Risk Management Concepts and Applications

This assignment delves into the fundamental principles of risk management. It examines different types of risks, methodologies for assessing and quantifying them, and common strategies for mitigating potential threats. The content draws upon diverse examples from sectors like finance, healthcare, and engineering to illustrate practical applications of risk management concepts.

Short Answers

Table of Contents
INTRODUCTION...........................................................................................................................1
Short Answer Responses..................................................................................................................1
1. Risk and Associated Risk........................................................................................................1
2. Risk Management Process......................................................................................................1
3.Elements of risk .......................................................................................................................1
4. Risk context in an Woolsworth limited Company..................................................................2
5. Key steps in risk management process....................................................................................2
6. Identify potential areas or sources of risk within an organisation..........................................2
7. Fish bone diagram to identify probable cause of the sales decrease.......................................3
8. Assess the likelihood of risk...................................................................................................3
9. Impact of risk..........................................................................................................................3
10.Risk treatment........................................................................................................................3
11. Risk Treatment strategies: Avoid, Limit, Reduce, Transfer, Retain, Defer and Mitigate.....4
13. Role of the manager in term “code of practice”....................................................................5
15.Different mediums that can alert people to potential hazards, risks and associated risks in
the workplace..............................................................................................................................6
16- Sources for determining the level of risks in the organisation.............................................6
17- Strategy to implement for gaining interest of people in WHS legislations..........................7
CONCLUSION ...............................................................................................................................7
REFERENCES ...............................................................................................................................8

INTRODUCTION
Risk assessment is a tool of identifying the risk. It is a process to identify the risk and
harmful factors that created in the organisation and after such analysing the evaluation and
appropriate steps are taken to check the process and to control the and related factors
(Assessment, 2000). The present report is based on Woolworths limited company which is a
major industry in retail sector and the second largest company in Australia by revenue. This
report also tells about that how the company using down the risk assessment factor and
evaluating down the risk factors while conducting down the business activities.
Short Answer Responses
1. Risk and Associated Risk
 Risk: It is a result of uncertainties, nothing can be predicted that what will happen in the
future.
 Associated Risk: Associate risk is risk which comes under business and business should
calculate the risk factors that been involving under the business and calculate there risk
factors(McNeil, Frey, and Embrechts, 2015.). Whether they made an impact on business
performance directly or indirectly. The business considered down the risk factors and
check that whether such factors are important, not so important or neutral (Li, 2014).
Important factors are those factors that to be considered down the business otherwise it
leads to an insolvency and give harmful losses to business. Neutral factors are those that
gives down losses to the business but did not result in insolvency of firm and not so
important risk these are those that incurred normally in business.
2. Risk Management Process
Risk management is a process of identification of risk, evaluating the risk at each course,
managing the risk and monitoring the risk by providing appropriate solutions to it in order to
reduce down the adverse impact that made on business which affects down its
performances(Glendon, Clarke, and McKenna, 2016. ).
3.Elements of risk
Identify the risk that what type of risk is involved whether such risk is effect down the
business performances or not. Whether such risk which been involved is important or not for the
business perspective.
Monitor the risk at all level so that proper solutions can be provided and risk can be treated.
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4. Risk context in an Woolsworth limited Company
The general risk factors are there in every business and here are different person involving to
control down the risk factors such as:
 The management board is there who conduct periodical review and reporting to the audit,
risk management and compliance committee.
 Leadership team and managers manages the risk and applying the principles under
different areas of work perform.
 Employees having a responsibility to manage down the risk while conducting out
business operations.
5. Key steps in risk management process
 Identification of risk: The first step under the risk management process is to identify the
risk factor whether the risk is important, not so important, uncover, describe that
involving and what are the appropriate solution will be taken down to control that.
 Analysing the risk: The second step is analysed the risk, once the risk is identified
determine down the consequences that been involving. Analyse the nature of risk and
check whether it affect the business performance in adverse manner or not.
 Evaluating the risk: The third step is evaluating the risk by determining out that whether
it is acceptable by business or not (Farsalinos and Polosa, 2014).
 Treat the risk: Assess the risk and prepare down a plan and implementing it properly to
treat or modify the risks.
 Monitor the risk: The final step is monitoring the risk it is a process of monitoring the
risk by providing appropriate solutions to it.
6. Identify potential areas or sources of risk within an organisation
 Audit areas: the audit which been conducting by an auditor sometimes the risk been
involving and some process are not covered under audit procedure and some times small
areas which not considered by an auditor also effect the business performances.
 New accounting standards: the new accounting standards made involve and changes in
the accounting standards also affect the business performances because it creating a
challenge for the auditors and such person whom prepare down financial statement
(Rabar, Harker and Wierzbicki, 2014).
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 Auditing standards: it also creates down the challenge for the auditors because they have
to change down their technique and read the law again then only he can imply down the
new auditing standards.
7. Fish bone diagram to identify probable cause of the sales decrease
The raw material costs is very high in the market ad company don't much have enough
money to purchased down the raw materials from the market and they purchase down the raw
material normally less than they usually purchase due to lack funds and there sales is also
impacted and company not have proper plans and inadequate cash flow for conducting
promotional activity and that also made down an impact on company's productivity and decrease
its sales by 25 percent(American Diabetes Association, 2016.).
8. Assess the likelihood of risk
Likelihood is nothing it is a frequency value and which considerable easy for a person to
exploit down the situations related to threat. It is a concept that occurring down the risk
potentials and such potential been measured in terms of value such as low, medium, moderate
and high(Lam, 2014.). It is a qualitative assessment which emphasises on quality and it said there
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Illustration 1: Fishbone diagram
(Fishbone diagram. 2016)

is more possibility tat rain will occur on tomorrow (Moyer, 2014). In this the level can be
described in terms, of the situation that arise in case of the service provider and service receiver.
9. Impact of risk
Risk impact is the process of identifying down the probabilities and the risk events that
are occurred in the organisation and it is necessary for the organisation to assess down the
factors. The organisation will give the priority to the risk which is most critical to them and very
considering down such risk factors which effect the business performances(Chance, and Brooks,
2015.). It is important for the risk manager to focus down certain factors and to control the risk at
all levels and reduce down its probability.
10.Risk treatment
Risk treatment is a process to treat the risk and modify the risk by changing down the
consequences that been occurred on livelihood. It can work in four ways:
 Avoidance: Not to take the risk by avoid down the actions related to it
 Reduce: Reduce the risk by adopting down mitigate measures.
 Transfer: The risk which not taken by person they transfer it to someone else.
 Accept: The risk which can not been transfer or avoid should been retained by person
itself.
11. Risk Treatment strategies: Avoid, Limit, Reduce, Transfer, Retain, Defer and Mitigate.
Risk treatment is the action which have to taken by the Woolworth limited to minimize
the risk(DeAngelo, and Stulz, 2015.). Woolworth is the supermarket company which deals in
various products. To minimize the risk management company needs to taken these risk
strategies.
Avoidance: sometimes company avoids small issues during the operations but this
affects more in future for example: Woolworths adopts new technology to perform the work but
new employees doesn't understand the process. This issue will be big if management not taken
any cure.
Reduction: In this risk strategy company needs to take protection while doing any work
for example before making any price strategies woolworths needs to analyse the prices of their
competitors.
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Transfer: In the transfer of risk means company transferral its own hazard to a third
party. For example: Woolworth applies some terms and conditions on the product and services
so that in future customer cannot create any type of difficulty.
Acceptance: In this situation risk acceptance means company choosing to face the risk.
By its own choices for example: Woolworth launch new high range of product they know that
customers are not preferred high cost services.
Sharing: Risk sharing means company share its risk with other organisations for example
Woolworth take insurance of its store to protect their in future risk.
Defer: This risk strategy means company postpone the some risk for future time.
12 Role of manager in legislation process.
The role of manger is play a very important role in terms of decision making. Its role is to
manage the management working in the organisation. In terms of legislation manager needs to
follow all the rules and regulation imposed by government. In Woolworth company it is the retail
supermarket in America. The manager of the company should follow the laws imposed by
government like safety of customer, consumer rights, labour employment. These all factors
should be consider by manager. It helps to maintain organisation image in front of customers. It
is the responsibility of the manger to care of the structure of the organisation and should follow
the guidelines provided by the government. It is required for manager to communicate all code of
conduct to the employees and take follow up to minimize the risk.
13. Role of the manager in term “code of practice”.
Code of practice is the process in which all rules and regulations are mentioned to
perform a particular work. Manager has the responsibility to check the management work
weather all employees follows the rules and regulations or not(Kahn, Liverman, and McCoy,
2014). It is important to maintain the discipline in the Woolworths. It helps to perform the task in
effective manner. Manager of the Woolworths control the unwanted work to create more
productivity among the employees. In code of practise they provide roles and responsibilities of
the employees. It helps organisation to accomplish the goals within a set of structure. In the
organisation the manager plays a very important role. It is the person who communicate the
employees about code of practice to control the things better.
14 principles of risk management
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 Monitor and evaluate In first principle of risk management is to evaluate the
things which happens in the organisation. In Woolworths organisation manager
should evaluate the things weather it is going correctly or not.
 All the organisation functional department should runs systematic according to
the structure form(DeAngelo, and Stulz, 2015.). This principle helps to sustain the
management and remove the risk.
 Organisation environment must be dynamic and uncertain. It is main thing to
adopt the best strategies to remove those uncertain situations.
 Manger should take proper control on following activities which is running in the
business
 Organisation decision making process needs to be proper form according to the
customer needs this factor helps to remove the future risk.
15.Different mediums that can alert people to potential hazards, risks and associated risks in the
workplace.
 Woolworth can give training to its employees for health and safety. In this training
program managers can make them aware what action need to take if fire or such type of
safety risk arise in the organization. This will help in altering people with this hazard and
minimizing such issues in workplace.
 Fire safety alarms and other equipment needs to be available in the organization so that if
any consequences arise in the business then all people can get information about it and
they can take immediate action on it. By this way effects of risk can be minimized in the
workplace.
 Use of electronic communication would be better option because by this way entity will
be able to make people alter with potential risk that may impact on business. Conducting
face to face meeting is another way through which managers can make people aware with
hazardous activities.
16- Sources for determining the level of risks in the organisation.
The company which wants to understand the level of risks they need to get some
information from some sources. Sources for getting information about level of risk in
Woolworths limited are as follows:
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 Employees- The organisation can ask from its employees about the risks they face.
Employees are person who are directly related by the risk which is taken in company.
Their perception about the risk taken matters for the Woolworths limited.
 Financial condition- The cited organisation should know the financial condition of the
company. Company should be financially stable to take the risks. Level of risk depends
upon the financial stability of organisation.
 Managers- For taking risk the company need efficient managers to manage the level of
risks. Managers of Woolworths should take all the responsibility of risks taken in the
company.
17- Strategy to implement for gaining interest of people in WHS legislations.
Strategy is needed by Woolworths limited to implement for gaining the interest of people
in WHS legislations. This strategy should include these points which are given below:
 Information- Management of company should provide all the information about
legislation to its employees. Organisation should tell all the benefits of following this
legislation which will be given to employees. It is necessary to give all the information to
the employees.
 Difficulties- Employees should also be told about the difficulties they will face for not
following the WHS legislation in Woolworths.
 Benefits- The cited company should tell the employees about the benefits they will get by
this legislation. Like, it will provide safe and secure working environment. This will help
the employees to increase their efficiency by working in healthy environment.
18 Strategy to maintain the employee relation
The main attractive strategy to maintain the employee relation is communication strategy.
Between the employees it is very important that their should be a proper communication channel
small business involves many short communication between the employees which is very
effective and helps to give more productivity in work.
19. Hierarchy of risk control.
Hierarchy of risk control gives help to minimize the first step is to Elimination means
remove the risk involver factors from the working environment. Second step is to substitution
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means ask user to take other alternative path to do the work. Third step is enginnerin controls
means control the unaffectionate work. Fourth step is to take administration controls in this
process company removes pitfalls in administration department. Las t process is to control the
risk is personal protective equipments. To take precaution from the hazards.
20 (3 )examples of insurance available
Fire insurance, life insurance, vehicle insurance these three examples are protected the
company from future risks. Insurance is the life jacket for the company to sustain in the market.
21.Describe each of the following
 Duty of care:Tort is a kind of civil wrong that opposed to criminal wrong. The duty of
care is considered to be a legal obligation that created on parties requiring to the
adherence rules, policies and set standards of reasonable care to be taken while
performing down an action that could foreseeably harm others.
 Company Law:Company is an artificial person created by law, having everlasting
existence, perpetual, succession and separate common seal or legislation.
 Contract law:It is an agreement i.e., offer and acceptance of offer which enforceable by
law and which create legal rights and obligations of parties.
 Environmental law:Environmental law is a law that been establishes to protect down the
natural resources and surroundings in form of air, water and land and to preserve down
the wildlife and save en compassion for living creature.
 Freedom of information:According to this act person having a right to take down
information and these rights provide by constitution to him and cannot be restrained by
anyone.
 Industrial Relations Law:It is the law that been created under industry so that work can be
conducted between employee and employees and, relationship will be created between
them, disputes and conflicts can be solved which arise at the workplace.
 Disability legislation:The main aim of this act is to provide essential services to the
people who suffer from various disabilities so they also been capable and they don't have
to depend on anyone for their livelihood.
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CONCLUSION
From the above report it was explained about the risk management that risk is the main
pitfall in the organisation. It was concluded the principals of the risk management that risk
should be evaluated properly and the strategies we taken to remove the risk like mitigation,
defer, Retain. In this above report explained about the risk management of Woolworths. It is the
well known supermarket in America.
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REFERENCES
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Chance, D.M. and Brooks, R., 2015. Introduction to derivatives and risk management. Cengage
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DeAngelo, H. and Stulz, R.M., 2015. Liquid-claim production, risk management, and bank
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Assessment, P. R., 2000. Down syndrome: prenatal risk assessment and diagnosis. Am Fam
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Farsalinos, K. E. and Polosa, R., 2014. Safety evaluation and risk assessment of electronic
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safety, 5(2), pp.67-86.
Li, W., 2014. Risk assessment of power systems: models, methods, and applications. John Wiley
& Sons.
Moyer, V. A., 2014. Risk assessment, genetic counseling, and genetic testing for BRCA-related
cancer in women: US Preventive Services Task Force recommendation statement. Annals of
internal medicine, 160(4), pp.271-281.
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Rabar, S., Harker, M. and Wierzbicki, A. S., 2014. Lipid modification and cardiovascular risk
assessment for the primary and secondary prevention of cardiovascular disease: summary of
updated NICE guidance. BMJ: British Medical Journal (Online), 349.
ONLINE
Fishbone diagram. 2016. [Online]. Available through: <https://www.isixsigma.com/tools-
templates/cause-effect/cause-and-effect-aka-fishbone-diagram/>.
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