Risk Analysis and Management Report: MacVille Pty Ltd Subsidiary

This report analyzes the risk management practices of MacVille Pty Ltd, focusing on its subsidiary, Hurley’s Café, and its expansion into a new location. The report begins with a review of MacVille's operations, including its organizational structure, financial strength, and risk management framework, which aligns with AS/NZS ISO 31000:2009. It examines the effectiveness of MacVille's risk management, the roles and responsibilities of key personnel, and the critical success factors. The report includes PEST and SWOT analyses, risk assessments, and communication strategies with internal and external stakeholders. It outlines the risk management process, emphasizing the identification, evaluation, and treatment of risks, and provides an action plan for risk mitigation and communication. The report also includes emails to stakeholders, and the CEO, and concludes with a summary of findings and recommendations for continuous improvement of risk management practices.

Running head: RISK MANAGEMENT IN SUBSIDIARIES
Risk Management in Subsidiaries
Name of the Student:
Name of the University:
Author Note:

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Table of Contents
Introduction:....................................................................................................................................3
Assessment Task 1:..........................................................................................................................3
Part 1. Review of MacVille Pty Limited:........................................................................................3
Part 2a. Effectiveness of MacVille Risk Management Framework:...............................................4
Part 2(b). Scope of risk management required in your role:............................................................6
Part 2(c). Critical success factors and goals of risk management strategies of MacVille:..............6
Part 2(d). Internal and external stakeholders of MacVille:..............................................................7
Part 1(e). PEST and SWOT:............................................................................................................9
PEST analysis of Australia:.........................................................................................................9
Part 1(g). Risk analysis of the Hurley’s Café for the management of MacVille Pty Ltd:.............11
Part 3. Keeping of records:............................................................................................................12
Part 4. Email to relevant stakeholders:..........................................................................................12
Part 5. Email the CEO:..................................................................................................................13
Part 6(a). Discuss on the findings and critical success factors and goals:.....................................14
Part 6(b). Risk management process of MacVille:........................................................................14
Part 6(c). Communication with stakeholders:...............................................................................15
Part 6(d) and (c). Support and input of CEO:................................................................................15
Part 7. Summary of discussion:.....................................................................................................15
 Copy of the email:..............................................................................................................15

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 Risk management process of MacVille:.................................................................................16
Assessment 2:................................................................................................................................17
Part A.............................................................................................................................................17
Part B (a to d). Risk assessment:...................................................................................................17
Part 2(e). Process of identifying the risks and assessing likelihood, consequences and priority:. 19
Part 4. Communication with board of directors:...........................................................................20
Part 1. Implementation of banking risk management:...................................................................21
Assessment 3.................................................................................................................................22
Part 1. Review of the scenario:......................................................................................................22
Part 2. Action plan:........................................................................................................................22
Conclusion:....................................................................................................................................23
References:....................................................................................................................................24

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Introduction:
Acquisition and merger is one of the strategic business risk management methods which
companies adopt. Brueller, Carmeli and Markman (2018) point out that acquisition and mergers
enable business organisations to acquire smaller business organisations. This enables companies
to get access to the resources and customers’ bases of their subsidiaries. Acquiring companies
are able to get access to the assets like property, financial assets and intellectual properties of the
subsidiaries. Ginsburg, Levin and Rocap (2017) strengthen the argument by pointing out that
acquiring firms buy out the stake of the previous owners while acquiring subsidiaries. King and
Schriber (2016) though do not contradict the opinion of the previous authors, point out that
management of the acquiring companies post buy-out have to acquire the liabilities and business
risks of the subsidiaries. High level of prevailing risks in the subsidiaries are transferred to the
parent company post buy-out and have negative impacts on the business of the latter (Boissel,
Bourveau and Matray 2015). Companies in order to mitigate or at least reduce these risks which
are the transferred to them post buy-out conduct extensive analysis of the risks prevailing in the
subsidiaries. The aim of the report is to conduct risk analysis of subsidiaries by a company
before take-over. The parent company namely, MacVille Pty Limited would be conducting a risk
analysis of its target subsidiary namely, Hurley’s Café.
Assessment Task 1:
Part 1. Review of MacVille Pty Limited:
A review of the case study reveals that several salient features of MacVille Pty Limited
which substantiate the strong documentation the company followed. First of all, the company
held a chain of cafes in Brisbane, Queensland and Sydney, NSW. The company was aiming to

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expand its presence into Toowoomba by acquiring Hurley’s Café. This fact proves that the
MacVille was financially strong and maintained financial documents. Secondly, the company
had a strong organisational hierarchy which operated under the leadership of Paula Kinski, the
CEO. The company had a strong and well established middle level management which was
evident from the operations of every branch under the leadership of dedicated managers and
assistant managers. This proves that the company maintained detailed records of its employees,
their performances and skills as well as competencies. This claimed was strengthened by the
promotion of Ash, who was then the assistant manager at the flagship store of Queen Street to
the position of the manager of Hurley’s Café in Toowoomba post buy-out. Thirdly, the risk
management of MacVille was conducted under the leadership of Finance, Audit and Risk
Management or FARM which in turn operated under the direction of the apex management. It
can be again be pointed out that this strategic alignment of the levels of control to oversee risk
management is not feasible without proper documentation. Thus, it can be established from the
analysis that the company was financially strong.
Part 2a. Effectiveness of MacVille Risk Management Framework:
The risk management framework of MacVille Pty Limited is effective in supporting the
principles and processes of risk management coined in AS/NZS ISO 31000:2009
(Finance.gov.au. 2019). AS/NZS ISO 31000:2009 coins eleven principles. The first principle of
AS/NZS ISO 31000:2009 mentions that risk management aims to create and enhance the value
of the organisation concerned. It can be pointed out that the risk management strategies which
MacVille applies, enhances its value. This is evident that from the fact the company has
established its business in as many as three locations namely, Brisbane, Queensland and Sydney,
NSW. This business expansion would not have been feasible without strong management of

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business risks (Chung 2016). The second principle of the AS/NZS ISO 31000:2009 is that risk
management should be an integral part of the core business. The third principle is that the risk
management should be mae a component of the core decision making process. MacVille
complied with the second and the third policies which is evident from the presence of FARM
committee to oversee the risk management in the company under direct supervision of the apex
management. The fourth policy of AS/NZS ISO 31000:2009 emphasized on explicit address of
the uncertainty while the fifth policy stressed on the need to address risk management in
structured ways. It can be pointed out that the management of MacVille appointed Ash to
conduct a detailed risk analysis of the Hurley’s Café, its target subsidiary prior to taking the
latter over (Roberts, Murray and Kim 2019). Thus, it can be pointed out that the company
addressed risk management in an explicit and a structured way, thus confirming to the fourth and
fifth policies respectively. The sixth principle mentioned that the risk management policies
should be based on the best available information and while the seventh principle mentions that
should be tailored or aligned to the business environment of the organization. MacVille followed
an extensive risk management policy which was documented and was aligned to the meet the
risk management needs of the expanding business requirement of the company. Thus, it is
evident from the discussion that the risk management framework of MacVille was aligned to the
policies coined by AS/NZS ISO 31000:2009. The involvement of the employees in MacVille in
risk management was evident from the mention of the employees in risk management proves that
the company complied with the eighth policy namely, consideration of human and cultural
factors under AS/NZS ISO 31000:2009. The repeated communication between Ash and the
FARM committee on the findings of the risk assessment of Hurley’s Café showed that the
MacVille stressed on the transparent communication between the personnel involved in the risk

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management. This satisfied that ninth policy of AS/NZS ISO 31000:2009 which stressed on
transparency in communication between the parties involved in the risk management. The tenth
policy of risk management principles of AS/NZS ISO 31000:2009 mentions that companies
should be ‘dynamic, iterative and responsive to change’. An analysis of the case study ‘Notes
from meeting with James Mansfield’ mentioned that the managers and assistant managers of the
Toowoomba outlet of MacVille would receive training post takeover (Reynolds and Teerikangas
2016). Thus, it is evident that the risk management strategies of MacVille was dynamic and
responsive to the changing business needs. The risk management training were iterated and
extended to the newly induced managers and assistant managers as well. It can be inferred from
the analysis of the above discussion that the risk management policies of MacVille enforced
continuous improvement, thus confirming to the eleventh policy of AS/NZS ISO 31000:2009.
Part 2(b). Scope of risk management required in your role:
The scope of risk management required by Ash in the role of assistant manager
comprised of several steps. He required to identify, evaluate, control and manage throughout his
operations. He was also mandated to implement the risk management policies in accordance to
the risk management procedures formed by the management.
Part 2(c). Critical success factors and goals of risk management strategies of MacVille:
The critical success factors of the risk management policies of MacVille were its
financial power, its dynamic organisational structure aligned to the business needs and
participation of employees in the risk management strategy implementation. The goals of the risk
management design of MacVille consisted of effective management of the risks so as to mitigate
or at least minimise their impact on the business of the company.

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Part 2(d). Internal and external stakeholders of MacVille:
Stakeholder Internal/external Role in process Issue/concerns
The management
board
Internal Making risk
management
strategies and
directing the
employees down
the hierarchy
1. Reduction in
profits due to
increase in market
risks.
2. Potential asset
loss both tangible
and intangible.
Paula Kinski, CEO Internal 1. Chairing
meetings.
2. Leading the
boards of
directors.
3. Communicating
important business
strategies to
managers and
assistant in
relation to future
acquisitions.
Potential loss of
reputation and
promotion
prospects.

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4. Risk
management
strategies in
relation to
buyouts.
Brisbane,
Queensland and
Sydney
management teams
Internal Management
teams took part in
the decision
making activities
and assisted the
management in
making risk
management
strategies.
Guided,
supervised and led
the lower level
employees.
Faulty reporting of
risks.
Lack of
cooperation from
subordinates.
Ron Langford External Councillor and
landlord.
Potential loss of a
tenant.
James Mansfield Internal Hurley’s store Potential loss of

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supervisor. promotion.
Hurley’s staff Internal Employees. Potential loss of
employment.
Goldsmith
Partners
External Legal and
compliance
advice.
Potential loss of a
client & potential
for being sued for
advice given.
Part 1(e). PEST and SWOT:
PEST analysis of Australia:
Political:
1. Australia is politically stable.
2. Australia has strong bilateral relationships
with both developed and emerging nations.
3. Forms laws like Work Health and Safety
Act 2011 (Legislation.act.gov.au. 2019).
4. The government forms strict IPR protection
laws which enable companies to minimise
IPR risks.
5. The Government of Australia makes strong
environmental laws which companies
including MacVille and its subsidiaries have
Economic:
1. Australia is economically strong and enjoys
a high rate of GDP and per capita income.
2. Fluctuating rate of AUD in the
international currency rate.

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to comply with (Environment.gov.au. 2019).
Social:
1. Increase of awareness about the importance
of risk management in among the companies
n Australia would encourage the owners of
the companies to take risk management steps
more strategically.
2. The spread of awareness among customers
in Australia would encourage the companies
to enforce risk management strategies to
achieve customer satisfaction.
Technological:
1. Advancement of technology would enable
the companies to acquire more advanced risk
management strategies.
2. Advanced information and communication
technology like cloud and web conferencing
would enable the companies communicate
risks more dynamically.
3. Advanced technology like big data would
enable the companies to acquire, manage and
apply a large mass of data regarding risk
management which would in turn enable
more efficient risk management.
4. The advancement of technology has
enabled hackers to get access to the sensitive
business data regarding risk management.
(threat)
SWOT of MacVille Pty Ltd:
Strength: Weaknesses:

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1. Financially strong which is evident from
the profitable business of the company.
2. Well-structured administrative hierarchy.
3. Strong risk management strategies under
the stewardship of FARM and apex
management.
1. The risk management standards of the
subsidiaries may not at par with MacVille.
2. Conducting of risk management analysis in
subsidiaries pre-buyout are expensive.
Opportunities:
1. Implementation of risk management
strategies on subsidiaries.
2. Training of employees on risk
management.
3. Expansion of business by acquiring
subsidiaries (already in use)
Threats:
1. Dynamic market conditions.
2. Lack of strategic fit with the subsidiaries
post acquisition.
3. Achievement of actual risk management
standards at subsidiaries may be below target
standards.
Part 1(g). Risk analysis of the Hurley’s Café for the management of MacVille Pty Ltd:
Risk Scenario
Risk 1: Banking risks 1. The management of the Hurley kept no record of the cash
transactions and any employee could record financial
transactions.
2. There have been thefts of cash.
3. Cash was not deposited into bank on time and there was no
cash vault