BSBRSK501: Risk Management Strategies at Woolworths Australia

This report provides a comprehensive analysis of risk management at Woolworths Australia, conducted as part of the BSBRSK501 Manage Risk assessment. It begins by introducing Woolworths, outlining its background and commitment to risk management. The report then delves into the context of r...Read More

BSBRSK501 MANAGE RISK
MANAGE RISK
System04116
2/22/2019
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Contents
Introduction......................................................................................................................................2
Background of the organization.......................................................................................................2
Context of Risk................................................................................................................................3
Identification of Risk.......................................................................................................................6
Analyzing of Risk............................................................................................................................8
Treatment of Risk............................................................................................................................9
Conclusion.......................................................................................................................................9
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Assessment 2: Managing risk of woolworths Australia
Introduction
This project is about to conduct risk management process of an organization. For this purpose, a
Woolworth Australia is chosen to conduct risk management process. The management of risk is
mandatory for every organization because without managing risk, a company or an organization
cannot define its future goals or objectives. If an organization defines goals or objectives without
considering the risk, the chances of losing direction are possible or increased. Therefore, for the
success of an organization, risk management process is followed and overcome those risks
associated while doing analysis of risk in the organization. In this project, the organizational
policies, procedures, process for risk management is discussed according to the current risk
management standards. The persons who are involved in this process and the factors, which
affects the risk management process is discussed. The risk is identified from the Woolworth
Australia and analysis those risks for further evaluation. The treatment for risk in the
management is discussed with the help of various facts or figures of the woolworths Australia.
Background of the organization
Woolworths group limited is a larger Australian enterprise with wide retail interest all over New
Zealand and Australia. It is on second number position in Australia by income after Wesfarmers
and on second largest in the New Zealand. Moreover, Woolworths is the biggest deprived retailer
of liquor in Australia and major hotel and gaming poker operator of machine in Australia. Its
main operations include supermarkets in Australia and New Zealand.
The woolworths limited group is committed to the constant development of a planned and
coherent wide approach to management of risk reinforced by a risk aware culture. This policy
applies to every individual who work for woolworths in Australia. The risk management
framework of enterprise supports the policies. Woolworths has adopted the process of risk
management defined in the Australian standards. This process is set out in the company structure
for risk management. All systems of risk management and approaches should be reliable with
this process (Woolworths group, 2019).
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Context of Risk
Woolworths is restricted to meeting high standards in the ways they bring about their business.
They strive for support Woolworths to attain its business goals by successfully managing its risks
that creates stakeholders value and safeguards their people, customers, and assets. An effective
management of risk is important to supporting Woolworths strategy, values, purpose and the
ways of operating. The purpose of this strategy is to clear Woolworths general approach and
principles accepted in relation to the management of risk (The economic times, 2019). The
context of risk includes :
Organizational process-
The Woolworths follow a process to manage the risk according to the Australian standards:
Step 1. Identification of risk: The Woolworths commissioned EA partners for auditing their
supermarkets chains to identify risk associated with it. They make risk analysis report which
helps in identification of risk and events that have a negative impact in attaining the goals of the
organization (Eastern Kentucky university, 2019).
Step 2. Assessment of risk: The risk assessment is in demand today because of increasing
demand in transparency that turns around risks. The risk is assessed by continuous scrutiny of
business whether right mechanism is in place at the time of crisis. The focus is on delivering
right information and so on.
Step 3. Mitigation of risk or control of risk: The risk is control by dividing key processes of
Woolworths supermarkets divisions and identifying, measuring and prioritizing the main risks to
each process of the business. Each risks faced by the company at every phase of operations has
been defined and suitable measures to control those risks which has been suggested under the
heading of response (Grabowski, 2008).
Step 4. Review of risk control: The risks which has high impact given a priority in the listing ,
compliance and the standards that is to follow in response is stated under the standard support
against the risk
Organizational Procedures –
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The following are the policies and procedures to manage the risk in the organization:
1. Precautions for equipment’s such as training regarding safety, seminars for inspections
and usage of products and services;
2. Selecting and hiring employees ;
3. Arranges Training, seminars, classes for employees of the organization;
4. Make contingency plans in emergency case;
5. Confidentiality of information or data at workplace;
6. ethics in the organization
7. Detailed records of employment training;
8. Employee or worker dismissal (Kloosterman, 2019).
Organizational requirements:
1. Information and resources: For managing the risk in the organization, the detailed
information is required to identify the risk. This information helps in assessing the risk
and control the risk in the organization. Various resources are used to extract information
that helps in risk management process.
2. Communication and consultation: An organization required communication and
consultation plan at early stage of the risk assessment to identify how the risk
management process will be shared to important stakeholders and what should be the
timeframes for the plan.
3. Review and monitoring: The company require to monitor and review the risk whether it
is adaptable to or evolve with external and internal environments and the actions or
perceptions of stakeholders (Chapman, and Ward, 2009).
In the process of management of risk following internal and external stakeholders of Woolworths
are involved such as:
External stakeholders-
Customers: The Company makes every effort to satisfy the requirements of the customers in
respect of quality, sustainability and value.
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Suppliers: They provide goods and services with satisfactory terms and support for the
development in a long-term and maintainable way.
Communities: They operate in Australia and New Zealand as well as in South Africa and eleven
other sub-Saharan African countries. They involved in the upliftment initiatives of community in
which they operates.
Shareholders: They have several shareholders or investors in South Africa and abroad (Brown,
2019).
Internal stakeholders-
Managers: The members of the Woolworths involved in the process of management of risk in the
organization.
Employees: They employ about 46000 individual and invest in their skills, learning opportunities
and conducive operating environment.
Owners: The owners are also helps in managing the risk in the organization to achieve success in
future.
The context of risk also includes environmental factors such as:
Political: Woolworths analyzes the various factors before entering in a certain market and these
factors are military invasion risk, corruption level, protection of intellectual property, tariffs and
trade regulations, incentives and tax rates etc.
Economical: Economic factors that Woolworths considers while analysis the risk is the stage of
business cycle (like prosperity, recession, recovery). An Inflation rate, comparative advantage of
host country, efficiency of financial markets also considered by Woolworths.
Social: The Woolworths analyzes the social factors that also affect the management process of
risk. These factors are culture, education standards and skill level of the population. Different
cultures in the organizations results in cultural risk because of language, norms, customer
preferences and customs. The success of the Woolworths marketing based on the skills of the
individuals in an organization.
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Legal: Legal factors also affect the process of risk management as negligence in compliance
related to business law cause any loss or damage. Woolworths faces many legal risks such as
compliance, regulatory, operational risk. for overcoming this issue, the woolworths properly
follow business activities according to the prescribed law.
Technological: The technological factor disrupts the Woolworth’s business activities due to
failure of technology such as information or data security incidents. For managing this risk, The
Woolworths secure their passwords and update their software on regular basis to the latest
version.
Policies: The policies are set to increase the overall awareness of risk and enables to the
managers and who are responsible for reporting of risk for identification, assessment and control
or mitigation of risk within their specified areas (Woolworths group limited, 2019).
Identification of Risk
The risks that are identified after studying the annual reports of Woolworths are material
business risk such as: (Martin bauer, 2019).
 Strategic risk
 Operational risk
 Compliance risk
 Financial risk
Strategic risk: An environment of retail trading will continue to be competitive, operated by new
entries, disruption of technology, internal and external drivers of risk and impacted by varied
needs of customers and its expectations. Failed to successfully respond to these factors of
environment, organization’s competitors and changing market place or condition may influence
shares of market and performance of business. The company is committed to delivering on their
strategy through ongoing emphasis on their clients as well as initiatives for transformation
(Bevilacqua, and Ciarapica, 2018).
Mitigation or control of strategy risk:
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 The Woolworths has an approved strategy of board which driving the first culture of
customer and enables growth in investment including their network of stores, digital
channels and technology.
 Establishment of delivery offices to effort transformation initiatives
 Their long and short- term plans for incentives are associated to their first strategy of
customer.
 Their corporate responsibility strategy 2020 identified their goals or objectives to
improve sustainability and reduce impact of environment on operations.
Financial risk: The availability of finance, Capital management and liquidity are essential to
finance the joint business operations and growth. Moreover, a failure of general merchandise
business, adverse interest rates and fluctuation in foreign exchange rate affects the profitability of
business (Brunner, 2019).
Mitigation or control of financial risk:
 Woolworths treasury policies which is approved by board to govern the group’s financial
risks of management including interest rates, liquidity and risk of foreign currency.
 They have board-approved plan of turnaround for their business of general merchandise
that is regularly monitored and they anticipate the future sales of petrol business that will
improve their position of capital (Schenkelberg, 2019).
Risk register
Risk
Name
Probabil
ity
(A)
Impa
ct
(B)
Ris
k
scor
e
Contingenc
y
Action by Resource
s
By
when
status
Strateg
ic risk
2 1 2 Efforts
Transformat
ion
initiative,
Managem
ent
Manpow
er ,
informati
on
Next
year
Not in
action
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long term
and short
term
incentive
plans
technolo
gy
Financi
al risk
3 2 6 Anticipate
future sales,
regular
monitoring
of general
merchandis
e
Finance
executive
Annual
reports
of
previous
years
Curre
nt
year
In
progre
ss
Risk of
Shop
lifting
3 1 3 Place their
checkout so
that
customers
should pass
it while
exiting.
General
manager
Manpow
er,
technolo
gy
Next
year
In
progre
ss
Analyzing of Risk
As to refine the project schedule, it is require assessing the several risks that are identified.
Identifying the probability of each risk will assist to manage the worst risk. The initial step in
determining whether to deal with a risk proactively is assessing the probability that it will occur
(Infront analytics, 2019).
There are following schemes to define the probabilities that a risk will occur:
 Chances of occurrence: it is an estimation of how risk or any uncertain event occurs as
probability. Probability lies between 0 and 1. Which means 0.0 states that situation will
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not happen in future, and 1.0 state that it will always occurs. It can also be expressed in
percentage.
 Ranking of categories: The risks are classified into different categories that represent
likelihood of Woolworths. It can be represented by using low, medium, high, often,
always, rarely, sometimes, and never.
 Ordinal ranking: The risk is ordered so that the first risk is the most likely to occur and
second risk is the next most likely to occurs and so on.
 Relative probability of occurrence: If they have two possible risks, they make choice
based on most likely to occur.
Treatment of Risk
Risk will not completely remove but it is the aim of Woolworths to make tolerable. When
selecting treatment of risk, the resource allocation should be relative to the identified risk rating
level (Ranong, and Phuenngam, 2009).
The process is followed for treating the risk:
1. Prioritize an unacceptable risk.
2. Establish objectives of treatment
3. Identification and development of risk treatment options
4. Evaluation of risk treatment options
5. Detailed or complete design of risk treatment options
6. Review of design of risk treatment
7. Implement and communicate the options of risk treatment.
Conclusion
It is concluded that management of risk is mandatory in every organization. Woolworths in
Australia follows a risk management process to manage risk in an effective manner. As it is
studied, that company cannot reach at the level of success if they are operating without
considering the risk. Therefore, to achieve success, it is required for an organization to follow
effective organizational policies, process and procedures. For managing risk, the company
should identify the risk, assess the risk associated within the organization due to environmental
factors or stakeholders. Evaluate those assessed risk in an effective and efficient manner to
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survive in a competitive market. If any risk is evaluated from the assessment then it is the duty or
responsibility of the company to have effective measures for the treatment of risk. By this
company can achieve or attain its goals in the prescribed time and manner.
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