Risk Management Report: Smartech's Wearable Technology Strategy

This report presents a risk management plan for Smartech, an Australian technology company, focusing on its strategic shift towards wearable technology. The report begins with an introduction to risk management principles, followed by an overview of Smartech's context, including stakeholder analysis, industry analysis, and an assessment of current risk management arrangements. The core of the report involves risk identification, analysis, and evaluation, culminating in the development of a risk treatment and action plan. The report also details the implementation, monitoring, and evaluation of the proposed risk management strategies, including a communication plan and a sample email to the CEO. The analysis covers various risk factors, including technological, economic, social, legal, and political dimensions, along with critical success factors and a stakeholder communication plan. The report emphasizes the importance of a comprehensive approach to risk management to ensure the successful launch of new wearable technology products and the achievement of Smartech's business objectives.

MANAGE RISK
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Table of Content
Introduction............................................................................................................................. 3
Activity 1: Managing Risk......................................................................................................... 3
Section 1: The Risk Context......................................................................................................3
1.1 Scope.................................................................................................................................. 3
1.2 Stakeholder analysis...........................................................................................................4
1.3 Industry analysis.................................................................................................................5
1.4 Strengths and weakness of current arrangements.............................................................5
1.5 Critical success factors........................................................................................................6
1.6 Communication plan..........................................................................................................6
1.7 Initial meeting with the CEO...............................................................................................7
Section 2: Risk Identification.................................................................................................... 7
2.1 Identifying risk....................................................................................................................8
2.2 Interim meeting with the CEO............................................................................................8
Section 3: Risk analysis and evaluation....................................................................................9
Section 4: Risk treatment and action plan..............................................................................11
Activity 2: Implementation, monitoring and evaluation.........................................................12
Task 1: Implement, monitor and evaluating the action plan..................................................12
Task 2: Evaluation Report.......................................................................................................14
Reference List.........................................................................................................................15
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Introduction
Managing risk may be defined as a systematic procedure of identification and analysing of
uncertainty in investment decision of business along with this it provides suggestion for
minimizing their impact on business activities. Managing risk is an integral part of business
world which analyses the losses that may be arise in any type of investment or financial
decision and after analysing risk through risk management procedures, manager takes
appropriate action to lower the risk associated with the project. Investor use various methods
to identify the risk that is cover with the investment project.
Overview of the organisation: SmarTech company (founded on 1980, headquarter: Sydney)
has been selected for the study, this company is an Australian technology company which
sells tablets and mobile phones. As there is a huge demand of wearable technology, the
company is deciding to change his business strategies to yield growth and development of
organisation. The risk factor associated with decision of company is evaluated in the study.
Activity 1: Managing Risk
Section 1: The Risk Context
In this section risk associated with the change in business strategies and production of
wearable technology such as smart watch are discussed. Addition to this scope of the risk
management plan draw is defined, the role of stakeholders in managing risk has been
discussed along with this analysis on company profile “Smartech” has been done. The section
finds and review strength and weakness of current risk management arrangements in
company also and analyse the critical success factor associate with the arrangements. The rest
of the section describes how to communicate the new plan developed and lastly frames an e-
mail, which will be send to CEO of Smartech company.
1.1 Scope
A risk management policy has been drawn for Smartech Company which will guide the
management body and give direction at organisational level to implement the new business
strategies adopted by employees of the selected organisation. The policy is developed
according to current standard of market which will assist the company to produce wearable
technology. The risk management plan will supply information and help management to take
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decision by continuously reviewing and monitoring the risk factors (Sharma et al. 2017,
p.45).
1.2 Stakeholder analysis
For this section five different stakeholders of company is selected and their responsibilities
according to the risk management plan has been discussed-
Board of Directors: The members of board of director formulate the risk management plan
to control and reduce the risk associated with the new business strategy. They are the first
most responsible stakeholders to manage effective risk management process. The level of
influence on decision taken by board of director is higher as they formulate policies which
can affect the whole organisation (Jain, 2016, p.17). The decision taken by board of directors
should be communicated with every members of board for successful of risk management
plan.
Shareholders: Shareholders are internal stakeholder of any company because they own
specific denomination of entire capital of particular company (Chevalier, 2016, p.65 ). They
rank second on priority level of interest thus the issues related to change in business strategy
and risk management must be frequently communicated with them as they can provide
financial support to manage risk if company faces loss.
Executive team: If they are not involved in the risk management plan the flow of work will
get hampered in the organisation
Board of Directors
4

Shareholders
Executive team
Stakeholder 4
Stakeholder 5
5

Shareholders
6

Role
The members of board of director formulate the risk management plan to control and reduce
the risk associated with the new business strategy.
They provide resources to an organisation and thus manage the risk factors of investment
plans. Their influence on managing risk is high as they provide financial support to business.
Shareholders have to provide much effort in following risk management plan as they are the
person who will gain higher if the risk plan is properly followed (Loch et al. 2011, p.67).
This executive team is an important part of internal stakeholder as they closely monitored the
activities which should be implemented in the organisation for managing risk (Reason, 2016,
p.25). As they guide the ongoing projects and prepare quarterly report the level of influence
in the risk management program will be higher, importance and interest of executive team
member should be high in this context (De Vita et al. 2016, p.52). According to the role of
executive team their position should be third in the risk management program so they should
be also aware about the related issues for which frequent communication are necessary
(Kaplan and Mikes, 2012, p.14).
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8

Internal/External
internal
Internal anmd external
Internal
9

Interests
Financial
Emotional political
Political, financial
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.
11

Contribution
Capital
Capital funds
Decision funds and capital
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13

Level of Influence
High
(Low, Medium, High)
High
high
14

Level of Importance
High
High
High
(Low, Medium, High)
15

16

Level of Interest
High
High
High
17

(Low, Medium, High)
18

Priority
4
19

(1, 2, 3, 4, 5, …, n;
5
3
20

1 being the highest)
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22

Method of communication
Written
Verbal and written
Verbal and writen
23

Frequency
Quite often
Often
Medium
24

Issues if not involved
25

No proprer information about econonmy
Fall of understanding the mentality of the people
Fall of executive decision
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1.3 Industry analysis
A research is conducted on the background of Smartech with respect to risk management
program, to identify which factors can control and affect the risk associated with new
business strategies. The factors are described below briefly-
Technological: Economic: Social: Legal policy:
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Dimension
Details
29

The craze of wearable technology influences the changes in Smartech business strategies as
the new generation is addicted toward smart watch. The future growth of business is ensured
by implementing new business strategy.
Social
30

The current technological market scenario is quite promising and new wearable technology
will also capture vast market by 2025. The generation is addicted to technological world
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though Smartech has decided not to increase their budget by keeping their capital intact. The
board of directors has decided to take business loan to implement the new design and develop
product. The cost of online marketing should be considered in this regards
Technological
32

Economy had been a stable economy since the unemployment rate had been quite low of
about 6.9 and inflation had been observed to be low as well.
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Economic
34

35

There are legal policies formed on taxation and tariffs which a5re followed by the
organisati8on for proceeding with its works and operations.
Legal
36

37

Political
The Company needs to comply with organisational policy before producing smart watch.
Proper pricing of new launched product should be done to maintain fair competition in
market. The board of director should also maintain internal policies which will guide them to
follow the risk management plan.
Policy
38

Government Policy
Organisational Policy
 Is there any course of action that the current
 Is the current SmarTech Risk Management Policy
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government planning to introduce which
sufficient to manage risks associated with the
may have an impact on SmarTech’s strategic
proposed changes? Is there a need to change the
plans, the industry the company operates in
internal policy? Are the internal policies and
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and consumers?
procedures aligned with the government policy?
1.4 Strengths and weakness of current arrangements
Strengths
Recommendation
Reputation in market: Smartech is reputed company in Australian market and has captured
12.4% technological market.
 Potentiality to increase: The Company has potentiality to grow in market if they have
proper technological support to produce product related to wearable technology.
 Mature organisation: As the market is dealing in producing technological products
from 1980 it has proper knowledge windows mobile which are based on android.
 Thus it is the advantages for company, as company has reputation in market customer
will also appreciated their new product accordingly.
The company might achieve greater market share and attract large number of customers from
the market.
 Thus the company has less chance to prove failure in producing wearable technology.
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Weakness
Contribution
Technological facilities: The organisation does not have proper technical and operational
facilities which will assist in manufacturing wearable technology.
 Limited budget: The business is not injecting additional capital, which may be
considered as weakness of enterprise because new project requires investment.
 Online stores: The company is not operating in online store which is one of the
weakness as if they operate their selling activities in online platform they will attract
more number of customers.
 This weakness will hinder in growth of organisation.
 Limited financial strength and constraints in operations and functions
1.5 Critical success factors
The important reason for developing risk management plan is to provide comprehensive
approach which will guide the employees of enterprise and evade the risk associated with the
launching of Smart watch in market (Nicoletti, 2017, p.163). The success factors which can
be assessed, if risk management plan is followed while implementing new business policy are
as follow-
 The company will attract more customer as compared to present customer volume
 The market share of company will increase
 The scope of future development and growth will pave their way through new
business policy
 Employees of company will get technical support in manufacturing products
 The overall profit of company will increase
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1.6 Communication plan
In point 1.2 stakeholder analysis, three important stakeholders are discussed who should be
aware of the every decision taken by management body in the context of launching new
product and business strategy. Thus to make Board of Directors, Shareholder and Executive
team aware about every issues related to business strategy a communication plan is
developed (Torppa and Smith, 2011, p.65). The plan consist of five elements such as-
Communications Plan
Stakeholder 1
Stakeholder 2
Stakeholder 3
Stakeholder 4
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Stakeholder 5
Outcomes
The reason behind developing risk management plan should be discuss among the entire
stakeholder who will help in achieving the desired aim of business (Van Asselt and Renn,
2011, p.438).
44

Key Message
The motive of new business strategy should be discussed to make them understand the
importance of new risk policies implemented in Smartech.
The motive of new business strategy should be discussed to make them understand the
importance of new risk policies implemented in Smartech.
Channel
Communication is done through specific channel, here the management can organised
meeting or can send them e-mail to make them aware about new strategies implemented in
company.
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Responsible
According to Terborgh, J. and Estes, (2012, p.2) while communicating the plan the
responsibilities of each stakeholders in imparting their duty to make the project successful is
very important.
When/Frequency
The frequency of communication should be maintained which will manage and guide the
process on regular basis. Weekly progress meeting can be arranged and weekly report can be
prepared to maintain frequency of communication.
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1.7 Initial meeting with the CEO
Format of an email which will be send to CEO of company for attending meeting
To,
CEO of Smartech Company
Subject: requesting to attend meeting
Respected Sir/Mam,
The Board of Director has wished to developed new business strategies which will assist the
manufacturing department to manufacture wearable technology such as smart phones. In the
context of this, risk management plan has been developed to analysis the risk associated with
this decision and overcome those risks. Meeting has been arranged to discuss the matter
elaborately. In the meeting elements of risk management plan will be discussed to consider
the advantages and disadvantages of the decision taken.
I request you to come in the meeting to share your valuable opinion in this matter which will
help us to take proper decision.
Yours Faithfully,
(CRMO)
Smartech Company
Section 2: Risk Identification
Risk identification specially refers to the process which determines the risk associated with
investment project or any other project. This process after evaluating the risk prepares
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programs which can prevent occurrence of risk and thus will help to achieve target
(Raspotnig and Opdahl, 2013, p.1126).
2.1 Identifying risk
The two risks which are majorly associated with this new business strategy are market risk
and financial risk. In order to evaluate these risk roots cause analysis and risk breakdown
structure tools are selected. Those risks and their effect on Smartech are described briefly
below-
Market risk: According to the given scenario Smartech holds good position in market and it
market share also capture 12.4% to 11.2% of technological market. The company is deciding
to manufacture smart watch but the company deals only in mobile and tablets and there is
huge competition in market, if the manufacture product is not up to satisfaction level then
market reputation of company will come down in actual market (Groth and Muntermann,
2011, p.682).
Financial risk: As the company is not injecting any extra capital in their business from
internal sources, they are collecting fund by taking loan. If the business strategies
implemented brings failure to company, the external debt of company will increase which
will create financial problems in company and alternatively it will increase risk factors for
reducing company’s reputation in market (Christoffersen, 2012, p.17).
2.2 Interim meeting with the CEO
During the meeting with CEO of Smartech focus should be given on the main two risk
identified market risk and financial risk. According to the given scenario of company these
two risk factors are associated with the implementation of new business strategy. The tools
which are used to identify risk provide appropriate results.
Principles of root cause analysis:
 It identify the factors and their harmful outcomes
 Systematic approach is used to analyse risk
 Provides appropriate solution for risk identified
Principles of risk breakdown structure
 Identifies and analyses risk following qualitative methods
 Solves complex problem associated with risk factors
 Assist stakeholders to take decision
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The risk factors identified and tools used to analyse those factors should be communicated in
proper time within the organisations among stakeholders. After that the suggestion received
from CEO should be recorded properly for further requirements.
Section 3: Risk analysis and evaluation
Scales and models described below were used to analyse and evaluate risk
Likelihood scale:
Impact Scale:
Risk level and Ranking:
Risk priority= Likelihood (probability) * Impact (financial, political, time)
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Risk Level:
Risk Assessment Template:
Risk
ID
Risk Risk Area Likelihood Impact Consequences Risk
Ranking
Risk
Level
1. Market
risk
Market
reputation
Almost
certain
Moderate The reputation of
company in
market may come
down and number
1 Serious
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of customer can
reduce
2. Financial
risk
Financial Possible Moderate If loan taken are
not paid under
certain
circumstance, the
company will
have to suffer
from financial
losses which will
affect
organisational
activities
2 Serious
Section 4: Risk treatment and action plan
Risk ID Risk Risk Area Risk
Ranking
Root Causes Risk Treatment Risk Control
Measures Actions
to be Taken
Monitoring
Process
Responsible
Person
Timeline
1. Market
risk
Market
reputation
1 The product
produce is
not
satisfactory
as compared
to other
product
present in
market
Before manufacturing
product conduct
market research on
current standard of
product
Market research,
providing
continuous
guidance to
employees while
manufacturing
product
Preparing
weekly report
and
organising
meeting
Marketing
executives
3 to 6 months
before
manufacturing
2. Financial
risk
Financial 2 If the new
business plan
implemented
brings failure
Analysing the
investment plan by
various investment
tools
Market research
and monitor
activities of every
department
Preparing
weekly report
and
organising
meeting
Board of
Directors
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Activity 2: Implementation, monitoring and evaluation
Task 1: Implement, monitor and evaluating the action plan
At meeting CEO identifies certain more risk factors which are associated with new business
strategies such as Operational risk. Those risk are again analysed with the help of scales and
model present above. There will be changes in Risk assessment template based on new
identified risk.
Revised risk assessment template:
Ris
k ID
Risk Risk Area Likelihoo
d
Impact Consequence
s
Risk
Rankin
g
Risk
Level
1. Market risk Market
reputation
Almost
certain
Moderat
e
The
reputation of
company in
market may
come down
and number
of customer
can reduce
1 Seriou
s
2. Financial
risk
Financial Possible Moderat
e
If loan taken
are not paid
under certain
circumstance,
the company
will have to
suffer from
financial
losses which
will affect
organisational
activities
2 Seriou
s
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3. Operationa
l risk
Organisatio
n
Possible Moderat
e
Though the
impact is
moderate on
business level
but it can
affect majorly
the business
losses if
operational
department
become
dysfunctional
due to this
risk
3 Major
Accordingly the risk treatment and action plan framed will be revised due to inclusion of one
more risk.
Revised risk treatment and action plan:
Risk
ID
Risk Risk Area Risk
Ranking
Root Causes Risk Treatment Risk Control
Measures
Actions to be
Taken
Monitoring
Process
Responsible
Person
Timeline
1. Market risk Market
reputation
1 The product
produce is not
satisfactory as
compared to other
product present in
market
Before
manufacturing
product conduct
market research
on current
standard of
product
Market
research,
providing
continuous
guidance to
employees
while
manufacturin
g product
Preparing
weekly
report and
organising
meeting
Marketing
executives
3 to 6 months
before
manufacturing
2. Financial
risk
Financial 2 If the new
business plan
implemented
brings failure
Analysing the
investment plan
by various
investment tools
Market
research and
monitor
activities of
every
department
Preparing
weekly
report and
organising
meeting
Board of
Directors
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3. Operational
risk
Organisation
and employee
3 As smart watch is
not manufactured
by company
earlier the
employee may
face problems in
manufacturing the
product which
will hamper
organisational
workflow
Providing
training to
employees and
make them
aware about
new decision
taken
Guiding and
monitoring
the work of
employee
Evaluating
the reports
on daily
basis
Executive
team
6 months
approx
Task 2: Evaluation Report
The above mentioned plan is highly dynamic according to business standards. The risk
management plan has been produced according to current competitive standard of market
with respective to the specified product i.e. smart watch. Therefore, it is possible that with
changing time, the risk factor may vary based on priority and effects on the organisation. As
Smartech is going to adopt a new strategy, it must include risk factors in some respective
fields including expenses, operations and technical implications. As, there are only two major
risk concerns have been taken under consideration, Smartech may have to include some
additional one. Some major refinements may be required in the prospects of operational risk
as well as financial allocations. Some visible gaps are still there in terms of strategic
management planned by the respective firm. In terms of realistic approach, Smartech has
been considered to be most alert in some special fields like operations and finance. Besides
that, it is also important to consider technical factors while operating a business with a
product like smart watch.
The above risk management project has included different stakeholder groups including
directors as well as executive professionals. However, it is important to consult such
professional groups for better communication and to implement new strategies. While
avoiding and analysing risk factors, responsible professionals can make better decisions. This
prospect has proved the future success of this risk project in favour of Smartech.
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