Comprehensive Risk Management Analysis for Rio Tinto Mining Company

This report provides a comprehensive risk management analysis of Rio Tinto, a major Anglo-Australian mining company. It begins with an overview of Rio Tinto's operations, including its diverse product portfolio and organizational structure. The report identifies both internal and external stakeholders, highlighting their significance in the context of the company's performance. It then delves into the concept of risk management, explaining the importance of identifying, managing, and eliminating potential risks to ensure business stability. The report examines the risk management framework used by Rio Tinto, including the integration of operations and the use of techniques like risk registers and fishbone diagrams. It discusses various types of risks faced by the company, such as fluctuations in commodity prices, political conditions, and employee motivation, and emphasizes the need for proactive risk mitigation strategies. The report concludes by summarizing the importance of continuous risk assessment and management to ensure Rio Tinto's sustainable performance and competitive advantage in the market. The report references various books and journals to support its findings.

Risk Management

Contents
Contents...........................................................................................................................................2
Overview of case..............................................................................................................................3
Identify stakeholders........................................................................................................................3
Risk management and developing risk framework..........................................................................4
CONCLUSION................................................................................................................................6

Overview of case
For this report, Rio Tinto is taken for consideration which is one of the largest Anglo Australian
mining companies in the world and has been running the business since 1873. Company has
expertise in producing and mining products like aluminium, iron ore, diamond, uranium, copper
etc. Organisation has the turnover of 40.522 billion dollars in 2018 and employees more than
47,000 people worldwide (Hopkin, 2018). Organisation has recently gone through structural
change in which five different teams been formed i.e., Aluminium, Energy and minerals, Copper
and diamonds, growth and innovation and at last iron ore to support the overall aim of Rio Tinto
which is fulfilment of stakeholders expectations from the company. Currently firm has been
using mixture of functional and staff structure so that company could become more flexible and
sustainable in coming future.
Rio Tinto mission is to maximise the return of shareholders through leveraging their expertise to
others by procuring raw materials in low cost and high quality which cannot be offer by other
competitors in the market. Company runs on four different business strategies i.e., choosing
portfolios which will work as a long term assets for company by reshaping their operations in
more productive way (Hubbard, 2020). Second is to maintain sustainable performance by
changing operations according to internal and external environment. Third is partnering with the
customers and NGO’s which believes sustainable performance in their working operations
through reducing carbon footprint from the production process. Last is a person, which means
provide proper training and development sessions to employee’s so that they can maintain and
enhance their efficiency to a certain level. Company’s objective is to expand and create new
market on a continuous basis. Rio Tinto has been successful in the market just become they have
eliminated mostly all the gaps in the risk principles which assist them in performing better in the
market. For instance, one of the principle is integration of operations, so as mentioned above,
company has integrated their all operations in to five different aspects so that they can focus on
their core competencies instead of focusing on those in which they are not good at or does not
have proper skills.
Identify stakeholders
Stakeholders refer to individual or group of people who has invested their time or money in the
company and has specific amount of share in their earnings. Internal stakeholders refers to those

people who are directly connected to company operations and performance i.e., employees,
managers and owners. On the other hand, external stakeholders includes, suppliers of Rio Tinto,
society in which they are working, government under which they are performing their task,
creditors, lenders or investor, customers and shareholders (Sadgrove, 2016). All these people
earning are directly affected by company performance i.e., higher performance level in the
market leads to higher profitability of stakeholders as well as company.
Macroeconomic and geopolitical risk could be faced by company like due to Brexit, it would
become complex for them to contact client from Britain and remaining Europe as well. Changing
in monetary policy, weakening demand from countries like china, global trade obstacles, and
continuous ban by governments for mining etc in few countries are few potential risk of Rio
Tinto which they could face in the future (Giannakis & Papadopoulos, 2016).
Health and environment safety are the risk faced by firm as company needs to take care of every
measure which is essential to fix the risk as high amount of legal fines are imposed by local
government if company is find for breaking the law. Economic slowdown of china is one of the
external risk faced by company as their overall revenue has increased but not up to the
expectations of expertise and owners which reflects under-utilisation of available resources due
to external factor (Tupa, Simota & Steiner, 2017) .
Risk management and developing risk framework
Risk management refers to a process of identifying; managing and eliminating risk which could
be faced by organisation in the future so that business instability would be reduce to a certain
level (Wiengarten & et al., 2016). As mentioned above, there are hardly any gaps in the risk
management process as company is continuously assessing their internal as well as external
environment for any type of threats and then try to modify the process accordingly so that they
won’t get affected from it. But still, there are various time when employees gets harm while
working which reflects the negligence of health and safety act in the operations. It should be
eliminated from the scratch as it is inversely proposition to employee’s performance and
efficiency (Cole, Giné & Vickery, 2017). For instance, if any employee gets hurt due to accident
then they won’t be able to able to focus on their work resulting in lower performance at work.
Risk management plays an essential role in the success of organisation as if company is able to
manage their operations in hard times by tackling risk then it becomes easier for them to conduct
their business in any market (Brustbauer, 2016). For instance, due to slowdown in china’s

economy, company is bearing millions of loss as they have produced high amount of aluminium
and iron ore to satisfy china’s need. So these remaining raw material and finished products are
acting as a inventory product which automatically increases cost price of the production. Various
advantages of risk management are as follows,
 Elimination of risk and obstacle resulting in smooth operations of work in Rio Tinto
 Due to smooth functioning of departments, it becomes easier for them to attain
sustainability performance in the market thus competitive edge over others.
 If Rio Tinto is performing according to their skills and capabilities by eliminating their
risk then their performance and efficiency level will go higher thus higher profitability
for company and stakeholders.
 Various risks which are faced by Rio Tinto is fluctuations in commodity prices due to
external factors like demand and supply, exchange rate variations, market movements etc
(Hopkinson, 2017). For instance, if Rio Tinto has produced aluminium in 500 dollars per
box and demand of the product reduces then price of the product will also decrease
resulting loss for company and vice versa.
 Other risk is political conditions of country in which company is working as it has a
direct connection with profitability or loss of a company. For instance, China has been
suffering from slow down or market crash due to which demand of gold or aluminium
has decrease resulting in loss for company and vice versa.
One risk which manufacturing company like Rio Tinto faces is internal risk or employee’s
motivation level due to health and safety if them (Behzadi & et al., 2018). For instance, recently
company’s driver, who was driving truck for transportation of iron aluminium has crushed still
car. Though no injury has been reported till now but it adversely affects company performance in
the market. As these type of accident affects company image as then employees don’t trust their
own employees regarding safety and health wellbeing resulting in lower productivity of company
thus lower profitability and vice versa (Cvitanić, Possamaï & Touzi, 2017) .
There are different types of risk management techniques in organisation but Rio Tinto uses risk
register techniques to identify the risk within the operations and then identify the ways through
which it would be removed before even it affects company performances. For instance, if Rio
Tinto management has analysed that company performance is degrading due to lack of skill of
employees and it would affect adversely in the future. Then it’s their responsibility to arrange a

proper training and development sessions so that skills would be inculcate accordingly. Apart
from that, fishbone techniques can also use by Rio Tinto as it assist management to track down
the reason of inefficiency so that they would eliminate it by taking proper actions thus improving
overall performance (Paté‐Cornell & et al., 2018) .
CONCLUSION
As from the above information, it can be summarised that company needs to analyse their
internal as well as external environment for risk which they could face in the future. After that, it
is more important to take actions on it by reducing or eliminating it so that it won’t affect
organisation sustainable performance in a negative way.

REFERENCES
Books and Journals
Behzadi, G., O’Sullivan, M. J., Olsen, T. L., & Zhang, A. (2018). Agribusiness supply chain risk
management: A review of quantitative decision models. Omega, 79, 21-42.
Brustbauer, J. (2016). Enterprise risk management in SMEs: Towards a structural model.
International Small Business Journal, 34(1), 70-85.
Cole, S., Giné, X., & Vickery, J. (2017). How does risk management influence production
decisions? Evidence from a field experiment. The Review of Financial Studies, 30(6),
1935-1970.
Cvitanić, J., Possamaï, D., & Touzi, N. (2017). Moral hazard in dynamic risk management.
Management Science, 63(10), 3328-3346.
Giannakis, M., & Papadopoulos, T. (2016). Supply chain sustainability: A risk management
approach. International Journal of Production Economics, 171, 455-470.
Hopkin, P. (2018). Fundamentals of risk management: understanding, evaluating and
implementing effective risk management. Kogan Page Publishers.
Hopkinson, M. (2017). The project risk maturity model: Measuring and improving risk
management capability. Routledge.
Hubbard, D. W. (2020). The failure of risk management: Why it's broken and how to fix it. John
Wiley & Sons.
Paté‐Cornell, M. E., Kuypers, M., Smith, M., & Keller, P. (2018). Cyber risk management for
critical infrastructure: a risk analysis model and three case studies. Risk Analysis, 38(2),
226-241.
Sadgrove, K. (2016). The complete guide to business risk management. Routledge.Aven, T.
(2016). Risk assessment and risk management: Review of recent advances on their
foundation. European Journal of Operational Research, 253(1), 1-13.
Tupa, J., Simota, J., & Steiner, F. (2017). Aspects of risk management implementation for
Industry 4.0. Procedia Manufacturing, 11, 1223-1230.
Wiengarten, F., Humphreys, P., Gimenez, C., & McIvor, R. (2016). Risk, risk management
practices, and the success of supply chain integration. International Journal of Production
Economics, 171, 361-370.