Risk Management and Risk Identification - Case Study Example

Risk Management Name: Subject Tutor: Date: 1.0 Executive Summary Risk management has been defined as the application of policies regarding management by using aspects such as practices and procedures in communicating and passing information about the process on how to establish context, identify, analyze, evaluate treat. Monitor and review the risk. Risk management has been used by most organizations to enable them to thrive under the consequences of the competitive environment in today’s world. When it comes to the definition of risk for a business, it is the process of forecasting the future events by considering the past performance and evaluating whether there is a probability of risk emergence, thereafter, if there is a forecasted risk, the business will research and develop means of minimizing or avoiding the risk. Risk management is always associated with the finance department in a business. This is because the root cause of the business survival is the way the flow of finance is managed. When there is a possibility of risk, the finance department is responsible. However, there are other risks which involve environmental risks, political risks and market risks. It is again healthy for a business to encounter risks because it acts as a climbing stone for success since to be a good entrepreneur, you should be a risk taker. There are two types of risk, the independent risk and the dependent risk. The independent risk is a type of risk that has no impact on any other risk, while dependent risk is a risk whereby occurrence of one risk depends on the occurrence of another risk. Table of Contents 1.0 Executive Summary 2 2.0 Project description 4 3.0 Risk Identification 5 4.0 Qualitative risk analysis 8 5.0 Risk treatment 11 6.0 Risk register 13 2.0 Project description From the definition of risk management, we can, therefore, analyze how Transperth bus stop in Western Australia has been able to manage risks related to transport services. The bus stop is located outside Western Australia at the Perth Cultural Centre, it has been able to serve passengers who travel from different places, and this bus station has decided to expand its operations by construction of another bus depot known as Beenyup bus depot which is responsible for water treatment while providing bus shelter services. This depot is intended to serve buses stop at Whitfords station, and it will include offering parking spaces, administration office, parking for the staff, maintenance workshop, bus wash and refueling facilities. 3.0 Risk Identification Before embarking on risk management, it is important to have an insight on the process for risk management, which will help us understand how Transperth has managed to overcome the risk (Edmund, 2003.340). There are six steps of the risk management process which are; Risk identification; this is the process that is undertaken to identify the possibility and the likelihood or risk occurrence. It involves assessing the aspects that form the overall body of the Transperth bus station and identifying the risks from where the staff will be aware. The process of risk identification is helpful to the company because it will enable them to prepare on how to handle the risk and it will also provide an overview on the levels of risk. Transperth identifies risk through forming interactive conversations with the staff and the stakeholders, these conversations involve brainstorming which will enable the managers to identify risk through the answers from the subordinates. Analyzing and prioritizing the risk; after risk identification, analyzing is done so as to transform the data obtained from the identification step and weight and prioritize the level of risk. This step is important because it enables the bus station to develop an appropriate mechanism of channeling resources towards handling the most important risk. It is the step where the personnel in charge of transport service will be subject to the decision making process on how to prioritize risks while considering their level of impact and the resources available to combat the risk. It also involves evaluating the risk and judging whether the transport service will be able to tolerate and accept the risk, and plan on how to manage it. It is obvious that a risk cannot be managed if there is no means of tolerating and accepting that the risk has or is likely to occur (Ronald and Roy, 1998.125). Planning and scheduling; after analyzing the identified risks, the bus station will therefore resort to planning and scheduling on how to develop strategies that will ensure risk management. Planning uses the information acquired from risk identification, while scheduling ensures that the actions towards risk management are systematically organized, it provides approval. Reporting and tracking of the risk management implementation; since planning and scheduling is the process of ensuring that strategies are made for managing risk. The report and tracking step is the process of providing an account on how the risk management implementation process is taking place. Tracking risk helps to monitor the level of risk and the progress put in place to combat it, it also measures the risk probability and its impact. Reporting of risk is the responsibility of ensuring that managers, staff and the stakeholders are aware of the level of risk and the status of managing it. Risk control; this is the process of taking action towards risk management execution plans. Controls measures are used to ensure the management process are undertaken and the account on how the process will ensure there is no risk. When it comes to the bus station, risk control is done through developing control strategies whereby staff will be working towards minimizing the levels of risks. Learning about the risk; this is the last step in the risk management process, it involves passing the knowledge about the risk on the staff. This ensures that the staffs are well aware on the probability of risk and hence they will be able to work as a team to ensure the occurrence of minimal risks. Learning will enable staff to also identify risk in their field of operations and, therefore, report the symptoms of risk. The company will thus be aware of the risk and will look for an appropriate remedy to avoid it. In every bus station, there are a lot of risks associated with the process of handling passengers and ensuring that the service provided for them is of good quality. These risks include the use of vehicles and the related hazards the risk is identified in the construction of the bus depot whereby the use and handling of vehicles can cause an adverse risk to the people surrounding. The risk can occur in the form of accidents due to over speeding while near bus stop and lose of control while driving. Spillages that result from the vehicles occur through mishandling of vehicle liquids such as oil, petrol and water. When spillage occurs, it will cause the floor to be slippery and this will result in minor accidents. Poorly maintained equipments that can result to risk in such a way that the people handling them may be careless and they may break them, this equipment could be fuel tanks, car washing facilities and parking facilities.wet surfaces that can harm passengers is a risk that result from spillage causing the surface to remain wet, the bus depot can have the wet surface at the cleaning hours and this should be done during the time when the passengers are few. Noise and obstructions are other risks that will occur through hooting of vehicles and noises from packaging equipments to be transported. Transperth has to assess these types of risk and come up with a risk management strategy that will ensure reduced harm, especially to people who use their transport service and also the environment in which the bus service operates. 4.0 Qualitative risk analysis Mitchell et al (2000) defines that the Qualitative risk analysis is the process of assessing the level of each risk that has been identified in the risk identification process. This process makes it easier for the shelter bus station to be able to manage the risk according to the resources available. The level of risk will determine the action that will be undertaken to control the risk. There are two main factors that describe the level of risk and they are the risk probability and the consequences of the risks. From the risks identified in the shelter bus service at Transperth, we can analyze them by looking at their level of probability and their level of consequence. Before qualitative risk analysis, it is important to have an insight information sources for risk analysis. Past records have been used to estimate the present types of risk and analyze whether they are consequential. Using past records requires that Transperth and the construction of the bus depot will analyze the present scenarios of risk and rate their levels. Relevant experience is also another source of risk analysis information that relates the present risk with one that has been experienced before. In the case of a shelter bus station, the use of relevant experience is important because it will provide an appropriate way of managing the risk. Published literature that relates to the types of risks encountered in Transperth provides details on how these risks occur and their immediate mitigations. Conducting research is another source of information on risk analysis, it will help the bus station to critically analyze the risk and come up with the bet management strategy. Risk analysis under probability; this is a step where the risk is analyzed and evaluated on the basis of its probability to occur. Let’s take a look at the risk of spillage, this is a type of risk that has been identified and there is a probability of its occurrence in the shelter bus station. Probability analyses the level of risk in five steps which are; Almost certain; it explains how the event will be expected to occur in most circumstances, when you look at the identified risks, there are risks that are expected to occur often and they include noise risk, spillage risk and mishandling of equipments. This is because the shelter bus station will always be subjected to the process of serving passengers and operating the bus station. Likelihood; it explains the probability of risk occurrence in most circumstances, such that when analyzing the risk, Transperth will consider the likelihood of risk occurrence. Possibility; this explains that the event will occur at some time; therefore the bus station should analyze these periods when the risk will occur. Unlikely; it explains is may or may not occur at some certain time. Rare; it explains that the risk will only occur under some exceptional circumstances. Risk level under the consequence it provides the analysis of the level in which the consequence of the risk will occur. The risk consequence always occurs when there was no control or risk avoidance upon identification of this risk. In the bus station, the level of consequence will affect the services offered to the passengers and is likely to run the bus station at a loss when it comes to using the available resources to treat the risk. Under the consequence matrix, the risk is analyzed as follows; Very severe; this is the consequence level where failure to treat an identified risk will stagnate the whole project because it will cause severe consequence which will deter the implementation process. Severe; this is the level where the consequence will affect the ongoing project because there is no means of ensuring that the risk is avoided yet it has already happened. Moderate; this level of risk will have an impact on time cost and quality of the project implementation because it will have a slight consequence which will slow down the project. Little; this is a consequence that will cause a minor impact on the process of implementing the project. Very little; this is a consequence that will have almost no impact on the project because its results are minimal due to the ability to minimize the risk of occurrence (Ian and Jim, 2011.65). From the risks identified in the shelter bus station in transpert,these risks have been analysed and their level of probability and consequence have been rated.for example the probability of noise is is almost certain and therefore it will heve a severe consequence if not mitigated.the bust station upon realizing the rsik should thereofre look fo an immediate remedy so as to avoid more consequences.it is obvious that when the risk occurs it will imoact on the management of the bus station which will escalate towards a result of the negative impact on the passengers who use these shelter buses.it is difficult for a bus station that operates and serves many passangers to manage risks that will occur consequently. thereofore, the risk management process will help them ensure that they have developed appropriate strategies for handling the risks. Risk analysis, while considering the level of probability and consequence help the bus station to organize their resources towards managing these risks.the resources will be in the form of money because they are required for purchasing equipments for repairing the damages caused by the risk. Spillage, for example, is a risk that will cause the floor to be slippery and will cause minor damages such as people falling,vehicles slippering and equipmens will be damaged.therefore assessing the level of risk will provide the bus station with a guideline on how to avoid such risks.it also helps the management to make decisions that will help the bus station to minimize the risks by planning on how to ensure implemtation process of risk management. 5.0 Risk treatment Risk treatment is the process of responding to the risk, looking for ways of amanging it and initiating control measures towards the risk management and in the end, providing mitigation measure to avoid the risk.risk treatment has four aspects which are risk avoidance,reduction,retension and transfer.the level of risk,which is determined by analysing the probability and consequence will help the management to make decision on which treatment strategy to choose.for the case of transperth shelter bus station it is important to analyse the strategies on treating the risk so as to choose the correct stratgey that will act as a long term mitigation towards minimizing the risk( Alexander et all, 2010.45) Risk avoidance is the decision to withdraw from facing the risk.this occurs when there is an adverse effect of the risk on the company resources.thereofre the management will identify and evaluate the level of risk to find out whether they can be able to handle it.risk avoidance is applied in finacial risks because of the probability that the risk will affect the financial status of the company.Transperth will apply the risk straegy on its finacial management when it comes to handling the passengers and vehicles, it is definite that risks will occur and, therefore, it is advisable that they will have to take a different course of action. Risk reduction is the most commonly used form of strategy to treat a risk such that the mitigation measure is to reduce the probability of risk occurrence and hence reducing the impact.for the case of transpert, it will take initiatives of reducing risk by ensuring that they hire qualified personel to work in the bus station and the bus depot.they will also employ safety management tools such as trainning their staff on safety issues like how to do first aid and how to handle equipments in a place where there is a large crowd and they demand services. To ensure risk reduction,Transperth has put in plce some measures to ensure that there will be no impact on the constructed depot to the community and to the passengers.noise is one of the hazards realted to any constrcution or a bus station,the shelter bus service has put in place measures of constructing the depot that will have a noise wall facing an opposite side where there are residents,this will minimize the noises produced from the hooting of vehicles and passangers. ligthing will also be minimized since it will have an impact on the nearby community because the depot will operate under a twenty four hour system, so the lighting will be focused into the depat to minimize spillage. Traffic movements have lso been associated with several risks, the depot will be serving a lot of buses and, therefore, there is a need to minimize traffic risks.Transperth has scheduled a timetable whereby the bus arrival and departure will be controlled and hence thare will be minimal risks concerning the traffic.Gas emissions are associated with environmental pollution and being a shelter bus station,there are a lot of gas emissions that are a hazard to the community and to the environment as well.Transperth will reduce these emmisions through restrictive measures thatensures that refuellling facilities are fitted filters that will eleiminate vapour and hence minimize exhaust emissions.the shelter bus station, therfore, will focus more on risk reduction which will help to minimize the occurences of risks and will ensure that passengers are treated with quality and satisfactory services. 6.0 Risk register Identified risk Risk analysis Probability consequence Risk treatment Noise Almost certain severe Risk reduction Gas emissions Almost certain severe Risk reduction spillage Likely moderate Risk avoidance Traffic risks Likely moderate Risk reduction lighting Possible moderate Risk reduction Handling equipments Almost certain severe Risk avoidance Reference Books In-text Reference list End note 3 authors Alexander McNell, Rudiger Frey, Paul Embrechts(2010,45) Alexender.M, Rudiger.F, Paul, E.2010 Quantitative risk management: concepts, techniques, and tools. 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