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Risk Review at MacVille Pvt Ltd

BSBRSK501 Manage risk


Assessment Task 1 :

For this assessment task, you will need to review the simulated business’s risk management processes and determine the scope and objectives, taking into account stakeholders and both internal and external environmental factors affecting the organisation. Once you have gathered this information, you are to identify risks and write a draft report to the CEO. You will meet with the CEO to discuss your report, seek support for your findings, and approval to communicate risk management processes to relevant stakeholders for their feedback and participation.


Procedure
You will assume the role of Ash, Assistant Manager of the Brisbane MacVille café, who has just been promoted to Manager of the new Toowoomba store. In preparation for the new venture, Ash has been tasked with conducting a risk management analysis of this project:


Excerpt of email from CEO Paula Kinski
From: CEO – P. Kinski
To: Assistant Manager – Queen Street store
Re: New Toowoomba store
Congratulations on your new appointment. Prior to taking up your position as Manager of our new Toowoomba store, located in Ruthven Street, the Board of Directors has asked that the risks in this project be appropriately managed.
I want you to undertake this task as it will give you significant insight into the store’s operations, it will ensure a smooth transition for Hurley’s Café staff into the MacVille family and will encourage you to give ongoing support for our risk management initiatives.
I would like you to approach this task in three stages and meet with me at the end of each phase to review your work and discuss your plans for the subsequent phases. The three stages in this risk management task will include:
1. Review.
2. Analyse and plan.
3. Monitor.

Once I have received your risk review report, we will need to discuss the steps that you
will take in the risk management process.
Regards
P. Kinski
CEO MacVille Cafés (Qld)


1. Review the provided MacVille simulated business scenario information and documentation provided in the Appendices of this task.


2. Write a report for the CEO (your assessor) that addresses the following:
a. The effectiveness of the MacVille Risk Management Framework in supporting the principles and processes of risk management, set out in the risk management standard AS/NZS ISO 31000:2009. Outline the purpose and key elements of the standard in your discussion.
b. Identify and describe the scope of risk management required in your role.
c. Identify and describe the critical success factors, goals or objectives for areas included in the scope.
d. Identify relevant internal and external stakeholders, their role in the risk management process, and any issues or concerns they have raised.  Complete the Table of Stakeholders Template (provided in Appendix 3 of this task) and attach to your report.
e. Complete a PEST analysis and a SWOT analysis to identify risks associated with the scenario. Outline the relevant legislation, regulations and standards (including those at a local level, i.e. Toowoomba Council).
f. Describe the methods of research that you used to complete your PEST and SWOT analysis. For example, how you approached the simulated business information; legislation, regulations, etc.; and any other information or research on risk that applies to the scope of your report.
g. Complete the analysis of risk for the scenario by summarising the scenario and identifying a list of risks to the project.


Answer

Assessment Task 1: Risk Review


Executive summary

This is a report that would reflect upon the different risk factors that are associated with expanding MacVille Cafe to the new Toowoomba store. The risk factors have been identified after several meetings with the current manager of the shop. The report includes an email to the stakeholders as well, and also an excerpt from the meeting with the CEO.


Introduction

As per the instructions of the CEO, the new manager went to the new Toowoomba store to gather some information about the operations and management of the existing Hurley’s cafe from the current manager of the store, James Mansfield, and the landlord of the premise, Ron Langford. It is understood that expanding and establishing a new shop needs to be planned meticulously, and this needs careful assessment of the entire scenario and properly gathering information. This report is has been made as per the CEO’s specifications that would try to give you a proper knowledge about the current functioning of the cafe and the assessment of all the risk factors that are associated with the expansion. 


MacVille knows that risk management is an integral part of proper goods management. The company tries to assess, evaluate and manage its risk factors, so that they can provide the best services to their customers. In this report, risks are identified so that those risks can be dealt with in a correct and efficient manner. 


Effectiveness of the MacVille Risk Management Framework

The risk management framework tries to cover a number of important elements that help the company to operate efficiently and provide the customers with the best services possible. An array of operational, financial, commercial and strategic risks are identified and tried to be dealt with in this framework. 

MacVille has a very clearly defined risk management framework and the following are incorporated within it, so that most of the obstacles t6hat may arise can be identified easily and solved.

  • Policies and procedures: these are to control the internal functionings of the company and to ensure that the shops run smoothly. These include policies on Human Resources (which include policies on harassment in the workplace and staff policy for travel, parental leave policy etc.), Financial prospects and Corporate Governance.
  • Monthly reporting: The senior management team regularly hold meetings so that no problems go unnoticed by the authorities and prompt and effective measurements can be taken. The Board is given proper and detailed reports on these meetings so that they are kept up to date with the problems and the solutions as well. 
  • Business planning and budgeting: The Board of Directors make proper budgeting plans and decide on the business strategies that would best serve the company’s purposes and take the company to the desired goals. 
  • Risk management review: The Financial, Audit and Risk Management Committee (FARM) reports to the Board on internal controls. This committee is assigned with the task of paying special attention to risk management. These reports are given to the CEO of the company and the CEO reports directly to the Board of Directors. The committee also oversees the internal and external audits; and this puts the committee in the perfect position to make advices to the Board on how to effectively control the internal management as well as advices on how to formulate the best strategies for running the business efficiently.
  • External audits: MacVille takes the issue of financial management very seriously and makes sure that the company is periodically audited by external agencies or audit firms so that no discrepancies are found in the monetary functioning of the company. These audit reports are sent to all the senior managers and the CEO and the Board of Directors.

This framework ensures that the company can operate without any glitches and even if any problems do arise, the company can handle those situations and come up with the perfect solutions. These company principle have been all taken into account while reviewing the new store at Toowoomba and trying to identify all the risks that the company may come across. 


The scope of risk management and role as the new manager of the Toowoomba store

The currently existing Hurley’s cafe is being taken over by MacVille and the company is trying to gather information on the different aspects where risk may arise, so that MacVille can effectively battle those and ensure a good running of business. The company already has a basic outline on where it may face risks and problems while operating, and this outline will be governing the analysis of the new store functions. 

MacVille, primarily, thinks that it has risk factors associated with organisational, financial, governance and project management. Multiple things and topics are included in this general guideline which normally cover most of the potential problems. 

As the newly appointed manager of this new store, meetings were scheduled with the current manager of Hurley’s Cafe and the landlord of the premise. The new manager has been assigned with the task of identifying the risks that may arise from this expansion and report to the CEO so that further steps can be taken accordingly. 

Upon meeting with the current manager of the store, James Mansfield, some points were identified and notes were taken accordingly. 


One of the biggest problems that was noticed was the distance between brisbane and Toowoomba. The time that it takes to drive from the Brisbane to the new store would make the weekly managers’ meeting somewhat of a problem. New manager has to be trained properly so that he/she can execute the responsibilities perfectly. The distance may pose as a serious issue, but it can also be solved with good time management skills. The climb up to the store is blocked by trucks, which make the approach somewhat of a problem. Since the distance is a problem, delivering fresh food items would also become one of the bigger concerns for MacVille. This problem can be resolved reasonably enough as the current store has infrastructure to bake fresh products within 30 minutes. This would also render company-branded supplies to lag. The current establishment does not have any written down contracts between the employees and Mr. Hurley. This has to be revised immediately as MacVille is a much bigger chain and a proper contract must be made, else this may prove to be a problem in the future. The store has to have a good flow of water supplies. The store currently uses about 41,500 litres of water every week and this amount must be kept on being supplied. MacVille may even need to upgrade the system to a dual-flush one, which would cost the company about $7,500. 


One of the major problems that was noticed during the meeting was the issue of cash handling. The store does not have any safe for keeping cash and MacVille has to make sure that the cash register is revamped. James said that there is a 50% chance of theft in the store. This is just one more aspect that would only prompt MacVille to invest on making a proper cash registry system. The furniture of the store also has to be replaced. 

The store currently has no established process for treating injuries that may happen from work. MacVille would be sure to make contracts that would include treatment of injuries.


SWOT

The new shop’s biggest strength is its location. It is set on the crossing of two main streets. This would massively help to attract attention. The area is well connected by public transportation - this would enable customers from far away to easily reach the shop without much hassle. The store currently has moderate infrastructure which would prove helpful to MacVille while overhauling the existing set-up. 

The weakness that is faced by the store is the obstacles that are posed by the trucks. But investigations can help to solve this with relative ease.

According to the landlord of the premise, Ron Langford, more shops can be opened in the surrounding areas. He also explained that the population of the area is on the rise, and this would ensure MacVille with a lot of customers and good profits. He further mentioned that a by-law would be implemented from the next month by the government, which would allow cafes to expand their footpaths and put more tables. 


Two major threats have been identified which may concern the company. Firstly, the is a local law that excessive water usage would result in a $50,000 fine, which is going to be backed up by the government soon. MacVille has to pay close attention to this, and even has to upgrade the system if necessary in order to minimize water usage. Another issue is the growing competition in the area. Ron said there are many multinational cafe chains are trying to set up cafes in the city. This means MacVille has to price their products very competitively.

These are the different risks that involve setting up the new store at Toowoomba which were identified. To make sure the company operates like its other shops, these must be addressed as soon as possible.


PEST

PoliticalThe new legislations   that are being talked about by the government would both help MacVille as   well as make operations somewhat of a problem regarding the water issues
EconomicalSince the current   store already has a basic infrastructure, this would help MacVille to curb a   lot in terms of spending to upgrade
SocialThe existence of   Hurley’s ensure that all the regular customers would be wanting to come back   at the same place of their choice even after the change. Retaining the   customers would easy, more or less
TechnologicalMacVille has to invest   considerably into upgrading the water supply systems so that extra fines do   not have to be paid



Email to the stakeholders of the company

An email is being sent to the stakeholders, which would give them the proper idea pertaining to the problems that have been identified and the possible solutions, so that they would have clear ideas about the whole situation.

To,
The stakeholders of   MacVille Ltd.

Sub: Explaining the different stakes at work
 
Dear Sir/Madam,
This mail is to inform   you that Macville is establishing a new store at Toowoomba and the process   has identified some issues and problems regarding the running of the company   in the area, the solutions have also been chalked out. You are kindly   requested to contact the management of MacVille so that you could be given   the proper detailed idea about the whole situation, so that you can assess   the situation yourself as well and assist the company with insights and   advices that would help us to serve you better.

Thanking you,
The Manager
MacVille Cafe, Toowoomba Shop



Points from the meeting with the CEO

After the issues had been identified, the new manager attended a meeting with the CEO of the company. The key points of the meeting are given below:

  • Key problems have been identified
  • The problems have been explained to the CEO and they have been accepted
  • Steps to deal with these problems have already been started to be planned
  • The CEO has given full authority to the new manager to resolve the issues
  • Further investigations are sanctioned and the manager is instructed to go on with original plans to expand the new shop


Table of the stakeholders

StakeholdersInternal/externalRole in processStake in process
WorkersInternalEnsuring smooth   everyday operations while dealing with customersRetaining job and keep   earning
ManagerInternalManaging the store so   that every aspect of the store runs properlyMaking sure the   company profits the most from this store
CEOInternalOverseeing the process   of expansionHelping MacVille to   expand and reach its potential 
SuppliersExternalKeep supplying the new   store with the ingredients and the materialsRetain macVille as one   of their biggest purchasers
CustomersExternalComing to the shop and   helping the company to make salesKeep getting the best   food and services for that price
ShareholdersInternalRetain the shares of   the companyProfit more from the   shares as the price of each unit would increase with the gradual development   of the company
InvestorsExternalInvest to the   expansion of the companyExpecting maximum   returns from the investments



Conclusions

The new shop has some issues that have been identified. These problems are being tried to deal with. The CEO has been notified and a report has been sent to the Board of Directors too. The next courses of actions are being planned as per the identified problems. 

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