BSBRSK501 Manage Risk Answers

Assessment task 1

Risk review

Performance objective

For this task you are required to determine the risk context associated with establishing a new business outlet, within the existing business structure. They will be required to review internal and external environment factors and liaise with all stakeholders to generate a list of risks.

Assessment description

For the case study provided with this Assessment Task, you are required to review risk management processes and determine scope and objectives, taking into account stakeholder input and both internal and external environmental factors affecting the organisation. With the information gathered, you are to identify risks and present this to relevant parties for feedback.

Procedure

For the provided case study, you will assume the role of the risk manager/assessor.

1. Review the provided MacVille Risk Management Policy and Risk Management Strategy and complete a written report for your manager (your facilitator) that addresses the following steps.
   1. Scope – Identify the scope of risk management required in your identified role.
   2. Goals – Identify and describe the critical success factors, goals or objectives for areas included in scope.
   3. Stakeholders – Identify internal and external stakeholders, their role in the process, and any issues or concerns they have. Present this using the table format provided.
   4. Analysis – Complete a PEST analysis and a SWOT analysis for risks associated with the scenario. Include reference to relevant legislation.
   5. Research – Review and summarise the research information provided in the case study, as well as any literature available that is relevant to this scenario.
   6. Describe – Complete the analysis of risk for the scenario by summarising the scenario and associated risks, accompanied by checklists, diagrams or flowcharts that support the summary.
2. After you have completed the above steps, you need to meet with your manager (facilitator) and discuss the draft report you have developed, especially your understanding of the critical success factors and goals (you should check that your manager {facilitator } agrees with your findings).
3. As part of your discussions you also need to discuss and identify how you can communicate with stakeholders about the risk management processes in this scenario and invite them to participate in discussions to further identify risks associated with the scenario.
   1. Summarise: In dot-point form, summarise the discussions with your manager.
      1. This should include any recommendations they made to you.
   2. Develop: a draft of the communication your manager suggested you use for consultation with a stakeholder or particular group of stakeholders.
      1. For example, if stakeholders desire a phone call, you should include a draft script of information that you need to share with stakeholders.
      2. Whatever the form of communication, it must clearly ask stakeholders for input, and invite them to assist in the identification of risk for this scenario.

When uploading the report and accompanying documents, you need to ensure that:

• your report is titled ‘Risk review’
• your report is in order, with attachments on the back of your report as follows
• it includes notes from meeting with your manager
• it includes draft communication

your report is uploaded by the due date

Specifications

You must provide:

• a completed report as outlined above in steps 1–6, using the headings provided for each step
• summary notes from your meeting with your manager (facilitator)
  • summarise in dot-point form the discussions with your manager and include any recommendations they made to you
• a draft communication to be used with stakeholders
  • develop a draft of the communication your manager suggested you use for consultation with stakeholders
  • e. if they suggested a phone call, you should include a draft script of information that you need to share with stakeholders
  • whatever the form of communication, it must clearly ask stakeholders for input, and invite them to assist in the identification of risk for this scenario.

Your assessor will be looking for:

• evidence that you analysed and identified the needs of the case study and have clearly reflected these in the risk report.

Case Study: Business plan (excerpt)

MacVille business plan FY 2016/17

Mission

MacVille cafes serve competitively priced, high quality coffee and gourmet food in a safe and comfortable cafe-style environment. Our friendly, well-trained staff provide superior customer service.

Vision

MacVille aims to deliver our valued customers the very best cafe-going experience. In three years, the business will have established a presence across the Queensland and NSW, with the opening of additional cafes.

Values

• Customer-focus
• Safety
• Teamwork
• Performance excellence.

Strategic directions

The strategic context in which MacVille will achieve its mission and vision is through:

• engaging with customers and customer research

developing and improving products and quality

Case Study: Scenario

As part of their overall strategy in the Australian beverage market, MacVille Pty Ltd have developed a chain of cafes in the Central Business District (CBD) of Brisbane, Queensland and the CBD of Sydney, NSW. The board of directors have made the decision to expand their operations in Queensland with the purchase and re-branding of the existing Hurley’s cafe in Toowoomba, 130km west of Brisbane.

You are currently the assistant manager of their flagship store in Queen Street, Brisbane, and have been given the opportunity to manage the new store in Toowoomba. The CEO for MacVille’s cafes in Queensland is Paula Kinski.

You are a member of the Finance, Audit and Risk Management (FARM) Committee described in the MacVille Risk Management Policy.

Paula has assigned you the task of managing the risks involved with the operational aspects of this take-over. A copy of her email is attached.

Email from CEO – Paula Kinski

From: CEO – P.Kinski

To: Assistant Manager – Queen Street

Re: New Toowoomba store

Congratulations on your new appointment. Prior to taking up your position as manager of our Toowoomba store located in Ruthven Street, the board 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 to the MacVille systems 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.

Your primary risk management focus is directed to the ongoing operations of the Toowoomba cafe. The strategic and investment risks of this project are being managed by the board. To this end, you are to consider any risks that could impact on human resources management, financial operations, WHS, our supply chain and the local governance and overall compliance issues.

By way of background, MacVille has agreed to employ all existing staff on three months probation. The current supervisor James Mansfield, has been offered the position of 2^nd in charge and he has accepted.

While settlement on the purchase of the business is not for another few weeks, the seller has agreed to grant us full access to the store’s operational processes and store information. You should liaise weekly with the Finance, Audit and Risk Management (FARM) Committee here at head office concerning the marketing, finance and store management functions that you are investigating. I will set up a regular meeting for you.

Head office has a report on a similar expansion conducted by the NSW team that may help you in your research. You may need to review other statistical information and engage specialists to help you with your investigation. The legal firm Goldsmith Partners are advising MacVille on the Hurley cafe acquisition and would be available to help you with legal or any compliance issues.

The landlord of the shop in Toowoomba, Ron Langford, is also a local councillor and has offered his assistance in getting established in Toowoomba. He has offered his email address for correspondence (ron.langford@tcc.com.au).

Once I have received and discussed your risk review report, we can move onto the next stage of the risk management process.

Regards

P.Kinski

CEO MacVille Cafes (Qld)

Site visit – Toowoomba

You received permission from Paula to travel to the Toowoomba store to start your research. Paula had cleared it with James Mansfield the current senior supervisor who will spent most of the day with you helping answer your queries.

You arrived at the cafe and noted the two hours of drive time that it took to get to the cafe from the CBD of Brisbane. You met with James who took you through a complete overview of the store and the surrounding area. He was OK with the idea that you needed to take notes in preparation for a report.

Paula had also arranged for you to meet with Ron Langford in his office later that afternoon.

Hurley’s Cafe

After lunch, you went over your notes to revise and edit key concerns and significant events that you had written down earlier.

• The location of the store on the corner of the two main streets of the city makes easy access for local customers and highly visible for tourists.
• The long drive from Toowoomba to Brisbane would make attending the weekly managers meeting difficult considering many meetings did not finish until into the evening after refreshments. There is also manager training sessions that need to complete over the next 6 months in conjunction with a few other assistant managers. Navigating the steep narrow climb up the range with trucks blocking the way is quite difficult even in daylight hours. Being a competent driver you feel that it would be unlikely that you would be involved in an accident, but it still concerns you considerably.
• The two hour delivery would make fresh pastry deliveries from the company’s central bakery plant impractical. The pastries would arrive after the morning rush. These are a key part of the MacVille assortment.
• There is also a concern about getting the company branded supplies through as quickly as a CBD Brisbane store could.
• Hurley’s cafe was a family run store and some family members were employed on the staff. James was engaged by the family to supervise the operations of the store and Mr. Hurley as manager would authorise wages but anyone can authorise deliveries.
• When asked about written policy and procedures manual, James said that Mr. Hurley set the policy and procedures verbally and on the few days each week he was in the store he would show the staff how to do things the way he wanted them done.
• Water use – Running the dishwasher when only half full. Washing fruit and vegetables under a fast running tap. Toilets all used the single flush system. Dual flush would cost about $7,500 to upgrade. The dishwasher was always set to full wash and had a Water Efficiency Labelling and Standards Scheme (WELS) rating of 3. The more water efficient 5-6 star dishwashers cost about $6,000 and above. James explained that Mr Hurley instructed the staff to keep the non-native flowering plants in the courtyard fully watered. The store currently uses 41,500lt a week.
• James spoke about the cafe attracting a large % of retirees because of the easy access to busses and the stores central location.
• The same staff member that completed the cash register balancing also completed the bank deposit form and did the banking as well. The banking was not done every day and often $4,000 was kept on the premises overnight in the cash register. There was no safe. There is a bank two shops away but the Hurley family bank is a couple of blocks away and there was not always time to do the banking.
• James replied to you question about the possibility of break-ins saying that there was a 50% chance of it happening and the risk was moderate.
• Not all takings from the cash register by family staff members were recorded.
• The fit-out in parts looked old and unattractive, with some chairs unstable and broken and some parts of the worn carpet was simply taped over with gaffer tape.
• One of the staff was a qualified chef who had developed an innovative and popular range of rice wraps that were tasty, gourmet and healthy. None of the other cafes in the area offered these.
• No established process for dealing with injuries that happened at work.
• James gave a brochure about an innovative frozen par-bake cooking system that was under the limit set by council for an exhaust system yet it cooked fresh bakery items in 30 minutes from frozen par-baked pastries.
• The computer with all the stores employee details, and financial records was not password protected and anyone could access the information.
• James’s response to your question about the lack of sales promotion techniques was that he could not get the staff interested in the activity so he stopped trying to make it happen.
• The employee detail form requested information about the employee’s entire past health issues.
• The wage and superannuation records seemed to be incomplete with many calculations being worked out by the number of hours worked multiplied by a set ‘in the hand’ amount.
• James also provided a brochure about a company that could come and set up WIFI in the cafe so that customers could use their computer notebooks and connect to the Internet while they were dining in the cafe.

Meeting with Ron Langford

In the afternoon you met with Ron Langford in his office to discuss the cafe, council by-laws and aspects concerning the surrounding district. You took notes that included the following significant information.

• Ron explained that there were opportunities for opening more cafes in the surrounding shopping centres like Wilsonton, Clifford Gardens and K-Mart Plaza.
• Ron handed you an extract from a government report ‘Economic Brief.’
• Ron explained that the Federal Government was now introducing legislation that backs up the local by-law concerning efficient water usage, particularly by industries. The current by-law has fines of up to $50,000 for excessive water breaches. Ron did explain that the council was giving some time to ‘make good’ under certain circumstances on a case by case basis. Ron also agreed with the idea of installing a water tank in the court yard for the cafe to use and would help get it built.
• Ron explained that Toowoomba was obviously a place for retirees and the population was growing.
• Ron spoke about the Federal Government’s National Broadband Network being rolled out in Toowoomba that would allow efficient and effective video streaming and teleconferencing.
• Ron spoke about the current by-law that was due for implementation on the 1st of next month allowing cafes to expand their footpath dinning and so put more tables and chairs outside their premises.
• Ron also spoke of the fact that representatives of a large international chain of coffee shops had been making enquiries around town about opening a store in the Toowoomba CBD.

Senior Management Team and Finance, Audit and Risk Management (FARM) Committee meetings

Soon after you got back from your research trip to the Toowoomba store, you attended two teleconferences. First, you met with the senior management team. At this teleconference, you discussed issues raised by James Mansfield and Ron Langford and the report on previous NSW expansion, which head office had given you: Report into the acquisition and re-branding of the NSW expansion store. Paula said that there may be some things to learn from the NSW experience.

Key problems identified in the report were as follows:

1. Lack of internal controls, particularly over cash handling, monitoring and recording.
2. Failure to meet compliance standards in WHS, Privacy and industrial relations law.
3. Lack of written policy and procedures to guide staff in carrying out their duties.
4. Lack of a professional business culture in the family run business.
5. Failure of the business to monitor the external environment and find opportunities and threats to the business.

The team agreed that similar issues would pose a risk to the Toowoomba expansion.

You then held a teleconference with the FARM Committee. At the teleconference, you relayed the concerns of the senior management team. The FARM committee decided to allow you time to complete your review and then would include discussion of your review in the monthly board meeting.

Case Study: Table of stakeholders (format)

Case Study: Risk management policy

Introduction

MacVille recognises that risk management is an essential component of good management practice and is committed to ensuring the implementation of risk management processes that focus on the proactive management of risks across the organisation.

This risk management policy forms part of MacVille's internal controls and corporate governance arrangements. The risk management policy is designed to:

• identify, evaluate, control and manage risks
• ensure potential threats and opportunities are identified and managed
• inform directors, senior management and staff members about their roles, responsibilities and reporting procedures with regards to risk management
• ensure risk management is an integral part of planning at all levels of the organisation.Policy

MacVille is committed to achieving its vision, business objectives and quality objectives by the proactive management of risk at all levels of the organisation.

MacVille will identify, evaluate, control and manage risk throughout the organisation in accordance with the ‘MacVille Risk Management Framework’. See risk management strategy for framework details.

Responsibility and Authority

Directors, management and employees of MacVille have responsibility fro implementing aspects of this policy.

Role of the Directors

The directors have a governance responsibility in the management of risk. This includes:

• determining what types of risk are acceptable and which are not
• setting the standards and expectations of staff with respect to conduct
• approving major decisions affecting MacVille’s risk profile or exposure
• monitoring the management of significant risks to reduce the likelihood of potential organisational risks and threats or failure
• being satisfied that risks are being actively managed, with the appropriate controls in place and working effectively
• annual review of MacVille’s approach to risk management and approval of changes or improvements to key elements of its processes and procedures.

Role of the Senior Management Team and Store Managers

Key roles of the senior management team are to:

• implement policies on risk management and internal control where this is deemed appropriate
• identify and evaluate areas of significant risks potentially faced by MacVille for consideration by the directors
• identify areas where risk management is not adequately addressed and advise the directors accordingly
• review and update the Risk Management Strategy

undertake an annual review of the effectiveness of systems of internal control and provide an annual report to the directors, including a summary review and respective recommendations.

Role of Cafe Employees

Key roles of the employees are to:

• familiarise themselves with the content of the risk management policy and clarify any aspects necessary with a senior team member
• consider any risks they feel could impact on them meeting their objectives and either manage the risk if it is in their control to do so, or inform a management team member of their concerns
• advise senior management, in the first instance, or the Board, if concerned about any fraud or unethical behaviour.

MacVille Risk Management Framework

This framework encompasses a number of elements that together facilitate an effective and efficient operation, enabling MacVille to respond to a variety of operational, financial, commercial and strategic risks. These elements include:

Policies and procedures – A series of policies underpin the internal control process. These policies are endorsed by the directors and are implemented and communicated by the senior management team to all staff. These policies include:

• Human Resources Policies
  • Staff Travel Policy
  • Harassment Policy
  • WHS Policy
  • Return to Work Policy
  • Work/Life Balance Policy
  • Equity/Discrimination/Diversity Policy
  • Parental Leave Policy
  • Organisational Culture Policy
• Financial Policies
  • Bad Debt Policy
  • Cash Reserving Policy
  • Revenue/Expenditure Recognition Policy
  • Finance, Audit and Risk Management (FARM) Committee Terms of Reference including delegations
• Corporate Governance Policies
  • Board Protocol
  • Sitting Fees Policy
  • Directors Remuneration Policy

Monthly reporting – Decisions to rectify problems are made at regular meetings of the senior management team. Comprehensive reporting at board and sub-committee meetings is designed to monitor key risks and their controls.

Business planning and budgeting – The business planning and budgeting process is used to set objectives, agree on action plans, and allocate resources. Progress towards meeting business plan objectives is monitored regularly by the senior management team and by directors at board meetings.

Risk Management review – The Finance, Audit and Risk Management (FARM) Committee are required to report at board meetings on internal controls. The Finance and Audit Committee pay particular attention to risk management. It is the CEO’s responsibility to brief the directors periodically and as appropriate on the development of policies and procedures to ensure effective and efficient operations, risk management strategies and implementation. In addition, the FARM committee oversees internal audit, external audit and management as required in its review of internal controls. The committee is therefore well placed to provide advice to the board on the effectiveness of the internal control system, including MacVille’s strategy for the management of risk.

External audit – The final audit of financial statements is controlled by an external chartered accountant who provides feedback to the Board through the Finance and Audit Committee.

Procedure: Development of a Risk Management Profile

The following outlines the process for developing a risk management profile.

1. Establish the context

• Define and identify the environment, characteristics and stakeholders, their goals and objectives, and the scope of the specific risk management process.
• Develop criteria against which risks are evaluated and identify the structure for risk management.

2. Identify and describe risks

• Risks are best identified through a collaborative approach involving a cross section of stakeholders.
• All conceivable risks must be considered. Ensure any certainties are identified as problems and addressed in the risk management profile.

3. Conduct current risk analysis

• An analysis of the risks is conducted to determine their causes, and estimate their probability and consequences. This analysis provides the basis for working on the ‘right’ risks.

4. Conduct risk evaluation

• Risks are considered and prioritised according to their potential impact, and each risk is assessed to determine its level of acceptability.

5. Develop and implement proposed risk treatments

• Risk treatments are developed to cost-effectively reduce, contain and control risk.
• Formal risk management reporting mechanisms are defined and documented.
• Categorise the risk likelihood.

6. Monitor, report, update and manage risks

As risks change constantly, the risk profile is continuously monitored, reviewed and updated by management. New risks may be identified as more information becomes available and existing risks may be eliminated through the effectiveness of the risk treatments/actions. Record risks identified through regular audit on the risk audit log. Record risk management activities on the risk management register.

MacVille’s Risk Areas

The following are four broad areas where potential for risk to MacVille has been identified. Under each area, examples of possible risks are detailed.

Operational/Organisational

• Legal and regulatory compliance
• Technology
• Insurance
• Resources: human, physical
• Logistics
• Marketing
• Product quality
• Communications
• Infrastructure, plant and equipment
• Customer interaction
• Market needs

Financial

• Accountability
• Fraud or theft
• Capital investment
• Interest rates
• Loss of income, funding/finance

Governance

• Conduct of board
• Conflict of interest

Project Management

• Procedures and tools for project management
• Stakeholders – strength of relationships/conflict of interest
• Human resources
• Financial resources

Case study: Risk management strategy

Introduction

MacVille recognises that risk management is an essential component of good management practice and is committed to the proactive management of risks across the organisation. The strategy is designed to:

• identify, evaluate, control and manage risks
• ensure potential threats and opportunities are identified and managed
• inform directors, senior management and staff members about their roles, responsibilities and reporting procedures with regards to risk management
• ensure risk management is an integral part of planning at all levels of the organisation.

Guiding Principles

• MacVille is committed to achieving its vision, business objectives and quality objectives by the proactive management of risk at all levels of the organisation, acknowledging that embracing innovative ideas and practices carries with it risks, but that these are identifiable and measurable and therefore capable of being subject to realistic risk mitigation processes.

Responsibility and Authority

• The directors have responsibility for ensuring that risk management is in place.
• The Finance, Audit and Risk Management (FARM) Committee has the responsibility of reviewing the Risk Action Plan on a six-monthly basis.
• The CEO and the senior management team have responsibility for managing risk and advising the Board on appropriate controls.
• The CEO and the senior management team support and implement policies approved by the directors.
• Key risk indicators will be identified, closely monitored and action taken where necessary, by the staff and directors.

MacVille Risk Management Framework

This framework encompasses a number of elements that together facilitate an effective and efficient operation, enabling MacVille to respond to a variety of operational, financial, commercial and strategic risks. These elements include:

• Policies and procedures: A series of policies underpin the internal control process.
• Reporting: Decisions to rectify problems are made at regular meetings of the senior management team.
• Business planning and budgeting: The business planning and budgeting process is used to set objectives, agree on action plans and allocate resources. Progress towards meeting business plan objectives is monitored regularly by the senior management team and by directors at board meetings. Contingency planning is undertaken as required.
• Risk Management review: The Finance, Audit and Risk Management (FARM) committee is required to report at Board meetings on internal controls.
• CEO: The CEO has responsibility to brief the Directors periodically and as appropriate on the development of policies and procedures to ensure effective and efficient operations, risk management strategies and implementation.
• External audit: The final audit of financial statements is controlled by an external chartered accountant who provides feedback to the Board through the FARM Committee.

Definitions

Risks are identified on a scale of likelihood of occurring in the next 12 months and assigning an impact or consequence to the risk as high, medium or low. High includes either a significant shortfall of around 40% in achieving budget or a significant reduction in ability to function. Medium includes either a shortfall of budget of between 10% and 20% or some reduction in function. Low indicates minor reductions in achieving budget or minimal reduction in performance.

To complete this assessment task, you will need to review a simulated business and associated documentation, identify and document risks, analyze and evaluate risks to determine level of risk for the organization, and plan to treat risk. You will need to perform these activities in accordance with organizational requirements and the international and Australian Standard for risk management, AS/NZS ISO 31000:2009.

Introduction

MacVille is an Australian coffee supply business. The company imports coffee and supplies cafes and restaurants with top quality coffee, which is produced and distributed in line with the highest social and environmental standards. Within five years, MacVille intends to have established itself as the number one coffee supplier for fine coffee shops and restaurants in Australia. To achieve the company vision, MacVille’s strategic directions include:

• engaging clients with excellent service to increase sales volume
• reducing expenditure and achieving financial control over expenses
• establishing MacVille as employer of choice through supporting innovative thinking, performance management and leadership skills through training, and exemplary health and safety performance
• monitoring supplier quality and triple bottom line impact.

These strategic directions are reflected in sales and operational targets at every level of the company and are also reflected in individual performance measures. The organization must effectively identify and manage risk to strategic goals.

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Task 2: Analyse and Treat Risk

Performance objective

For this task you are to analyse the risks you identified in the simulated business scenario to assess the likelihood and consequence of risks, evaluate and prioritise risks, and determine options for treatment. You are also required to develop a risk management action plan for the treatment of risks and communicate it to relevant stakeholders.

Assessment description

For the MacVille Pty Ltd simulated business scenario provided, you are required to assume the role of Brisbane store Assistant Manager, Ash, who has just been promoted to be Manager of a new store. Ash has been tasked with conducting a risk management analysis of this new venture.  There are three stages to this project: (1) review, (2) analyse and plan, and (3) monitor. This project is divided into three assessment tasks as follows:

For this task, you are to use the information you gathered in Assessment Task 1, along with the simulated business information provided, to examine the likelihood and consequence of identified risks, priorities the risks and determine options for treatment of each risk. Using this information, you are required to develop a risk management action plan for implementing risk treatment, document the plan as required, and communicate the risk management plan to relevant parties.

Procedure

Part A

1. Review the MacVille simulated business scenario information and documentation provided in the Appendices of this task and in Assessment Task 1.
2. Develop a report for the CEO (your assessor) that includes the following:
   1. For each risk (i.e. the four identified in the scenario for this task), assess the likelihood of the risk occurring.
   2. For each risk, assess the consequence of the risk occurring.
   3. Develop a risk matrix to assist in prioritising the treatment of the identified risks, including numerical values (e.g. risk matrix in the Student Workbook).
   4. Once you have prioritised the risks, for each, outline at least two suitable options for treatment.
   5. Include an explanation of the process you used to identify risks and assess likelihood, consequence and priority. Also include an explanation of why the options you have suggested for treating the risks are:
      1. likely to be effective
      2. feasible for the organisation.

      Note: Ensure your report is written in a style appropriate to your stakeholder audience, for example, using appropriate language and including appropriate illustrative material (such as checklists, diagrams or flow charts) and attachments to support your findings and process.

3. Develop an action plan(you may use the Risk Management Action Plan BSBRSK501 Manage Risk Answers provided in Appendix 3 of this task)for implementing risk treatment and attach it to your report.
4. Communicate your analysis to the Board of Directors by submitting your risk analysis report, along with your risk management plan, to the CEO (your assessor) for internal distribution.

Part B

1. Implement your risk management treatment of one key risk, such as decreased brand recognition, in accordance with the requirements provided to you by the CEO (your assessor). You will need to discuss and agree with your assessor how to provide evidence of your implementation.
2. Submit the required documents for assessment as per the specifications below. Be sure to keep a copy for your records.

Specifications

• a risk analysis report, including a risk matrix
• a completed risk management action plan
• Communication to your CEO for risk analysis report and risk management plan
• implement one risk treatment and submit evidence as agreed with your assessor

Your assessor will be looking for evidence of:

• reading skills to gather, review, interpret and analyse text-based business information from a range of sources in order to evaluate risk
• written skills to organise and deliver information to effectively communicate risk management analysis and plan to a range of stakeholders
• numeracy skills to interpret mathematical data when reviewing and analysing scenario business information and evaluating risks and treatment options
• ability to work independently to evaluate risks and make decisions about treatment options
• ability to interact with others using appropriate conventions when communicating to, and consulting with, stakeholders
• ability to sequence and schedule activities and manage communication
• ability to analyse relevant information to identify and evaluate treatment options
• ability to use familiar digital technology to access information, document findings and communicate them to stakeholders.

Appendix 1 – Scenario – MacVille Pty Ltd simulated business

Background The MacVille Board has reviewed the previous report you developed, and has requested further information for four of the identified risks, including options for reducing the risk levels. These risks are as follows:

• Banking risk – theft of cash left on premises.
• Manager’s travel risk –physical injury.
• By-law compliance risk –reputation/brand loss and fines
• Loss of brand recognition risk – brand non-compliance of staff not wearing the MacVille uniform, or altering MacVille processes and service expectations.

Timelines to consider are based on risk priority levels and include the following:

• Pre-settlement – date of legal transfer of the business.
• Opening week – first week of company operations.
• Within three months – after the opening week.
• Within six months – after the opening week.

Responsibilities for actions include the following.

• Financial, insurance and banking issues – Financial Controller.
• Legal issues – Goldsmith Partners.
• Expenditure >$5,000 – MacVille Board of Directors.
• New policy – CEO with MacVille Board of Directors.
• On-site management, training – Store Manager.
• Changes to MacVille Café Queensland operations – CEO.
• External audits – CEO with MacVille Board of Directors

Develop a report for the Board of Directors that examines these risks and describes ways that each can be treated, and forward a copy of your report to the CEO to table at the next Board meeting.

Appendix 2: Revised notes from previous meetings

Site visit – New Toowoomba store (the existing Hurley’s Café)

Meeting with James Mansfield

You revise your notes from the meeting with James Mansfield and identify the following points.

• In the context of MacVille’s investment here, $4,000 would be considered to be of minor consequence if it were burgled from the closed premises overnight.
• One or two of the staff at Hurley’s pride themselves on being on-trend and well-dressed; they are going to struggle with being required to wear a MacVille uniform. It will be difficult to make them comply with the uniform requirement. The rest of the staff are generally very responsive to employment requirements. The consequence of initial non-compliance would be minor.

Meeting with Ron Langford

You revise your notes from the meeting with Ron Langford and identify the following points.

He also said that the Toowoomba Council water patrols meant that it is likely that stores not complying with the by-law would be discovered.

Senior management team meeting

You go back over your notes compiled with the senior management team and note the following.

Further feedback from Paula included that the water compliance risk was one where significant time and resources would be required and the Board would view it having moderate consequences for MacVille’s cafés in Queensland. She also indicated that while the Board views the risk of a serious accident unlikely, any potential risk that could result in the death of an employee would have a catastrophic consequence.

Brainstorming ideas

Looking at the hierarchy of control, the senior management team were able to give you some good brainstorming ideas to pursue. These include the following:

• Installing native plants to cut down water use.
• Making it a company policy to bank every day and eliminate the need to carry overnight.
• Install a teleconferencing system.
• Install a water tank and reduce dependence on council water.
• Change banks to the nearer one to avoid the long walk.
• Install dual-flush toilets.
• Insure overnight cash holdings.
• Finish management meetings at 3.00pm.
• Introduce new processes on water use and conservation.
• Change assistant manager training times to the morning.
• Write new policy and procedures for water use in Toowoomba.
• Install a water-usage graph in the staff room.
• Give the manager an excusal letter allowing them to leave any meeting at no later than 3.00pm every day.
• Replace the dishwasher with one that has a 5–6 star (WELS) rating.

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Task 3: Monitor Risk and Evaluate Processes

Performance objective

For this task you are required to review the implementation of the risk management action plan you developed in Assessment Task 2 and prepare a monitoring report.

Assessment description

For the MacVille Pty Ltd simulated business scenario provided, you are required to assume the role of Brisbane store Assistant Manager, Ash, who has just been promoted to be Manager of a new store. Ash has been tasked with conducting a risk management analysis of this new venture. There are three stages to this project: (1) review, (2) analyse and plan, and (3) monitor. This project is divided into three assessment tasks as follows:

For this task, you are to review the implementation of the risk management action plan you developed in Assessment Task 2 against the simulated business information provided in this task. Then, you will need to prepare a monitoring report evaluating the outcomes of the action plan and risk management process.

Procedure

1. Review the MacVille simulated business scenario information provided in the Appendix of this task.
2. Develop a report for the CEO (your assessor), which examines the ongoing implementation of the risk management action plan. a. Ensure you include the following sections in your report:
   1. Plan –a clear summary of the initial risk and the plan implemented to manage it.
   2. Implementation– a summary of all actions taken to date in attempting to manage identified risks.
   3. Outcomes –a clear statement identifying continued and/or reduced risks, with supporting information in tables or graphs where available.
   4. Evaluation –a clear analysis of the effectiveness of the risk management plan, including risk assessment (e.g. risk matrix), by comparing the implementation with the outcomes.

   Note: Ensure your report is written in a style appropriate to your stakeholder audience, for example, using appropriate language and including appropriate illustrative material (such as checklists, diagrams or flow charts) and attachments to support your findings and process.

3. Submit the required documents for assessment as per the specifications below. Be sure to keep a copy for your records.

Specifications

Your assessor will be looking for:

• reading skills to review, interpret and analyse text-based business information from a range of sources in order to evaluate effectiveness of risk management implementation
• written skills to organise and deliver information to effectively communicate evaluation of activities to stakeholders
• numeracy skills to interpret mathematical data when reviewing and evaluating scenario business information effectiveness of activities
• ability to work independently to analyse scenario information and evaluate effectiveness of activities
• ability to interact with others using appropriate conventions when communicating to, and consulting with, stakeholders
• ability to sequence and schedule activities and manage communication
• ability to analyse relevant information to identify and evaluate effectiveness of activities
• ability to use familiar digital technology to access information, document findings and communicate them to stakeholders.

Appendix: Scenario – MacVille Pty Ltd simulated business

Implementation information It has now been six months since you delivered your risk management action plan.

In accordance with the action plan, an external audit was completed and has been presented to the MacVille Board. The audit investigated the status of the planned actions on the risks identified.

A summary of the findings

• The financial controller had taken out $5,000 on insurance cover for cash held on the premises overnight from the launch week as planned.
• The company bank account that was planned to be opened in the first week was actually opened about four weeks after the café’s launch at the bank two doors down the street. As it is not MacVille’s regular bank, there are difficulties with getting the same level of service that MacVille stores receive in Brisbane.
• The teleconferencing system, planned for six months after launch, has not yet been installed, due in part to the delay in the rollout of the federal government’s National Broadband Network.
• The weekly management meetings are finishing close to 3.00pm as planned but sometimes the manager has to stay on at the request of the head office team. The manager has not yet been issued with an excusal letter by the CEO as agreed, and feels that they do not have the authority to just walk out at 3.00pm.
• The assistant manager training has been shifted to the mornings, allowing the manager to leave before 1.00 pm as planned.
• The Board of Directors and CEO included a new policy regarding compliance with the Toowoomba by-law on water conservation as planned, but the specific procedure has not yet been written. However, it appears that compliance is being achieved.
• The plants have been changed to natives that require minimal water as planned. The installation of dualflush toilets were planned for completion six months after settlement, and although the dual-flush toilets have been ordered and are in stock, they cannot be installed due to the backlog of work by district plumbers. The five-star rated (WELS) dishwasher was installed by the supplier within the six-month timetableas planned.
• The application to ‘make good’ by Goldsmith Partners on behalf of MacVille was accepted by the Toowoomba City Council; however, the grace period to comply with by-law ends in 14 days and the store is still above the acceptable benchmark for water use.
• The training on daily banking appears to have been successfully completed as planned. An audit of the bank deposit book shows that there is no banking entry for the day’s sales on only two occasions in the past six months.
• There has been one internal audit arranged by the store and, as planned, there should have been a call every two months. The store manager cites the distance that auditors have to travel and their overloaded work with the Brisbane stores as the reason for this infrequency.
• Although the training on the water-saving processes, as directed by the policy, has been verbally explained and followed, the written procedure has not been completed as the assistant manager (James Mansfield) claims to be too busy.
• A water tank had been built in to the courtyard but the plumbing has not yet been connected. There is a weekly water-usage monitor in the staff room as planned but the information has not been updated for the past three weeks.
• All the original staff members are wearing the MacVille uniform. However, these original employees are now responsible for directly supervising new employees. The original staff members are not explaining the uniform requirements to new employees and are not delivering any warnings for uniform non-compliance. As a result, there has been an increase in uniform non-compliance.

BSBRSK501 Manage risk Assessment Answers