Risk Management: Hurleys Caf - Assignment Example

Risk Management Risk Management Assessment Risk Review report 0: Introduction Hurley’s Café was one of the chains of cafes purchased and rebranded by the Mac Ville Pty Ltd in Toowoomba along the darling downs 130kilometers west of Brisbane. This is one of the main strategic plans of the Macville Pty Ltd toward controlling the Australian beverage market. The company is managed by Paul Kinski as the sitting CEO at the head office in Queensland. As the new risk manager of the newly acquired café, the CEO tasked me with an assignment of conducting a detailed review report on how we can manage risks linked to the operational based takeover. Essentially, the appointment and tasking communication was through an email, which outlined how to conduct the report and the areas, which it must capture such as store, finance, human resource, procurement and supply chain, local governance and the compliance-based issues. The three main stages of risk management based report were review, analyze, plan, and finally monitor. The risks considered were those influencing human resource management, financial based operations, OHS, supply chain, local governance and finally overall compliance-based issues. Several stakeholders were involved in this report; the board of directors, the CEO, the risk manager, current supervisor; James Mansfield, already existing and absorbed staff and the landlord and local councilor of the shop in Toowoomba; Mr. Langford. In summary form, the risk review report was sub headed into Scope, goals, stakeholders, analysis and recommendations. Essentially, the recommendations were based on the discussion the various stakeholders on how we can improve the performance of the café. 2.0: Body of the review report 2.1: Scope of the risk management The scope of the risk management in the Hurley’s café in Toowoomba was limited on how the human resource department, finance operations, OHS, local governance, supply chain and overall compliance issues undertaken. Essentially, a meeting with the current supervisor; Mr. James Mansfield revealed that thee exist a weak internal control where those receiving cash do not record somewhere or even the cashiers banking the cash. In addition to that, different departments in the café such as store kept no proper records. Moreover, there were many family members employed in the café, something that can contribute to poor performance. This will definitely yield for reduced operational costs, efficiency and high performance rate. Moreover, the risk management scope helped management into understanding the areas of weakness and find ways and means of how to finance them. 2.2: Goals of the areas included in the scope The main goals of the various areas mentioned in the scope, such as finance, management, legal compliance, human resource and operation are efficiency, reduced cost of operation, maximized profits, safety, more customers, reduced thefts and strong internal controls. The presence of strong internal controls will help to ensure that Macville Pty limited resources are safe and therefore quality services are delivered to the customers. Essentially this will mean that there are proper record keeping, the customers are well served and no conflict of interests arises. The presence of strong human resource management help in ensuring that qualified and disciplined employees are employed. Moreover, it ensures that related parties are not employed in the same café. Lastly, there is need to ensure strong financial department where no quick theft of cash. Therefore, the main gals of all these areas mentioned in the scope were to ensure that the Hurley’s café has been re-branded and efficiency maintained in operation. In most cases, the goals were going to ensure that we also have customer satisfaction and reduced cost of operations kinked to poor risk management policies. 2.3: Stakeholders Stakeholders Internal/external Roles in process Issues and concerns Board of directors internal Supervision of the risk management process Ensure there is reduced risks CEO Internal Supervision of the risk management process Ensure efficiency and reduced risks Landlord/Councilor external Ensure compliance with law Help to ensure efficiency attained Risk manager internal Conduct the risk review process Ensure Hurley’s café reduces risk in her department. 2.4: Analysis of the risks associated with the scenario A critical PEST and SWOT analysis reveals that certain political factors such as presence of the property owner who is a politician will influence the business by ensuring that it complies with the ethical and legal policies. Essentially, the environment at which it is located means it is already economically viable to attract many customers such as the retirees. Moreover, there are opportunities mentioned by the councilors, which the Hurley’s café should take advantage of. Lastly, various threats such as poor management posed great risk for the café to fail in meeting her objectives. Therefore, the risk management process helped in mitigating and improving her performance. 2.5: Recommendations From the finding, it was recommended that the Hurley’s Café need strong internal control system .The system must be coupled with proper documentation, reshuffle of the human resource department and improved and efficient banking of the collected cash. Secondly, the CEO must relocate some of the employees instead of just putting them into probation. This rotational-based employment will help to ensure that employees work hard to meet efficiency and high turnover. 2.6: Conclusion The risk management report revealed that weak internal control system exists in Hurley’s café and therefore, there is need to improve the system. Proper documentation, close supervision of banked and collected cash and rotation of the employees can help in realizing the goals of the management. Assessment Task 2: Risk Analysis-assessment report 1.0: Introduction A critical analysis of the Hurley’s café revealed a lot of risk exposure. Essentially, the Board of management requested the risk manager to write a report about the risks identified in the café. The analysis captured the like hood occurrence of the risk, consequences of such risks, evaluation and prioritization of the risks before recommending how each of those risk should be treated. Moreover, the risk manager developed an action plan for the treatment of the risk before communicating to the relevant parties. Several risks are mentioned and observed to swindle the efficiency of the Hurley’s café. The key risks identified include lack of internal controls particularly in cash handling, monitoring and recording, lack of written policies and procedures to guide the staff when carrying out their duties, and failure to meet the necessary compliance. It also incorporates legal standards such as OHS, privacy and industrial relations law, lack of a professional based business culture in the family business and lastly, failure to monitor the external environmental opportunities and threats. In addition to that, there are likely other risks to occur such the perishability of the fresh products on transit over the 130 kilometers. 2.0: Main Body-Assessment, consequences, evaluation, prioritization and treatment of the risk 2.1: Lack of Strong internal controls 2.1.1: Assessment of the risk There is a risk of how cash sales and other received revenue was handled, monitored and recorded. In Hurley’s café, the supervisor revealed that the same staff that completed the cash registers balancing was also tasked with a responsibility of depositing the cash in the bank. The banking deposits never took place so often and over 4000 dollars were kept overnight in the cash register. Amazingly, there was no safe hence, it can be stolen within seconds. Secondly, not all cash received from by the family members from the cashier were recorded hence poor cash management. In addition to that, there was a bank after two shops from Hurley café but the cashiers could not deposit because the family members blocked that happen. James admits that there are high chances of the break-in and hence the money stolen. On his assessment, he revealed that the risk was moderate hence, a 50 percent of it happens. However, we revealed and found out that it was not just moderate but alarming. 2.1.2: Consequences of the risk There are severe business consequences emanating from poor internal controls. First, the business cash can be stolen on the way or burglar breaks in. This will mean that the cash is lost and hence close the business. Secondly, lack of records means that there is a lot of cash leakages no wonder the café could not sustain and yield profit. In addition to that, there is a risk of the staff colluding and eloping with some cash especially the 4000 dollars left in the cash registers. Moreover, the café do not have a safe, meaning any fire outbreak will definitely burn the cash and other essential resources into ash (Gallati, 2003). 2.1.3: Evaluation and Prioritization of the Risk On critical evaluation of the risk; lack of internal control measures and especially on how cash is handled pose a great risk to the business. In fact, a business can find itself under the worst risk scenario. Therefore, it should be first prioritized and solved before other sequential risks. 2.1.4: Treatment of the risk The risk can be treatment through maintenance of strong internal control system such as presence of a safe, proper recording of cash collected two individuals to be rotated in collecting and banking the cash. Ensuring that no cash kept in the cash register overnight, controlling how the family members participates in cash matters and closed supervision of the cashiers through daily internal auditing. 2.2: Lack of written policies and procedures to guide the staff 2.2.1: Risk assessment Another risk that the risk manager found was lack of written documentaries vital for guiding the staff in line of duties. The staff was from the same family meaning that no written human resource guide on how merit can be exercised in employment. This means that staff can even report for duties late and fail to be punished. James admits that they have verbal policies, which cannot amount to a legal suit because there is no reference. 2.2.2: Consequences of the risk The main consequences of no written policies and procedure to guide the staff emanates during reporting hours and termination of contract. The staff can sue the café and be fully compensated because no written document found to indicate the procedure used in terminating contract or report to duties. 2.2.3: Evaluation and Prioritization of the risk Essentially, the risk was evaluated and we found out that, it was not prone compared to internal control measures. However, it was moderate on prioritization because several employees report to work late. 2.2.4: Treatment of the risk The Hurley’s café new management should come up with written document that outlines procedures and guidance on how employees should conduct themselves in duties. 2.3: Failure to comply with legal standards such as OHS, privacy and industrial relations law 2.3.1: Assessment of the risk A meeting with Ron Langford revealed that the Hurley’s café was not so good in complying with legal standards such as OHS, privacy and industrial relations law. Therefore, once the federal government introduces the new legislation on efficient water usage and particular to industries, the café may be held off guard and punished. He revealed further that new cafes are going to be opened in the Toowoomba area and therefore Hurley café must rebrand itself to get customers. 2.3.2: Consequences of the risk A failure to meet compliance and legal standard means forced closure, heavy fine or legal suit in a federal court of law. Therefore, the Hurley’s café was exposing itself to such legal risk. It is vital for the management to reconsider strict law, ethic and policy adherence. 2.3.3: Evaluation and prioritization of the risk A critical evaluation of the risk revealed that it is one of the severest risk that Hurley’s café can be subjected to. The main reason is that, the court may call for closure of the café, imprisonment of the owners or subject them to heavy fines. 2.3.4: Treatment of the risk The risk can be managed through quick re-branding of the café, reshuffling of the management and total adherence to the rule of law and standards. 2.0: Risk Management Action Plan Risk Description Priorities(L,M,H,E) Options for control/treating method Monitoring Methods Timelines Likelihood/consequences Person responsible Lack of internal controls M Maintain strong internal auditing controls Regular Internal auditing 1 month Loss of cash, theft and inefficiency Management Failure to comply with legal standards L Revise the policy to adhere to such legal standards Checklist of how many policies adhered to 6 months Heavy fines and legal suits management Lack of written policies and procedures to guide the staff H Keep proper written documentaries about duties Refer to written documents Daily legal suits and poor time wastage management Lack of knowing Presence of environmental threats and opportunities E Extensive research on environmental threats and opportunities Research on how much achieved 3 Months Poor market performance compared to rivals management 3.0: Storage of the Risk Management Action Plan The action plan should be secured well and stored in a safe place. This is because it provides a guild line to management on how some of the risks can be mitigated and eventually efficiency maintained in the café. The documents should be chronologically and numerically numbered for quick reference. Assessment Task 3: Knowledge Test Introduction The aim of this assessment task was to answer all the following questions and demonstrate full understanding of the risk management 1.0: What are three ways that research can be conducted for risk-related issues, and for each way, briefly describes how it may be done There are three main ways through which research on risk related issues can be conducted. First, we have observation where the risk managers’ visits the risk related areas and assess the risk level from the ground. Essentially, this is more accurate and little deviation is experienced because those on the grounds are questioned apart from seeing what they are subjected to. The observation method of conduct risk based research is the most popular and used by the internal auditors (Gallati, 2003). Secondly, we have interviewing. This has been experienced in the previous two case studies where the risk manager was tasked with writing a risk review report about Hurley’s café. The risk manager had to interview the current supervisor to know some of the risks facing the café. Essentially, it is vital because help to collect risk based information from the experienced group of management. Third, we have secondary sources of research where, the researchers conduct research on the risk through books and other documentaries. This method of research is highly recommended because it allows comparison. However, there are cases of deviation. 2.0: Checklists and brainstorming are both tools that can be used in risk management. Describe each of these and when they would be used. Checklist is one of the tools that risk managers use to know what is required of a café or business to mitigate risk. Moreover, it singles our numerous risks that a firm faces. Essentially, checklists are prepared prior to the risk management process. They help the risk managers to understand the scope of the risk review process, the goal of the organization and how each risk is prioritized. Lastly, checklist has some limitations because it convenes the risk manager into specific risks. The manager goes on the ground knowing what to expect and if they fail, there are chances of failing in the risk management based research (Gallati, 2003). Secondly, the brainstorming is another tool used in the risk management. In brain storming process, the risk manager goes on the risk-based areas with open mind of any risk. They start research and assessing the risk before conclusively identifying the main risk. Essentially, this kind of method is highly preferable because no biased report can be synthesized about the risks. In most cases, risk managers are expected to combine the two methods because they help in harnessing new risk and mitigating tem further. Moreover, the risks are adequately known and solved within the right time schedule. 3.0: For each of the pieces of legislation, describe the intent and give examples of how it could impact on the process of managing risk a) Privacy Law/Act The idea of privacy in risk management depends on each risk area. Essentially, it helps to show a limit at which the risk management scope can be conducted. The privacy law is set to protect personal information or asset from being tampered with in the risk management process. However, those requesting for the personal information protection benefit from formal risk based management scrutiny and under that scenario their risk are identified and presented in a special way(Gallati, 2003). The privacy law can however be used by some culprits to hamper risk management evaluation for example where there are cash mismanagement. The employees can seek refuge from the privacy acts to ensure that they are not investigated hence the risk will not be mitigated. A recent survey in U.S showed how in 2009,companies used private act to compromise independent risk management research by arguing that they were comprised to give records. b) OHS Regulations Occupational Health and safety (OHS) is a risk-based area concerned with the safety, health and welfare of people engaged in any employment. This regulations are aimed to ensure that the employees welfares are maintained and therefore no exploitation. The main impact of these regulations on the risk management is that they help to ensure moral, financial and legal adherences. Effective OHS regulation can also help in reducing illness and employees’ injuries related based costs, disability costs and high medical care. This relieves the company unnecessary cost of caring for the employees (Gallati, 2003). It has affected risk management because employees can perform their risks at lowest risk possible exposure. c)Contract Laws The Contracts and Risk based Management Group negotiates, prepares, and reviews more than 500 kind’s contracts annually. Contract laws are found to influence how the risk is managed in various ways. The depth and breadth of the whole contract determines how efficient the risk management process occurs. Risk management is of particular importance in dealing with the non-negotiable based nature of government contracts. It has been argued that contract exposes more risks to business because they can be terminated easily hence they affect risk management in different ways. 4.0: Name and give an example for three adjustments that can be made in the workplace to assist a person with a disability. Various adjustments can be made in various job places to assist the disabled group. First, there should be strong OHS regulation for example easy and accessible medical facilities in case of accidents. Secondly, organization should have accessible routes for disabled to the skyscraper buildings. Lastly, there should be special package benefits for the disabled people for example you can excuse them some working hours especially in the morning. 5.0: List two types (one of them must be compulsory insurance for every company) of insurance an organization could consider purchasing, and for each type, describe the risks covered by the insurance and the benefits to the organization. The most popular two types of risk in insurance companies are fire and burglary insurance. This insurance is highly purchased because any organization can get fire or items stolen. The risks are covered depending on how exposed the company is to risk for example the petroleum companies will pay more premiums for fire insurance than a café. The main benefits of such insurance policies are compensation once the risk occurs. 6.0: Provide at least 3 examples of how the AS/NZS ISO31000:2009 provide guidance for managing risk? ISO 31000:2009 are not specific to any industry or sector. First, they provide guidance and principles of how risks can be mitigated. Secondly, it defines various functions such as finance, human resource and how each of these functions should be prevented from unnecessary risk. Third, it is made to apply to all kinds of risks for example it will work well in positive or negative consequence risks. References Gallati, R. R. (2003). Risk Management and Capital Adequacy. New York: McGraw-Hill. Read More