdeswell includes French fries, chicken
hamburgers, salads and desserts etcetera. After undergoing the entire risk assessment planning it
can be concluded that doing a thorough background analysis is beneficial for implementing
proper risk management. In the beginning of the assignment the background of the organisation
is discussed where it is identified that the organisation which is taken for this assignment is a fast
food chain where perishable food item is sold. It is also found that with quality product and fine
services the contextual organisation has placed their name in the top among their competitor.
Furthermore, it can also be examined that the background research also found that the contextual
organisation has a total strength of 37000 workers in different section of the earth. This fast food
chain has extended their service to other overseas continents such as Europe, Asia, Africa, the
United States of America and South America. The background study of the contextual
organisation also reveals that the key reason behind the accomplishment of the taken
organisation is mainly their super fast service. The other factor that aids the organisation to
achieve the success is reasonable price and quality control. Hence, in order to maintain their
position in the contemporary fast food chain industry the organisation need to maintain their
service as well as quality while managing various risk factors.
In addition to this, it is also analysed that the following portion of this assignment reveals the risk
analysis which is also called as internal as well as external environmental analysis. This
environmental audit helps operational manager to identify the risk associated with the contextual
organisation. The weakness and threats are excellent parameter to plan the contingency plan.
Ever changing taste of the consumer is identified as the one of the key risk associated with these
kinds of business. Furthermore, inclination of contemporary generation towards healthy fatless
food is hurdle for the existence of the fast food chain. In order to mitigate these risks the
organisation needs to think out of the box and incorporates healthy food in their menu. They also
need to keep their focus in their supply chain management so that they are able to continue
providing their service without any gap.
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