Risk Management: Risk Assessment, Strategies, and Business Continuity

This report provides a comprehensive overview of risk management for startup businesses, detailing the importance of risk management, its effect on various business functions, and methods for assessing and managing risks. It evaluates different risk assessment methods such as 'what-if' scenarios, checklists, HAZOP, and FTA, and explores risk management approaches including risk avoidance, reduction, sharing, and retention. The report also identifies key drivers of business risk, such as changes in interest rates, market competition, and natural disasters, and analyzes their impact on business operations. Furthermore, it suggests risk management strategies, approaches to crisis management, and the impact of breaks in business continuity, using Vodafone as a case study to illustrate the concepts.

Risk
Management

INTRODUCTION...........................................................................................................................2
MAIN BODY..................................................................................................................................2
TASK 1............................................................................................................................................2
1. Risk Management....................................................................................................................2
2. How risk management affects different business functions....................................................3
3. Evaluate the methods of assessing risk in business.................................................................3
4. Evaluate the approaches to managing risk in business............................................................4
TASK 2............................................................................................................................................5
1. Main drivers of business risk...................................................................................................5
2. Impact of the different types of risk........................................................................................6
3. Analysis of severity and likelihood of risk..............................................................................7
4. Suggested risk management strategies....................................................................................8
5. Approaches to crisis management...........................................................................................9
6. Impact of breaks in business continuity.................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
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INTRODUCTION
In the financial world, risk management involves the process of identifying possible risks in
advance, assessing them and implementing measures to reduce or mitigate risk (Baryannis and
et.al., 2019). This helps business owners to establish processes to prevent risks, mitigate their
impact, and at the very least assist with their negative effect. Vodafone is telecommunication
sector organization which is selected for the better understanding of risk management concepts.
It is UK based company which is founded in 1982 by Gerry Whent and Ernest Harrison.
This assessment covers the several topics related to risk management such as how risk
management affect the business functions, methods or approaches to manage risk. In addition, it
also covers the others factors like key drivers of business risk, impact of different types of risk
and analysis of likelihood. This report also suggest some risk management strategies which helps
the organization to reduce the impact of risk on their operations, approaches for crises
management and impact of breaks in business continuity.
MAIN BODY
TASK 1
1. Risk Management
It's also the method of detecting, evaluating and managing the risks to the resources and
profits of a company. These challenges or risks may emerge from a multitude of sources, like
financial instability, legal obligations, strategy implementation mistakes, natural disaster. IT
security issues and data protection risks, as well as risk management techniques helps
in to resolving them and these are becoming a top concern for digitized businesses (Behzadi and
et.al., 2018). As a result, the risk management strategy increasingly covers the processes of
organisations detecting and managing risks to their digital properties, including confidential
business data, personally identifiable information (PII) and intellectual property. Any corporation
and organisation faces such risk of unforeseen, adverse incidents that could lead to expensive or
allow it to close forever. Risk management helps companies to try to plan for the unforeseen by
mitigating risks and additional costs while they occur.
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2. How risk management affects different business functions
The effect of risk management is to identify potential issues before they arise, so that
threat-handling measures can be regarded and apart, as necessary, diagonally from the presence
of an outcome or creation in order to minimise negative effects on the achievement of objectives.
Effective risk management involves pre-time and disruptive risk detection during in the team
effort and involvement of relevant stakeholders, as defined in the Stakeholder Participation
Agreement in the District Development Preparation Procedure. Strong management throughout
all relevant stakeholders is needed to make a free and accessible risk exploration and discussion.
Although practical problems are fairly committed from the beginning and come across all
phases of the project, risk management must trust both within and without sources for expense,
plan and minimal risk. Unfortunately timed and disruptive risk exploration is important as it is
inherently simpler, less expensive, and less messy to make improvements and to do the right
work quickly during the prior stage of growth, compared to the current one. Risk management
can be divided into 3 areas: the basic risk management strategy, identification and analysis of
risks and the implementation of defined risks and, where appropriate, the implementation of risk
action plan.
3. Evaluate the methods of assessing risk in business
There are several methods which can be followed by the Vodafone in order to assess the
risk which they can identify in their business (Risk assessment method, 2015). With the help of
such methods, managers are able to identify risk and make action plan accordingly to mitigate
such risk. Some of the risk assessment methods are as follow:
 Using a "what-if" scenario to define risks and threats. What-if concerns are asked
something could go wrong and what might happen next if things were going incorrect.
This type of study is a brainstorming exercise which is conducted by those people who
have experience of locations, procedures and processes that could be subjected to
dangerous incidents and circumstances.
 Using a "checklist" of documented risks and hazards to classify the hazards and threats.
The importance of this form of review depending on the consistency of the assessment
and the interpretation of the collected data.
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 Using a mix of "checklists" and "what-if" research to identify the threats and risks.
Checklists are being used to verify that all appropriate questions are being asked and
addressed and to promote an innovative framework for risk assessment.
 Using the "hazard and operability study" (HAZOP) to identify hazards and potential
risks. If they need to perform a detailed analysis, this approach is for everyone. However,
it needs good management or leadership and it is expensive and time-consuming also. It
also means that they get a very experienced multidisciplinary approach at their side, one
with extensive knowledge of areas, procedures and processes that could be subjected to
dangerous events.
 Using a "fault tree analysis" (FTA) to classify all items which might possibly trigger a
dangerous accident. It begins with a specific form of hazardous incident and then
attempts to find some potential cause.
4. Evaluate the approaches to managing risk in business
There are some approaches which are used by the management of the organization to
managing risk. Risk handling manager of Vodafone can used one or more from them to manage
their business risk. Basically risk management approaches classified into 4 major categories and
these are discussed below:
Risk Avoidance: This involves not conducting an operation that may pose a danger. One
such example is the unwillingness to buy property or enterprise in order to escape legal
responsibility. Avoiding aircraft flights for fears of attempting to hijack is not acceptable.
Avoidance may sometimes be the solution to all risks, but avoiding risks often means missing
out on future benefit that embracing (retaining) the threat may have made possible.
Risk Reduction: Risk reduction or "optimization" requires a decline in the magnitude of the
loss or the probability of potential loss (Bevilacqua and Ciarapica, 2018). For example, sprinkler
systems are established to establish fire to minimize the risk of flame loss. This approach can
mean a higher loss of water damage and also may not be sufficient. Halon fire extinguishers may
reduce this risk, but the price may be unaffordable as a solution.
Risk Sharing or Transfer: The word 'risk transfer or sharing' is sometimes used instead of
threat sharing throughout the incorrect assumption that they can transfer the threat to a third
party via insurance or outsourcing. In fact, if the insurance agency or contractor goes bankrupt or
winds case in public, the initial liability is liable to be reverted to the very first party. As such, in
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the language of researchers and academics alike, the procurement of an insurance policy is often
defined as a "risk transfer”.
Risk Retention: It means recognising a loss or gain from either a threat when an event
occurs. Real self-insurance is also in this classification. Risk retention is a feasible method for
low risks where even the cost of risk protection will be higher over period than the overall losses
suffered. All threats which are not prevented or moved shall be maintained by default. This
involves risks which are so high or devastating that therefore these could not be protected
towards or the premiums will be inadequate.
TASK 2
1. Main drivers of business risk
There are several drivers of business risk which identified in the organizations and
managers of Vodafone should consider this driver to formulate their own risk management
strategies. Some of the drivers of business risk are as follow:
Changes in interest rates and foreign exchange rates: Change in interest rates and
foreign exchange rates arise as a function of the nation's economic situation and changes in the
international currency market (Borkovskaya, Degaev and Burkova, 2018). This occurs regardless
of external influences. Because once interest rates are raised on the market, they increase
Vodafone's monetary cost and also make it hard for the company to keep raising bank financing.
From the other hand, when there is a relatively high when compared in the foreign exchange
market, the value of the foreign exchange with the business relies on it. As a result, these
changes pose a financial thread to the firm.
Competition in the market: Strong competition in the international telecommunications
industry that drives Vodafone's strategic risk. Market share of company's customers is
diminishing in the market value due to competition pricing and products & service strategy. In
contrast to that new company are coming into the market. Shift in customer purchasing
behaviour: high switching costs for customers due to rapid changes in their purchasing behaviour
and knowledge of new goods / services on the marketplace are also growing the specific risks to
Vodafone.
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Failure in product development: Fail to develop a product that creates an operating risk
for a company. Vodafone operates in the service sector, the inability to deliver an acceptable
level of network services to customers often results in a business operating risk situation.
Natural disasters: The occurrence of natural disasters such as cyclones and earthquakes
poses a risk to the company. This is often seen in telecommunications and power production and
transmission firms as when any natural calamity comes, they decimate cell towers, electrical
polling stations and so on.
Computer Hacking: This could be accomplished by internal or external personnel in
order to gain some unfair influence from the firm (Chatterjee and et.al., 2018). Computer
hacking is performed to access such sensitive information or data relevant to the business. This
can be performed by the competition firms of Vodafone to get information about the company's
shareholders and specially targeted customers. Consequently, this will generate data risk for the
Vodafone Company.
2. Impact of the different types of risk
It is understood that if a risk occurs, there are several complications and uncertainties in the
business operation. The effect of various forms of risk on Vodafone's operational activities is
evaluated in the following points.
Financial risk: In an organization, it was recognised that perhaps the financial risk occurs
in the firm due to adjustments in interest rates and foreign exchange rates. Now, the manner in
which it influences the operational activities which require to identifies to minimize the overall
risk. As financial institutions raise bank rates, banks raise their borrowing interest rates and
therefore raise the interest rates of the loan they have already granted. As a result, this rise in
interest rates raises the financial burden of businesses like Vodafone if they have already
borrowed from the bank. The rise in financial expenses lowers the company's net profits.
Strategic Risk: The telecommunications industry operates in a very competitive
environment, raising the strategic risk that companies like Vodafone can maintain and develop in
the industry (Demek and et.al., 2018). The competitive pressure in the telecommunications sector
is raising both the share of the market of the consumer and the total sales of Vodafone, which
eventually affects Vodafone's business efficiency.
Operational risk: This risk has a negative influence on the brain of the consumer when
the service or product is not delivered in compliance with their expectations and needs. The
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consumers of the telecommunications industry are very disappointed because they can not get a
decent network from the network operator. Vodafone still believes in the provision of high
quality network services to customers and therefore does not face any operational risk.
Damage Risk: This kind of risk can be removed from the market by Vodafone when
damages are not tolerable to the company following the incidence of any natural disasters or
other incidents. It causes the company heavy financial and non-financial damages.
Information Risk: Vodafone retains extensive information and data relevant to its
suppliers, consumers, clients, the current service plan and other sensitive documents. But if this
data were compromised or hacked illegally, it would cause a massive liability for Vodafone
Company.
3. Analysis of severity and likelihood of risk
In a business organisation such as Vodafone, risk is an aspect that is involved in all
operations and functions (Durst, Hinteregger and Zieba, 2019). However, several regions are
known to be high-risk zones. Such high-risk areas are linked to records, system integrity,
operation and financial fraud. Database is the firm's details or key records, with aid about which
the business expands and maintains itself in a highly competitive environment. This knowledge
could apply to potential buyers, creditors, vendors, new products and services design and future
organisational strategy. This knowledge and information plays a major role in growth and
development of the Vodafone Company.
However, whenever this sensitive and critical data is exposed or goes into the hands of the
wrong people, it causes significant difficulties or problems for the organisation. System integrity
is expected role of any business enterprise, like Vodafone, which operates under high oversight
and supervision. This role cannot be modified or performed in any other manner until and unless
the higher power has given any clear orders or approval. The R&D department of Vodafone is
among the indicators of high-risk system integrity. Company is spending a large amount of R&D
funds to add variety in goods and services to a highly competitive environment.
The R&D department is expected to be a significant risk field since a range of
methodologies are carried out in specific department that are kept secret both inside and outside
the organisation (Fan and Stevenson, 2018). When any important information on the latest
product or leakage services in the marketplace is rendered in vain by the company's large
investments. It can also create the Minsk effect for the company. Credibility is again the main
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aspect of the company. Vodafone still aims to strengthen its brand value on the market by having
a strategic plan and implementing sustainability initiatives. Brand value is an intangible asset of
companies that helps the business raise market capitalization.
Fortunately, it also appears that the reputation of a firm's brand is largely influenced when
stories come about the illegal activity in the company, fraud in the documentation of financial
transactions and tax deceptions, and so on in the news and media. This sort of situation also
affects the company in such a way that it destroys the strategic partnership of the company with
other businesses. Financial fraud has been one of the major high-risk fields of business
organisations such as Vodafone. Financial fraud may be carried out by the existing teams or by
an external individual, such as a hacker (Hopkin, 2018).
4. Suggested risk management strategies
Risk management could be carried out effectively by implementing good practises and
procedures in the organisation regarding employment practises, fraud detection procedures,
health & safety policy, security of tangible assets and business sustainability, process and
inventory management, benchmarking and disaster management. The detailed overview of the
various risk management strategies that could be used in Vodafone is described below:
Employment practices: Vodafone management can follow good work practices, such as
an acceptable pay policy, salary policy, advancement and appreciation policy that will enable the
business to reduce the risk of staff turnover.
Fraud Prevention: Vodafone successfully regulates or removes fraud by implementing a
stringent fraud policy and standards of practice. Fraud could also be actually stopped by regular
exercise in the organisation's knowledge of fraud. A 360-degree assessment of staff may also be
carried out to eradicate corruption in the organisation. Furthermore, placing the correct number
of CCTV cameras in various departments will also help to reduce theft in the organisation.
Health and safety policy: The business can obey the UK Government's Health and Safety
at Work Act 1974 to maintain adequate care is taken for the health and safety of workers at work
(McShane, 2018). In relation to this, Vodafone will also adopt its very own health & safety
strategy in order to prevent accidents and incidents at work.
Protection of physical assets and sustainability of the business: Vodafone should also
follow sound policy refers to the safety of tangible assets of the company, which would
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eventually help to mitigate the loss of failure of mechanical equipment. The company will have
to provide employees with daily training on how to handle machines with protection and safety.
Process and Product Management: Process and product management policies can also
aid Vodafone greatly in the planning of operational risks associated with product failure. The
basic strategy would help the organization to recognise the gaps and overcome the problems
found.
Benchmarking: This means setting expectations for the accomplishment of certain tasks
in a given manner. Setting targets allows the company to measure or compare the norm is
already or has not been reached by the designated department or unit.
Disaster Management: In modern times, it is also very essential for companies to provide
disaster management plans in position to react efficiently to any emergencies (Patterson and
et.al., 2018). A crisis management approach should be used to allocate proper duties and
responsibilities and to create a rapid task force team within the company to fulfil any urgent
requirements.
5. Approaches to crisis management
There are several approaches of crises management which are followed by the other
organizations. Some of them are as follow:
Creating a living, breathing crises management plan: Effective crisis management
system is begins with a comprehensive risk assessment as well as a robust strategy that identifies
the related risks and lays out a concrete plan for action but it’s not going to stop there. To make
such a strategy truly successful, it needs to grow in line with the organisation. Modifying the
crisis response plan on a regular basis and making minor, gradual adjustments as required,
preparation standards and the presence of the experts and professionals are also where they must
be in the case of a disaster.
Get ready their people in advance: They should provide detailed training for their people
and need to take in a crisis situation, beginning about how to define a crisis scenario. Too many
crises begin under the radar such as slow-burning embers, which are overlooked until 'suddenly'
they capture everything (Thöns, 2018). By identifying the causes and allowing their staff and
management team to define the current crisis situation, they will be able to determine if it is
ready to initiate crisis management measures or if it is just business as normal.
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Turn weakness into strength: When the crisis hits, a good response and reconstruction
depends on many factors, but understanding the organisation's level of crisis management
sophistication is, in several ways, at the top of the priority list. Firms are too often uncertain
of internal vulnerabilities, making it difficult to determine if external assistance, such as external
cyber security experts, technical IT specialists, data recovery experts, or communication
management professionals, is needed during or after an attack.
There are a variety of crisis management methods that companies like Vodafone may
follow successfully to address issues related to disputes, complaints, downturns in industry,
customer frustration, disagreements with distributors and so on. Large company shall establish a
separate department which shall cope up with grievances and concerns to the consumers and
company. The methods which could be used for effective crisis management in Vodafone
include business continuity planning, independent analysis, risk assessment, scenario description,
recovery response design, communications and monitoring and so on.
The Crisis Management Strategy would allow the organization to resolve complex issues
impacting of Vodafone’s operations and the confidence of its stakeholders (Wang and et.al.,
2020). Crisis management is carried out in Vodafone after thorough consideration of the risks
and impacts of macro and micro environmental factors.
6. Impact of breaks in business continuity
Business organisations still hope and anticipate that the company can work smoothly in
every climate or circumstance for the long term. However, this expectation is not always
overwhelming, as business organisations are affected by many factors that impact or influence
business operational activities. These causes are known as breaks that establish a break to
business continuity. Similar sort of things have happened to Vodafone, too. Information on the
variables and the vulnerable influence has on organisational operations are discussed below:
Business size: It means the strengths of the company in terms of winning in the marketplace
and achieving success in the industry. It is commonly seen that large-scale organisations are
capable of growing and develop quickly as they usually have strong brand value, human
resources, technological resources, physical resources, market legitimacy and strong brand
recognition. It also has a higher impact if it incurs losses in large percentages. Small-scale
companies are at a slower rate in the industry, since they do not have far too much financial and
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physical capital that they can develop. It begins to grow with the year-on-year profits and is
influenced by the amount of losses accrued.
Operating environment: It reflects the workplace environment and human resource
professionalism of the organisation (Zimon and Madzík, 2019). If the organisation had staff
with professional skills, this would be able to determine core competencies in the business sector
because it would not be able to generate money.
Physical environment: it shows the securities and technological resources of the company.
If the company had a good physical atmosphere, it would expand effectively on the marketplace,
however if the physical environment will not be productive for the company, the circumstance
for the business would be much worse.
CONCLUSION
From the overall analysis, it has been concluded that risk management play very crucial role
in the business when they found any risk or danger in the business operations. Risk management
is the method of recognising potential threats, issues or accidents before they arise. With the help
of this plan, organizations able to mitigate their possible risk otherwise it generate huge lossess
for the organization.
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