BSBRSK501: Risk Management Analysis of A2 Milk Company

This report provides a comprehensive analysis of risk management at A2 Milk Company, addressing various aspects from risk identification to treatment. It begins by explaining the risk management process, emphasizing identification, analysis, evaluation, mitigation, and monitoring. The report also elucidates the purpose and key elements of current risk management standards, particularly AS/NZS ISO 31000:2009, focusing on vocabulary, performance criteria, procedures, and support for managing risks. Furthermore, the analysis includes SWOT and PEST analyses to assess internal strengths and weaknesses, as well as external political, economic, social, and technological factors. The document identifies internal and external stakeholders, discusses communication strategies for risk management, and lists information sources for risk identification. It also employs tools like interviews, SWOT/PEST analysis, and probability/impact matrices to generate a list of risks, analyzes their potential impact and likelihood, and prioritizes them using a risk matrix. Finally, the report proposes treatment options for identified risks, develops an action plan for implementation, and discusses document storage and monitoring processes.

Running head: RISK MANAGEMENT 1
Risk Management Process
Name
Course
Institution
Date

RISK MANAGEMENT 2
Question 1a) explain the process of risk management
The risk management process at a2 Milk Company follows five main steps in risk
management. The first step involves the identification of the risks that may affect certain projects
and their outcome. This can be done through a review of the relevant literature, conducting
questionnaires and interviews, through SWOT and PEST analysis and public consultation.
Secondly, the risks are analyzed to determine the likelihood and consequences of each of the
identified risks. The third step involves the evaluation and ranking of the risks (Aven, 2016).
This is done by determining the magnitude of each risk and examining whether the risk is grim
enough to affirm treatment. In the fourth stage, the managers prepare contingency plans and risk
mitigation strategies to treat the highly ranked risks (Aven, 2016). The last step involves
monitoring and reviewing of the risks. In this stage, the action plans are reviewed from time to
time to determine whether they have a positive impact on risk management. Also during
monitoring, the managers can determine if there are new risks in the organization.
a) Explain the purpose and key elements of the current risk management standards,
AS/NZS ISO 31000: 2009
ISO is a multinational organ charged with the achievement of standardization, reliability and
consistency in risk management by enhancing standards that would apply to all types of risks
(Kerzner & Kerzner, 2017). The current risk management standards have the following key
elements:
1) One vocabulary for risk management. This means that all the stipulations used in risk
management should be consistent with the fundamental process to ensure that
regulation in the standard is practical and rational.

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2) Performance criterion. This element states the key principles of effective and efficient
risk management. A successful risk management process should be based on the best
available information, be timely, systematic and structured. Moreover, a valuable risk
management process should explicitly address uncertainty and be part of decision
making.
3) The procedure of risk management. It includes one, risk identification, two, risk
analysis, three, risk evaluation, four risk treatments and five, monitoring and
reviewing of risks.
4) The support for managing risks. This element requires that organizations integrate
risk management in their decision-making process.
Question 2a) List down the information that you will need to analyze, to develop the scope
and the context for your risk management process for your chosen organization.
1) Information on the past experiences of the company
2) The level of technology in The a2 Milk Company
3) The legal requirements of the company
4) Information about the existing and prospective comp[editors in the market
Question 2b. Do the SWOT AND PEST analysis for your chosen organization
SWOT ANALYSIS
Strengths
Highly trained and technical manpower
The high purchasing power of the consumers
Weaknesses
Seasonal fluctuations in milk production
patterns.
The high cost of technology involved in

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A large number of dairy plants in the company
High demand for milk and its products since it
is a regular part of dietary in Australia
determining whether a cow produces a2 milk
Majority of farmers are unaware of scientific
dairy farming, value chain and clean milk
production.
Opportunities
Increasing export market especially after the
Chinese milk scandal
The growing economy in Australia offers the
company investment opportunities
Demand for milk products is inelastic
Threats
A limited number of cows producing a2 milk
High competition from milk producing and
processing companies in the country
High rivalry from researchers who try to prove
that A1 milk has no negative effects on health
PEST ANALYSIS
POLITICAL
High trade regulations and tariffs
The hazard of military invasion
High levels of corruption especially in food
regulations
High tax rates
High regulations on employment
Economic/LEGAL
Fluctuations in exchange rates
Low education level in the country’s economy
High costs of labour and productivity in the
country’s economy
Economic cycle stage
High rates of inflation
Increase in interest rates
SOCIAL TECHNOLOGICAL
High technological developments by the A2

RISK MANAGEMENT 5
Negative social attitude towards A2 milk
High education standards in the A2 Milk
company
Social trends that may result in a change of
consumer tastes and preferences
company competitors
The low rate of technological diffusion
Question 3. Name at least three internal and external stakeholders and identify their issues
or concerns regarding the risks within your business
Internal stakeholders may include Managers who are decision makers in the company and
have the responsibly of managing risks (Pheng, 2018). Employees: They also identify the risks
in the company and report to the manager's Owners of the company: The owners have the overall
responsibility of the organization.
External stakeholders of a2 Milk Company include the lenders, suppliers, competitors,
debtors, creditors and customers. Outside stakeholders have a significant role to play in the risk
management process. They have vital information about the company, and they can provide
informed ideas that could be used in formulating an effective risk management process.
Question 4: Briefly describe how you will communicate with relevant stakeholders about
the risk management process within your area of responsibility and how you would obtain
support for risk management from these stakeholders.

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Firstly, conduct interviews with the stakeholders to understand their needs and
preferences. Secondly, the risks are identified and assigned to the owners. Look for an
appropriate person to analyze, monitor and respond to the risks (Jepson, Kirytopoulos, &
London, 2018). Lastly, after identifying the risk owners make them aware of what they should do
to manage them. The communication should be simple, clear and precise to the stakeholders.
Question 5: Why is it important to invite relevant stakeholders and seek their participation
in the risk management process?
Both internal and external stakeholders of a2 Milk Company may have useful
information and ideas that can be used creating an effective and efficient risk management
process. They are aware of what happens inside and outside the company (Carvalho,& Rabechini
Junior,2015). They deal with the products, customers and the resources of the company. This
means that they can know the possible source of risks in the organization.
Question 6: List all information sources that you may get from your internal and external
research that will assist in risk identification process.
1) Risk reports and registers
2) Audit reports
3) Internal and external reviews
4) Stakeholder analysis
5) Business impact analysis
6) Brainstorming
7) Working groups
8) Review of literature

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9) Consulting the public
10) Questionnaires and interviews
Question 7: Identify three tools or techniques you used to generate a list of risks that apply
to your scope in consultation with the relevant parties
1) Interviewing the relevant stakeholders
2) SWOT and PEST analysis
3) Probability and impact matrix.
Question 8: Identify at least three risks or hazards from your chosen place of work, analyze
them and determine their potential impact and likelihood from the scope of risk
management.
a) Use the following table for your response
Identified risk Likelihood Impact/ Consequence
The low rate of technology
diffusion
Possible and likely to occur at
sometime
A limited number of
customers which may lead to
low profit
Price fluctuations Likely to occur frequently Low profits to some extent, it
may lead to losses
A limited number of cows
producing A2 milk in the
country
Almost certain to occur in
most circumstances
Low production is leading to
fewer gains.

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b) Using the above risk matrix level, identify the risk rating and prioritize them
by their risk rating.
Identified risk Risk rating as E, L, M, or H Priority as 1,2,3
The low rate of technology
diffusion
H 2
Price fluctuations M 3
A limited number of cows
producing A2 milk
E 1
Question 9. Complete a table of risks for selecting the appropriate treatment for the above
three identified risks. On this table, provide at least two treatment options for each risk
and then select the most appropriate option for treating each of the risks.
Risks Options Most appropriate
The low rate of technology
diffusion
Perform product promotion of
the A2 milk to the customers
and make them aware of its
benefits.
Conduct extensive research to
provide scientific evidence
about the benefits of A2 milk.
The best option is to perform
product promotion to the
customers and making them
aware of the benefits of A2
milk to human health.
Price fluctuations The company can increase the
price of their products to cover
Increasing the price of A2
milk may reduce the demand.

RISK MANAGEMENT 9
the high production cost.
The firm can opt to adopt
improved inventory
management in case of an
increase in the prices for raw
materials.
Adopting improved inventory
control is the best option since
it will not have many effects
on the customers.
A limited number of cows
producing A2 milk
Encourage farmers to rare
cows that produce A2 milk
and providing them with
extension services where
necessary
Conducting more research on
cross-breeding to produce
cows that produce A2 milk
and curb pests and diseases
which may be a threat to them.
The company should conduct
more research on cross-
breeding to produce cows that
produce A2 milk. Also, the
research should cover areas
pertaining to pests and
diseases that may be threats to
the cows.
Question 10 a) Develop an action plan to implement each of the required treatment for the
identified risk based on their priority rating.
Risk Action Responsibl Resources Expected Expected

RISK MANAGEMENT 10
item e personnel required outcome timeframe
A limited
number of
cows
producing
A2 milk
Research
on cross-
breeding
of A2
milk-
producing
cows and
eradication
of pests
and
diseases.
Research
manager
Money to
hire
research
experts
More cows
producing
A2 milk
and that are
resistant to
pests and
diseases
At the end
of two
years
The low
rate of
technology
diffusion
Product
promotion
and
creating
awareness
of the
benefits of
A2 milk to
human
health
Marketing
manager
Money to
pay the
product
promotion
staff
Cars
Fuel
Increased
market for
A2 milk
and its
products
Two
months
Price
fluctuations
Adoption
of
Inventory The
minimum
Two

RISK MANAGEMENT 11
improved
inventory
control
manager amount of
raw
materials
should be
used to
produce
maximum
output.
months
c) How would you communicate the risk management action plan to the relevant
stakeholders within your organization?
Firstly, hold a meeting with the relevant stakeholders and review the action plan before
its implementation. The risk owners are informed of what they are supposed to do to manage the
risk, and the necessary resources are allocated to them.
Question 11a) how will you ensure that all the documents related to the risk management
process are in order and appropriately stored?
Risk management process documents are one of the most vital resources of an
organization. They show that the risk management process was carried out correctly. Moreover,
the documents for risk management process also provide a basis for the most significant areas
that require risk management strategies (Cagliano, Grimaldi & Rafele, 2015) . Therefore, the
documents should be stored in a place that is only accessible by the relevant authority. Also, the
storage of the documents should enhance easy accessibility whenever they are required and

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ensure periodical revising and reviewing when needed. All the new documents should be stored
separately from the old documents to avoid confusion and allow easy identification.
11b) how would you monitor your action plan for implementing risk treatment?
Monitoring should be done by all members of the organization according to their
responsibility in the company. As a manager, it is necessary to carry out periodic reviews of your
risk management action plan to make sure that there are no new risks in the company (Cagliano,
Grimaldi & Rafele, 2015) . It also helps to ensure that the action plan is working in managing the
target risk. If it is not working, the manager identifies another action plan that could be used to
treat the risk.
11 c) Describe the measure of success that you would look to evaluate your risk
management process
Improvement in the value of the shareholders and a reduction in the cost of capital is one
of the most critical success measures in the risk management process. Debt rating agencies and
other regulators can distinguish between different organization’s risk management capabilities
(Cagliano, Grimaldi & Rafele, 2015). A form that can apply an effective risk management
process can achieve a lower cost of capital over time. If a firm’s reputation is growing in the
market due to its ability to manage risks than its competitors in the market, the valuations of its
shares are likely to increase, and its borrowing costs decrease accordingly.
References
Aven, T. (2016). Risk assessment and risk management: Review of recent advances on their
foundation. European Journal of Operational Research, 253(1), 1-13.

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Cagliano, A. C., Grimaldi, S., & Rafele, C. (2015). Choosing project risk management
techniques. A theoretical framework. Journal of Risk Research, 18(2), 232-248
Carvalho, M. M. D., & Rabechini Junior, R. (2015). Impact of risk management on project
performance: the importance of soft skills. International Journal of Production
Research, 53(2), 321-340.
Jepson, J., Kirytopoulos, K., & London, K. (2018). Insights into the application of risk tools and
techniques by construction project managers. International Journal of Construction
Management, 1-19.
Kerzner, H., & Kerzner, H. R. (2017). Project management: a systems approach to planning,
scheduling, and controlling. John Wiley & Sons.
Pheng, L. S. (2018). Project Risk Management. In Project Management for the Built
Environment (pp. 159-176). Springer, Singapore.