Assessment Task 1 BSBRSK501 Manage risk

Risk review
Submission details

Candidates name Candidate ID Group Phone Number

Assessment date/s Time/s

The Assessment Task is due on the date specified by your assessor. Any variations to this
arrangement must be approved in writing by your assessor.
Submit this document with any required evidence attached. See specifications below for
details.

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.

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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 assessor) that
addresses the following steps.
a. Scope Identify the scope of risk management required in your identified
role.
b. Goals Identify and describe the critical success factors, goals or objectives
for areas included in scope.
c. 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.
d. Analysis Complete a PEST analysis and a SWOT analysis for risks
associated with the scenario. Include reference to relevant legislation.
e. Research Review and summarise the research information provided in the
case study, as well as any literature available that is relevant to this scenario.
f. 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
and discuss the draft report you have developed, especially your understanding of
the critical success factors and goals (you should check that your manager 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.
a. Summarise: In dot-point form, summarise the discussions with your manager.
i. This should include any recommendations they made to you.
b. Develop: a draft of the communication your manager suggested you use for
consultation with a stakeholder or particular group of stakeholders.
i. For example, if stakeholders desire a phone call, you should include a
draft script of information that you need to share with stakeholders.
ii. 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.

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When submitting 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 submitted as required by your organisation (your training provider).

Specifications
You must provide:
a completed report as outlined above in steps 16, using the headings provided for
each step
summary notes from your meeting with your manager

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
i.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.

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Case Study: Business plan (excerpt)

MacVille business plan FY 2014/15

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

expansion of operations across Queensland and NSW

creating a high-performing organisation.

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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 Hurleys
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 MacVilles 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 stores 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 2nd 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 stores operational processes and store
information. You should liaise weekly with the Finance, Audit and Risk Management

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(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 ([email protected]).
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.

Hurleys 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 companys
central bakery plant impractical. The pastries would arrive after the morning rush.
These are a key part of the MacVille assortment.

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There is also a concern about getting the company branded supplies through as
quickly as a CBD Brisbane store could.
Hurleys 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.
Jamess 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 employees entire past
health issues.

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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 Governments 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.

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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.

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Case Study: Table of stakeholders (format)

Stakeholder Internal/external Role in process Stake in process

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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 MacVilles 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 MacVilles approach to risk management and approval of changes
or improvements to key elements of its processes and procedures.

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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

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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 CEOs
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 MacVilles 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.

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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.

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MacVilles 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

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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

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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.

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