Risk Management - Caltex Australia Limited - Case Study Example

Name: Instructor: Course: Date: 1. Caltex Australia Limited Introduction Caltex Australia Limited is one of the largest companies in Australia that deals with refining and marketing of vast petroleum fuel products such as auto-gas, petrol and diesel, lubricants and motor oils. It started in 1936 as California Texas Oil Company. It is comprised of eight directors with one of them acting as the chairperson and the other acting as the chief executive officer. Caltex Australia operates as a retail centre for various crude oil products. The company has approximately twenty thousand shareholders with over 4000 thousand employees in Australia and over 2 petroleum oil refineries stations in Australia. The company property is highly exposed to various risks. PEST Analysis Caltex Australia is faced with numerous influences ranging from political, environmental, social and technological. As the company expands, there is likelihood that it will experience obstacles related to politics, environment, social and technology. Political obstacles include political instability. Political instability is likely to affect the business operation and expansion in most parts of Australia. The company is facing extreme political risks that may result in paralysis of the entire business operations. The company is also facing challenges relating to environmental pollution that may limit its growth. Seemingly, some technological challenges are requiring acquisition of new and modern equipment to aid in the business operations. SWOT Analysis The greatest strength of this business is lack of completion. In Australia, only few companies that deal with crude fuel products. Therefore, this business is likely to enjoy a large market share and perhaps outdo other competitors. The company is faces weaknesses that may result to poor management as well as its operations limitation due to lack of experienced work force to run its operations effectively. Numerous threats are likely to affect the growth of the business negatively. These threats include environmental and political threats. The company’s expansion is likely to be limited due to its negative impacts on the environment. All External and Internal Stakeholders for Caltex Australia Limited The external stakeholders of the business are the customers, suppliers, partners and the community. Customers include the automobile companies, car owners among others. The suppliers supply crude oil to the company for refinery purposes. The community is also a major external stakeholder to the company as it provides the business with both casual and skilled workforce. The internal stakeholders include the shareholders and the employees. Shareholders provide the business running capital while the employees support the company’s management and operations. Outline the Success Factors, Goals and Objectives for Caltex Australia Limited The major success factors of the business include minimal completion and substantial capital to run the business operations effectively. The company has set various goals. These include financial goals, career goals, services goals as well as the product goal. The company has also set objectives that include business expansion objectives and returns objectives. The relevant staff to participate in the formation of the risk management plan and approve the plan in Caltex Australia Limited Formulation of the risk management plan is the work of the board of directors that consists of eight directors. The managing director who is the chief executive officer approves the risk management plan. The chairperson then seconds it. 2. Risks in Caltex Australia Limited The company faces numerous risks that can be classified as physical risks, location risks, human risks and technology risks. These risks affect the operations of the business both externally and internally. Internal risks include financial risks, manpower or workforce deficiency risks and operation risks. Economic crisis and the bad company’s environmental reputation account for the external risks. Identification of the risks is based on analysis of the business both external and internal working environment. 3. Analysis of the Risk Building risks is a major and most common type of physical risks that could affect the business operation. Fire and explosions can damage the business premise as well as its assets. Location risks involve various external factors that are likely to damage the business property and result to termination of its operations. These include natural disasters such as earthquakes, fires, tornado and storms among others. The company also faces human risks that may be financial risks due to predisposing corruptions and embezzlement of company’s operation funds. The company carries out new projects every year. Embezzlement of the company finances is great jeopardy that is likely to affect the company growth oriented projects negatively. Operation risks are also likely to occur due to poor financial management. This could be due to poor management skills in the business-managing workforce. Technology risks could also occur due to power outrage as well as breakdown of computers resulting to loss of information (Marc par. 3). The company also faces environmental risks due to its impacts on the environment. This could result to derail of its operations due to its expansion limitation. 5. Evaluation of the Risk Physical risks need to be managed effectively. It is important to manage physical risks because they can result in enormous losses of the company’s property. Managing physical risks can result in positive outcomes such as sustained business growth and improved business reputation. Physical risks such as fires and explosions can be exclusively inhibited from affecting the business through for example installation of fire extinguishers and fire alarms in the business premises. When physical risks such as explosions and fires occur, there is damage to business property. Fires can destroy business assets such as computers and furniture resulting in loss of documented information. This is likely to affect business operations. The risk is likely to be positive to the business as it ensures safe back up of the company’s data in separate safe data banks. This is to ensure the business operations are not paralysed in case of an occurrence of the risk. The risk also present opportunities for various skilled personnel work on safety aspects of the business premises. These risks also present an opportunity to the insurance industry that covers the business for the losses resulting to these risks. 6. Managing the Risks This risk can be treated through several options. Identification of these options involves proper assessment of various factors that could result in the ultimate occurrence of the risk. Through analysis of these factors, proper mitigation measures to minimize the risks can be outlined in a risk management plan. Selecting the most appropriate risk treatment option requires prior analysis of the effectiveness of the plan. Preparation of the risk management plan requires proper assessment of the various tools that can be employed in curbing the impeding physical risk. Implementation of the risk treatment plan involves proper communication between the managing directors of the company and the entire workforce. 7. Documents that are required to be kept for the Risk Management Plan Various documents require to be kept in a risk management plan. These include; 1. Risk identification documents 2. Risk impact assessment documents 3. Risk prioritization analysis documents 4. Risk alleviation, planning, execution as well as progress monitoring documents 8. The Monitoring Process Your Business Will Use to Monitor the Risk Management Plan Monitoring of risk can be done through tracking the watch list. The watch list is composed of the risk identified, the risk level, the planned strategy of mitigating the risk and the period required in the implementation scheme. Resources those are essential in the risk mitigation plan and the staff who ensure that the risk scheme is implemented effectively. 9. Evaluation of the Risk Management Processes in Caltex Australia Limited Evaluation of the risk management process requires proper assessment that can effectively identify various impeding risks that are likely to affect the business negatively. This requires appropriate development of an effective risk management scheme. The scheme will be composed of several risk management tools. These tools will include risk identification processes, risk impact assessment processes, risk prioritization plans as well as risk planning, mitigation and advancement tools. I can effectively evaluate the risk management processes of my business by utilising these tools to analyse the risk and monitor its progress. Risk evaluation can also be done by examination of various effects of the risk to the business. These effects could be either positive or negative. This is important as it enables assessment of the risk and its potential effect to the business thus providing appropriate insights on minimization and elimination of the risk. Works Cited Davis, Marc. "Identifying And Managing Business Risks." Investopedia. Marc Davis, 29 Sept. 2009. Web. 01 Nov. 2013. . Read More