Risk and Crisis Management Proposal for KFC: Assessment 2 Report

This report presents a comprehensive risk and crisis management proposal for Kentucky Fried Chicken (KFC). Building upon a previous environmental scan and risk identification report, the assignment details various internal and external risks, including human, technological, economic, political, an...Read More

Running head: RISK AND CRISIS MANAGEMENT
Risk and Crisis Management
Name of the Student:
Name of the University:
Author Note:

1RISK AND CRISIS MANAGEMENT
Executive Summary:
The following essay is a continuation of the assignment 1 which was on the environmental
scan and risk identification report of KFC. Various factors of risk were identified in the
previous report which were directly or indirectly affecting business operation of KFC. These
factors are internal or external in nature and can be caused during any time of the business
operation. Identification of risk is the first part of the risk management process which had
been done in assignment 1. The most crucial and most important part of the company is to
make a crisis and risk mitigation plan or proposal.

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Table of Contents
Summary of Risk Table:............................................................................................................3
Introduction:...............................................................................................................................6
Discussion:.................................................................................................................................6
Conclusion:..............................................................................................................................12

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Summary of Risk Table:
Particulars Effect on
Stakeholders
Probability Of
occurrence
Impact on the
company
Risk
Mitigation
Strategy
Internal Risk
Human risk This risk affects
all the personnel
who are directly
or indirectly
involved in food
handling.
Since KFC has
its outlet’s across
the globe. The
chances of
human risk is
relatively high.
The
consequences of
this risk is major
to the company
as it will affect
its reputation and
brand image.
It should
be
mitigated
by the
elimination
method.
Technological
risk
This risk has an
effect on the
management and
shareholders of
the company.
This risk is very
much likely to
happen which is
almost certain.
As technology
keeps on
changing and
innovating.
The
consequences of
the risk will be
minor as KFC is
multinational and
will be able to
adapt easily to
the new
technology
This risk
can be
avoided by
continuous
research
and
analysis of
new
technology.
Physical risk This risk has an
effect on the
employees and
The chances of
this occurring is
probable as it
The impact
would be
insignificant in
The
elimination
method is

4RISK AND CRISIS MANAGEMENT
consumers of a
particular outlet.
can happen to
any of the outlet
of KFC
relation to the
whole company
as it is primarily
concerned to one
outlet
used and
post that
substitution
method.
External risk
Economic risk This would affect
all the direct as
well as indirect
stakeholders of
the company.
The probability
of this risk is
very high as
KFC is a brand
all over the
globe and any
slight changes
will affect it.
This risk affects
all of the
company’s
profitability as
well as
performance
presentation.
This risk
can be
mitigated
using the
hedging
tools as
well as
substitution
method of
risk
mitigation.
Political Risk This risk affects
the management
the employees
and the
consumers of
KFC.
The chances of
this risk is very
minute as it will
affect the
company in a
particular
environment.
The risk affects
operations of the
company in a
particular area or
sector and is
focused on that
area only.
This risk
can be
controlled
by the
elimination
method.
Environmental This risk affects The chances of The risk effects This can be

5RISK AND CRISIS MANAGEMENT
Risk mostly the
employees and
consumers of the
company.
this risk is most
probable and
cannot be
predicted with
certainty.
the operations of
the company and
the severity of it
depends on the
avoided by
using the
substitution
method
along with
the use of
alternatives

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Introduction:
The importance of this crisis and risk mitigation plan is immense in almost every
business operation. Any type of risk can pose a serious threat to the going concern concept of
a firm, which means a risk might lead to the cause of bankruptcy of the company. It might
also lead to suspending of operation in that particular place.
The following essay seeks to elaborate a description of three types of risk along with
methods to mitigate those risk, time required for each strategy to be implemented, how the
stakeholders will be affected. Also it aims to provide an overview of the means required to
mitigate these risks or to keep the risk under the tolerance level. The following essay is an
overview of the risk management proposal or plan for Kentucky Fried Chicken (KFC).
Discussion:
Types and Level of Risk to KFC:
Human risk is the biggest risk faced by KFC in its business. This is a type of internal
risk which is generated within itself the business and can be assessed analysed only from
within the business. The level of human risk is very high in the business as KFC employs
humans at all levels of the production which ranges from food production to handling. KFC
needs to make proper plan and procedure to mitigate this risk (Sadgrove, 2016).
The major risk faced by any international brand is from the economy. The changes in
the economy affects the business in a positive or a negative way. This creates a sense of un-
stability in the business which severely affects its valuation and profitability. KFC being an
international brand is also affected by such changes in economy. This relates to the economy
cycle, changes in exchange rate, trade agreements between countries and many more such

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actions. The level of Economic risk is very high in KFC as it is an international brand and has
its operations all over the globe. This leads to making KFC susceptible to all the types of
economic risk. This type of risk is quite prevalent in the business of KFC (Rebelo, Silva, &
Santos, 2017).
The risk caused by the changes in the environment is out of control of every human
being. The changes in weather or a natural calamity affects the KFC business in a drastic way
as the business is dependent on poultry and vegetables which are prone to get destroyed with
weather changes. Thus KFC is affected by the environmental factors in a big way and has to
assess reasonable measure to mitigate this risk. The level of this risk is moderate to high as
KFC needs to follow all the norms in which the environment is a concern. (Born & Pfeifer,
2014)
Strategies or Methods to Control Risk:
In above the different types of risk are discuss that is face by the company KFC. To
mitigate the risk the company follows different strategies and methods to treat the risk. The
strategies to treat human risk are the KFC should imply vigorous recruitment process,
extremely thorough and careful training of the staff, measuring or monitoring the
performance of each employees and having confidential staff support network. This are the
example that can be used to eliminate the human risk. Technological risk can be treat by
ensuring the backup source of energy, to ensure that the software that KFC handle in
maintaining day to day activities is kept up to data and moreover protected from cyber-
attacks. The company should invest in research and development to analysis a new
technology so that KFC can maintain its quality. To eliminate physical risks the company
should ensure proper insurance policies and ensure safety measures in the work place. This
are methods to control the treat of internal risks (Ray, Kumar, Reed & Agarwal, 2014).

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The external risks were categories as economic risks, environmental risks and
political risks. The strategies which is follows to mitigate economic risks of KFC are to
maintain the exchange rate fluctuations the company can used hedging techniques. Moreover
they should diversify their business into different sectors. Every business suffer from political
risks. KFC due to its global presence suffer from political risks. The strategies can be used to
mitigate political risks is by managing the credit risks before any crisis arises and to review
its credit control procedures. The mitigation of political risk can also be done by making an
advance plan or crisis plan before the political violence occur. Political risk insurance policy
can help to cover the loss from political violence, currency which cannot be converted, non-
payment and from properties that are taken away by government.
Time to Implement Each Strategy:
Before implementation of each strategies, KFC required to analyse each risk
carefully. KFC should have proper planning before implementing the strategies to mitigate
the risk. The timeframes to mitigate internal risks is less with compared to mitigate external
risks. The time required for KFG to mitigate political risk, environmental risk and economic
risks cannot be defined exactly. It is difficult for KFC to control the actions of competitors
and customers as it is beyond the control.
The implementation of strategies to mitigate human risk might take more than one
month. As to provide good training to the employees working under KFC it generally
required one month training. Even to make its recruitment process robust it required a time of
one month and to monitor the performance it does not required any time to implement. The
time to eliminate the technological risk depends upon the availability of the technology. The
research and development departments might require years to innovate technology to
compete with competitors. And regarding installation of software it hardly requires hours. For

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the mitigation of physical risk KFC required to open up policies. It hardly required one month
for implementing strategies to mitigate physical risk (Engemann & Henderson, 2014).
Steps taken by Stakeholders in implementing the plan:
Human risk can be avoided by all stakeholders of the company who are responsible
for the proper functioning of the company. The management should formulate policy and
procedure for the risk mitigation while all the employees should follow the policies laid down
by the management of KFC. The first part of the risk plan is managed by the management
while the second part is applicable to the employees of KFC. (Drennan, McConnell, & Stark,
2014)
Economic risk is a risk which affects the entire company as KFC operates all over the
globe. The management is responsible in formulating the effective strategy and team for
assessing economic risk. Overall the mitigation of this risk lies with the management who are
responsible to see whether all the strategy to avoid this risk or reduce this risk is in place.
(Brink 2017).
Environmental Risk mitigation can be implemented by the management and the
shareholders as well as the government. The management should decide strategy which is
beneficial to the environment as well as cost efficient. The shareholders should approve the
strategy proposed by the management to avoid this risk. The government can provide
relaxation on products used by the food industry packaging which is beneficial for the
environment. This will encourage KFC to use these products in its business and thus avoid
the environmental risk (Liu & Wang, 2014).
Resources required to implement the plan:
Mitigation of human risk would require KFC to spend money on the hiring of experts
who are able to train the staff how to avoid human risk. The team of experts could be full

10RISK AND CRISIS MANAGEMENT
time employees or could be external help. The employees need to be trained with each and
every aspect where risk or human error is most probable to reduce the occurrence of this risk
(Griffiths, 2016).
Since KFC is an international brand the management needs to hire employees or
experts who can forecast the change in economy accurately. They would also devise methods
to hedge the currency risk faced by KFC. All the hiring and purchasing hedging products to
counter economic risk KFC needs to spend money while hire additional staff to assess and
manage this risk at the executive level (Epstein, 2018).
Environmental risk would require KFC to spend money on products which are
environment friendly, hence to avoid this risk. Since usage of plastic is harmful for the
environment it should be substituted with environment friendly products. This would require
KFC to hire additional staff who are experts in producing this commodities and would have
to invest in machinery which produce these products. Also it would have to hire staff which
would monitor the government regulation impacting the food industry or KFC all around the
globe (Davies, 2014).
Updating and Checking the Risk Proposal Plan:
Human risk can occur any time and regular checks are required to see that all the
probable reason which can cause human risk are covered by the policy and protocol. The risk
management team has to update the policy and protocol to avoid all chances of human risk
which might be new and not covered by the existing protocols of KFC (Hopkin, 2018).
Economic Risk changes with time and needs constant analysis by the risk
management team of KFC. Since the economy is very volatile the risk management team has
to update its strategies on an ongoing basis to hedge it. The management has to check

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whether any changes in economy is creating any new risk which is a threat for KFC (Graham
& Kaye, 2015).
Environmental risk is mostly based on changes in the government regulation which
can make the existing protocol of KFC for environmental risk useless. The risk management
team has to see and update this risk if only changes in government regulation arises.
Risk Occurrence despite prior planning:
If human error occurs despite of the implementation of the risk mitigation strategy
like failure at the employee level and it leads to contamination of food. The problem can be
tackled by KFC by assessing causes of the failure and tackling the damage by compensation
to the aggrieved consumer. The assessment of risk would lead to the shortcomings of the
policy which can be updated to provide a better policy which would avoid any future such
failures (Zhu, Anagondahalli, & Zhang, 2017).
Economic risk is difficult to predict and even after taking all the necessary
precautions this risk can affect KFC. This risk will affect the business operations of KFC on a
macro level depending on the intensity of the economic factor. If the economy enters into a
recession it will lead to forming of loss making KFC outlets which need to be closed. This
will lead to reduction in business as well as causing loss of employment for a lot of
employees (Yang, 2014).
Environmental risk is a natural event as it might occur even after necessary
precautions are taken by the management. The post risk activity would include
acknowledging the impact of the damage done by the natural event and to repair or replace
the damage. If the environmental risk arises from the government regulation then KFC needs
to stop implementing its existing policy and adapt its policy with the new regulations (Noe,
Hollenbeck, Gerhart & Wright ,2017).

12RISK AND CRISIS MANAGEMENT
Business Impact Analysis:
Business impact analysis (BIA) is considered as the standard of the process in case of
determining and assess the potential effects of an intervention relating with judgemental
operations as a result of difficulties, emergency or accident. A Business impact analysis is an
essential factor relating to entities marketing operational system. It includes an investigational
element to disclose any passiveness and planning elements improves strategies for lower
possibilities. The result is a business effect analysis report, which describes the potential
possibilities specific to the organization studied (Cadle, Paul, & Turner, 2014).
One of the basic expectation behind Business impact analysis is that every elements
of the entities is independent upon the continued functioning of every other elements, but that
some are more crucial than others and require a higher segregation of funds in the wake of a
disaster (Liu, & Wang, 2014).
Thus if any of the risk if would arise it would lead to a drastic loss of both reputation
and sales of KFC. If any human error occurs and the quality of food gets spoiled it leads to
consumers being sceptical to the fact of quality of KFC leading to loss of sales. Due to
economic risk the financial statement of KFC is widely affected by the changes leading to
volatility in financial statements. While any environmental risk will lead to losses to that
particular outlet or government regulation will impact the business in that particular region
leading to change in business strategy (Drennan, McConnell, & Stark, 2014).
Conclusion:
The following report is the brief overview of the risk faced by KFC comprising of
both internal and external risk. The degree of each risk and the type of each risk is very big
fundamental to safeguard the business from unexpected losses. The different mitigation

13RISK AND CRISIS MANAGEMENT
strategy along with their drawbacks has been discussed in the report. The time taken for each
strategy to be implemented and the additional requirements has been highlighted in this
report. Along with this the role of different stakeholders has been overviewed with the impact
on the business if such risk takes place. It is finally concluded in this report is that KFC is
vulnerable to various risks and it should mitigate it to avoid unexpected huge losses.

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