Risk Management Analysis and Plan for Careful Financial Services (CFF)

This report presents a comprehensive risk management plan for Careful Financial Services (CFF), a mortgage broking business. The report begins by establishing the context, identifying stakeholders, influences, and key business drivers. It includes a SWOT analysis and defines organizational goals and objectives. The core of the report focuses on risk management, detailing risk identification tools, and categorizing financial/economic, operational, compliance/legal, human, health & safety, and reputational risks. A risk register is developed to analyze and evaluate risks, followed by a risk treatment plan to mitigate identified risks. A communication plan is also created to ensure stakeholder awareness. Finally, the report addresses monitoring and review processes, including hypothetical scenarios and recommendations for improvement, ensuring a proactive approach to risk management for the business.

Name:
Course
Professor’s name
University name
City, State
Date of submission
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Scenario
You are the owner/office manager of Careful Financial Services (“CFF”) - a mortgage
broking business in Fedtown.
The business has been successfully operating for 5 years and a recent increase in loan
applications has you considering whether to employ a new loan writer.
One of the reasons for the increase in applications is the approval by local council of a
development application for a site that will contain 500 new houses. Off the plan sales
have been popular for the first release with an average sale price of $350,000.
The economy is reasonably stable with interest rates at 5.7%, they have not changed
in the past 6 months and are not predicted to change in the next quarter.
No risk management planning has ever been completed and you feel it is needed so
that both opportunities and risks are effectively identified and treated.
Relevant information:
 There is one other mortgage broking business in Fedtown.
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 Your business has 6 employees who have all been with the business for 3
years or more. 1 Business Development Manager, 3 loan writers, 1 support
officer, 1 administration assistant.
 Premises are owned.
 Spare office space is limited in the current premises.
 Business borrowings:
 Term loan $200,000
 Overdraft $20,000
 Procedure manuals completed when business first opened (never reviewed).
 Monthly workplace inspections are conducted.
 The business operates a company car that is leased.
 All computers are networked and basic virus protection is installed.
 Training of new staff and ongoing training is not well structured and is a bit
“hit and miss”.
 Business insurance is current – including personal injury and property damage,
fire, storm, malicious damage and other defined events, business vehicle
insurance, business interruption, personal accident or illness.
 Audits have not been completed as regularly as needed due to Office Manager
being too busy.
 A recent customer satisfaction survey showed excellent results, which has
been very positive for the business with a high level of referrals being
received.
 Business sponsors the local Under 10’s soccer team and has participated in
Clean up Australia day for the last 5 years.
 Aged debtors and creditors listing shows some long overdue accounts.
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Answer the following questions using the above scenario:
Please note: The answers provided should relate directly to the scenario and be in
your own words to demonstrate your understanding (do not copy directly from the
notes). The case study in the learners guide is there to assist in your completion of
the assessment.
Question 1 – Establish the Context
a) Identify at least 5 external and 2 internal stakeholders:
External Stakeholders Internal Stakeholders
 Suppliers
 Customers
 Local council
 Society
 competitors
 Employees
 Owners
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b) Identify at least 4 external and 3 internal influences:
External Internal
 Staff
 Money
 Company culture
 The economy
 Competition
 Technology
 Politics
 Customers and suppliers
c) List 5 key business drivers:
1. Cash
2. Profit
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3. Assets
4. Growth
5. People
d) Complete a SWOT analysis (provide at least 4 points under each heading)
Strengths
Weaknesses
 Good working environment
 Competent staff
 High levels of referrals
 Stable economy
 Limited office space
 Limited staff
 Non structured staff training

Opportunities Threats
 More referrals / new customers
 Operating another business


 Ageing debtors
 Audits that have not been completed
 competition

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e) To establish the risk management context provide information for the
following steps:
i) Step 1–
Define the
a) organisation,
this is an organization that deals in mortgage broking business and has been in
operation for the last five years.
b) process of activity
mortgage loan prequalification-application of loan-processing and
verification.
c) and establish its goals and objectives (use the table below to establish
objectives).
Criteria Objectives
Financial
To improve the company’s bottom line.
Operational
To be the most efficient company in terms of
service delivery.
Health and safety To protect the both the staff and society from
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health risks.
Compliance/Legal To comply with the government laws.
Technological To be most advanced in terms of technology.
Reputation To be a reputed company in terms of delivering
services.
ii) Step 2 – Specify the nature of the decisions that have to be made.
Routine and operational decisions- This are the decisions that have to be made in
regard to the operations of the business.
iii) Step 3 – Define the extent of the project activity or function in terms of
time and location.
The company has been in operation for over five years and the project has come a
long way to be fully established in this location.
Question 2 – Identify risks
a) List 7 risk identification tools that could be used in the formulation of the
risk management plan and discuss reasons for selecting each tool.
Tool Reasons
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1
Risk probability and
assessment of impact
It investigates the likelihood of the specific risks, cost ,
quality and performance.
2 Risk categorization
It is to determine the effects of uncertainty and
common risk causes
3 Expert judgement
This is to ensure that risk facilitation workshops, with
individual with experience in the project
4 Data gathering
Risk management plan is used in data collection and
identification
5 interviewing
Interviewing economists on the way forward to
determine the economic well-being of CFF
6 Risk categorization
It is categorizing risks so as to ensure that all risks are
classified into their own way
7
Risk urgency
assessment
Assessment of risk will be an essential tool in risk
assessment of CFF
b) Complete the following table identifying within each risk category:
 Financial/economic and Operational at least four risks/opportunities
 All other risk categories at least two risks/opportunities
Example of what is required
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A financial risk in the scenario could be that the increase in loans (due to the new
development) does not continue because the other mortgage broker in the town
attracts more clients.
Risk Description Impact of risk
Financial/economic 1. Expected increase in
loans does not continue
2.expected increase in
loans will not continue
3.Loan defaulting is
minimized
4.Increased loan facilitation
Risk - CFF could have cash
flow shortages because
they have put on extra staff
and the work is no longer
there.
Opportunity - CFF could
utilise these extra staff to
implement a new
marketing campaign, carry
out client retention or to
develop new strategies to
bring in more business and
increase their sales again.
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Operational 1.consulting and
outsourcing services are
important to CFF
2.Disruptive events in CFF
3.Operationalization of
4.
Risk - - CFF could have
cash flow shortages
because they have put on
extra staff and the work is
no longer there
Compliance/legal 1. consulting and
outsourcing services are
important to CFF
2.Disruptive events in CFF
3.Operationalization of
legal issues in legal rights
of the company
Risk- CFF could have cash
flow shortages because
they have put on extra staff
and the work is no longer
there.
Opportunity - CFF could
utilise these extra staff to
implement a new
marketing campaign, carry
out client retention or to
develop new strategies to
bring in more business and
increase their sales again.
Human 1.Expected increase in in
human resource
Risk- human resource
management, and risk of
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management
2.
labour turnover.
Health & Safety 1.increased health and
safety
2
Risk- CFF could have cash
flow shortages because
they have put on extra staff
and the work is no longer
there.
Reputation 1.expected risk of
reputational damage
2
Risk- CFF could have cash
flow shortages because
they have put on extra staff
and the work is no longer
there.
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