Risk Management in Business: A Comprehensive Analysis

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Manage Risk
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Table of Contents
Introduction......................................................................................................................................4
Task 1...............................................................................................................................................6
Q1. Examples of types of risks....................................................................................................6
Operational risks......................................................................................................................6
Strategic risks...........................................................................................................................6
External risks...........................................................................................................................6
Q2. Six key steps of the risk management process......................................................................6
Q3. Two components of risk management..................................................................................7
Q4. List three sources of information..........................................................................................7
Q5. Components of PESTL analysis...........................................................................................7
Q6. Stakeholder and methods to identify internal and external stakeholders..............................7
Q7. Risk criteria...........................................................................................................................8
Q8. Continual communication.....................................................................................................8
Q9. Five tools to identify risks....................................................................................................8
Q10. Components of risk analysis...............................................................................................9
Q11. Qualitative and quantitative risk analysis...........................................................................9
Q12. Likelihood and consequence table......................................................................................9
Q13. Risk treatment.....................................................................................................................9
Q14. Cost-benefit analysis...........................................................................................................9
Q15. Factors essential for cost-benefit analysis..........................................................................9
Q16. Items documented in a risk management plan..................................................................10
Q17. Continual reviewing of the risk management...................................................................10
Q18. Mechanisms ensure continual monitoring........................................................................10
Q19. Code of conduct................................................................................................................10
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Q20. Risk management standards..............................................................................................11
Task 2.............................................................................................................................................11
Part 1..............................................................................................................................................11
Business, goals, analysis of external factors and critical success factors..................................11
Analysis of external factors.......................................................................................................11
Stakeholders...............................................................................................................................11
PESTL and SWOT analyses......................................................................................................12
Risk Assessment Table..............................................................................................................13
Risk Management table.............................................................................................................13
Action Plan................................................................................................................................14
Implementation of risk management plan.................................................................................14
Report on implementation.........................................................................................................14
List of sources of information....................................................................................................14
Part 2..............................................................................................................................................15
Conventions and protocols for communicating with stakeholders............................................15
Tools and techniques to list risks...............................................................................................15
Consult and negotiate with stakeholders...................................................................................15
Support for risk management activities.....................................................................................16
Conclusion.....................................................................................................................................16
References......................................................................................................................................17
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List of Tables
Table 1: Code of conduct...............................................................................................................10
Table 2: Business details...............................................................................................................11
Table 3: Stakeholders analysis.......................................................................................................11
Table 4: Risk assessment...............................................................................................................13
Table 5: Risk Management table...................................................................................................13
Table 6: Action plan......................................................................................................................14
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List of Figures
Figure 1: Risk criteria......................................................................................................................8
Figure 2: Risk table........................................................................................................................13
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Introduction
Business assessment is essential to consider because it allows having a better analysis of
different values. Through considering the risk assessment and management process the issues
within an operational context can be identified. It also allows for framing better strategies on the
basis of information gathered to resolve issues. The present study will also cover learning about
mechanisms to ensure continual monitoring (Batkovskiy et al. 2016). Moreover, information
about tools and techniques to list risks can be attained.
Task 1
Q1. Examples of types of risks
Operational risks
Operational risk can be faced by business regarding improper reference of standards that can
harm hazard. For example, an accident at a manufacturing plant due to avoidance of standards
can be an operational risk. Another risk can be that employees are not skilled that enhances the
costing factor.
Strategic risks
If the company has designed the strategy without consideration of market needs and values then
it a business can face strategic risk because implementation may not benefit business. Another
risk can be changed in customer needs that can lead to strategic changes in business ( Hillson,
2017).
External risks
High competition in the market can also create a risk for a business firm that can influence the
business activities. Another risk can be regarding changes in policies and government norms
regarding the manufacturing sector.
Q2. Six key steps of the risk management process
Six key steps of the risk management process can be classified as hazard identification, risk
identification, risk assessment, risk control, documenting the process and monitoring and review.
At the initial stage the hazard that can be faced by employees and representative at the workplace
need to be evaluated. Discussion with employees needs to be referred to properly. After this, risk
needs to be identified in an adequate manner (Revilla et al. 2016). It has been noticed that
management also need to be focused on risk assessment process so that business firm can easily
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understand the factors that can influence overall development. The parameter of risk scale also
needs to be referred properly to ensure the standards.
Other than this, risk control standards also need to ensure so that long term development values
can be taken into account. Controlling measures need to be employed properly to meet the
objectives. After this, the application of standards and documentation of the process also need to
be evaluated in an adequate manner. If such standards are not proper then risk assessment can be
influenced in a negative manner (Farrell et al. 2015). Also, monitoring and review of practice are
essential so that risk can be controlled. Proper strategies and norms can be framed through
effective consideration of monitoring and review.
Q3. Two components of risk management
Risk avoidance and mitigation of the risk can be considered as two essential components of risk
management. It allows having better control and management of risk that impacts work
conditions.
Q4. List three sources of information
There are three sources of information to understand the objectives such as annual report,
investors report and sales of the business. By gathering information from diverse reports the
issues can be resolved and diverse factors can be promoted in an adequate manner.
Q5. Components of PESTL analysis
 Political: Government relation with other nation and political party’s involvement in the
business policies formation process.
 Economic: GDP can be considered as an essential component for business. Also, the
interest rate is also a critical value (Grace et al. 2015).
 Social: Customer needs and social responsibility are two factors that need to be referred
to properly.
 Technological: Use of digital tools and information system are two key components of
technology.
 Legal: Policies and code of conducts are two essential components of a factor.
Q6. Stakeholder and methods to identify internal and external stakeholders
Stakeholders are a group of people that have some interest in organizational working and
practices. Classification of stakeholders can be as international and external. Internal
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stakeholders can be as employees, manager and owners. However, external factors include
suppliers, society, government, shareholders and customers (Hopkin, 2018).
Q7. Risk criteria
It is a term of reference that is accessed to understand the significance of risk within the
organization. Risk criteria can be classified in different factors negligible, minor, moderate,
major and catastrophic.
Figure 1: Risk criteria
(Source: Nicholas and Steyn, 2017)
Q8. Continual communication
In order to have an effective risk assessment the business firm needs to focus on continual
communication. It is all about repeated communication between some time gape period so that
corrective measures can be taken into account. It is a continuous sharing of information
regarding risk so that standards can be framed accurately.
Q9. Five tools to identify risks
Information gathering technique can be used to have risk identification. Along with this,
businesses can also consider the application of brainstorming aspects adequately to meet risk
identification standards. Also, Interview and Delphi technique can be accessed by businesses to
have a proper analysis of risk. Checklist analysis is also significant to consider so that risk can be
identified. If such standards are not proper then it might affect the overall outcome (Hammer,
2015).
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Q10. Components of risk analysis
Risk analysis must be accomplished on the basis of diverse factors such as inflation risk, interest
rate risk and business failure risk. It is essential to have adequate learning about these factors so
that issues can be resolved. Application of standards must be according to components of risk
analysis.
Q11. Qualitative and quantitative risk analysis
Qualitative risk analysis is referred to as a process that considers the identified risk in an
adequate manner. It does not help in analyzing the mathematical risk. On the other hand, a
quantitative risk is an analysis of the risks which are marked for further analysis in the Perform
Qualitative Risk Analysis Process. It also allows having mathematical simulation so the
company needs to ensure about it properly.
Q12. Likelihood and consequence table
Use of likelihood and consequence table is essential because it allows understanding the scale of
risk. On the basis of likelihood and consequence table the mitigation priority can be taken into
account so that key goals and objectives can be accomplished. It also allows understanding the
frequency of method that assists in meeting objectives (Choi et al. 2017).
Q13. Risk treatment
There are different options of risk treatment that allows ensuring about the standards.
Classification of risk treatment options can be as avoidance, reduction, transfer, acceptance and
sharing. It allows making sure that risk is being measured properly to evaluate the same in a
significant manner.
Q14. Cost-benefit analysis
Cost-benefit analysis is considered as a process that allows understanding the ratio of benefits in
context to investment on activities. It means the comparison between costing and benefits can be
taken into account. It is a systematic approach that helps in eliminating the strength and
weakness of alternatives (Uhl and Gollenia, 2016).
Q15. Factors essential for cost-benefit analysis
Factors essential for the cost-benefit analysis are considered as feasibility, design, development,
implementation, operation and maintenance. By having an understanding about these factors the
overall practice can be advanced and leads to better analysis. It helps in identifying the better
alternative solutions.
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Q16. Items documented in a risk management plan
It has been noticed that items documented in a risk management plan so that corrective measures
can be taken into account. Validate the risk mitigation strategy and the alternative is necessary to
be promoted. Corrective action and project of actions taken are also critical aspects that need to
be referred properly to meet the objectives (Sadgrove, 2016). Identification of new risk resulting
mitigation is also necessary to documented to meet the standards.
Q17. Continual reviewing of the risk management
Regular basis review of risk management is also necessary so that information can be gathered
on a regular basis. If standards in terms of continual reviewing are not proper then it will affect
the overall process in a negative manner. Management must consider the standards in terms of
values so that issues can be resolved to respect to risk management.
Q18. Mechanisms ensure continual monitoring
The different mechanism needs to be considered such as auditing review process and monitoring.
It will allow having better consideration of continuous monitoring.
Q19. Code of conduct
Table 1: Code of conduct
Legislation Description and Examples
(a) Duty of Care It is necessary to ensure the roles and responsibilities so
that duty of care can be managed too evaluate risk.
(b) Company Law Company act must be considered in the risk assessment
process so that issues can be identified in an adequate
manner.
(c) Contract Law Supplier’s relation and other practices need to be according
to legal values and contract.
(d) Environmental
Law
Policies in terms of environmental protection also need to
be proper so that risk can be controlled. If such standards
are not proper it may influence negatively.
(e) Privacy Law Confidentiality of practice and standards must be
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appropriate so that issues can be resolved. If privacy is not
proper it will affect work.
Q20. Risk management standards
Standards in terms of risk management must cover values of ISO standard. Also, a framework to
evaluate risk and practice to resolve the same must be promoted by business.
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Task 2
Part 1
Business, goals, analysis of external factors and critical success factors
Table 2: Business details
SCOPE: Toyota is focused on appropriate consideration of risk analysis so that
practice can be balanced and protected from any unethical practice.
OBJECTIVES: To improve the risk assessment practice and enhance the work practice
standards.
To enhance the performance and stakeholders involved in practice.
CRITICAL
SUCCESS
FACTORS:
 Quality
 Cost
 Technology application
 Project completion is designed framework.
Analysis of external factors
External factors need to be evaluated properly to meet the objectives. For example, a company
can easily focus on the understanding of market trends. Competitor's analysis also needs to be
proper so that external factors can be measured in an adequate manner. Application of standards
in practice is also necessary to consider (Uhl and Gollenia, 2016).
Stakeholders
Table 3: Stakeholders analysis
Stakeholder Internal /
External
Role in process Stake in process
Customers External Customers will provide feedback
regarding services so that
business can make decisions
accordingly.
Moderate
Employees Internal Employees will follow guidelines
and standards in regard to have
the development of practice and
High
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