Format for BUS7AO Evaluating Risk Assignment 1 (Report)
2.0 Occurrence of Risks in Relation to Economic and Legal Implications (about 1,140 words)
You should state the organization that you will be assessing in relation to a particular country that the organization is operating in.
The objectives of the report should be clearly stated.
2.1 Definition of Risk
Risk involves an activity that leads to different possible outcomes where probabilities can be assigned to these possible outcomes along with the fact that the magnitude of the impact of these possible outcomes can be measured.
2.2 Difference between Risk and Uncertainty
Risk is a subset of uncertainty but risk and uncertainty are not exactly the same. Risk is quantifiable since probabilities can be associated with possible outcomes along with the impact of the outcomes that can be measured. This is not the case for uncertainty. We do not know what are the probabilities that are associated with the outcomes and we do not know the impact of these outcomes.
2.3 Origins and the Nature of Risk
The French formalized the concept of risk by introducing this word known as “risqué”. However, the English people see risk from a negative perspective as they view risk as an activity that expose people to danger.
The nature of risk has been well illustrated by Pascal after he had introduced the famous Pascal’s Wager. Based on Pascal’s argument, there is a need to believe in God because it offers a positive expected value which laid the foundation for modern risk management since the nature of risk is well illustrated in his argument.
In modern times, Hopkin (2017) identified four main types of risk:
2.4 Business and Societal Setting
There is a need to analyze the business setting of the organization. What is the nature of the business that the organization is operating in? Identity the sector/industry that the business is operating in. Who are the targeted customers?
There is a need to analyze the societal setting in which the business is operating in. How large is the population? What is the main language that this society is using? What is the cultural background of this society?
2.5 Identification of Risks in the Context of Economic and Legal Implications
2.5.1 Compliance Risks
There is a need to comply with the labour law. If the organization does not comply with the labour law, the organization will be fined for $xxx. For repeated offenders, the firm may be forced to shut down. These are the legal implications and the impact is high. The likelihood of such an occurrence might be low.
2.5.2 Hazard Risks
For example, the risk of fire. The probability of fire that occur in buildings each year is approximately 0.05%. The impact is very high as it burns down the office and the cost associated with a new start after the fire should be taken into account as well. The estimated cost will be $xxx and the impact is high.
Other hazards include the pandemic, floods, earthquake and etc.
2.5.3 Control Risks
The instilling of protocols and standard operating procedures. The probability of control risks occurring will be xxx%. The impact will be high since it affects the brand image of the organization that can lead to a loss of $xxx and the impact is high.
2.5.4 Opportunity Risks
For example, the organization takes on a new venture with a probability of xxx% failure rate. The impact is high as the organization may lose $xxx.
3.1 Control Measures
You need to identify and classify the potential hazardous sources for these risks.
There is a need to comply with the labour law. There is a department that takes compliance into account. In other words, the HR department will need to ensure that the contract given to employees are in-line with the labour law and the deployment of employees do not breach the rules and regulations of the labour law.
In dealing with fire, all hazardous sources are to be inspected on a daily basis. A fire alarm, fire safety doors, fire extinguishers along with a water sprinkle system is to be implemented. In dealing with a pandemic, social distancing within the office and the requirement of wearing masks in the office is required. The operations department will need to implement these control measures.
In dealing with control risks, there is a quality control department to ensure that the quality of the products are in-line with the standards that are promised by the organization to its customers.
In dealing with opportunity risks, a proper risk assessment plan with be drawn and the amount invested will be the maximum amount in which the organization is willing to lose. The Board of Directors and the senior management will be responsible for implementing these control measures.
3.2 Corrective Actions
Corrective actions are improvements to an organization’s processes taken to eliminate causes of undesirable situations.
There is a need for the HR department to review the existing labour laws on a weekly basis.
Relevant renovation can be done to improve on the fire escape route.
Workers can rotate between working from home and office to reduce contact between employees.
New technologies can be adopted with the installation of new machines to ensure that the quality of products are maintained and improved with greater efficiency.
The adoption of financial products to hedge the risks associated with opportunity risks with the establishment of an improved risk assessment process.
3.3 Record Keeping and Review Frequencies
The number of times and the implications in which the organization breach the labour law should be recorded in the HR department as well as in the risk register. They should be reviewed on a semi-annual basis.
The number of times and the implications in which the organization experienced a fire and pandemic should be recorded by the operations department as well as in the risk register. They should be reviewed on a semi-annual basis.
The number of times and the implications in which the organization breached the quality standards that it had promised it’s customers should be recorded by the quality control department as well as in the risk register. They should be reviewed on a weekly basis.
The number of times and the implications in which the organization failed to capture the potential gains of the opportunity risks that is embraced along with the losses should be recorded by the senior management as well as in the risk register. They should be reviewed on a quarterly basis.
You need to summarize your report by not exceeding 100 words.
Please follow proper Harvard referencing which is supposed to be arranged in alphabetical order with no indent spacing. More importantly, please ensure that in-text citations are in-line with your reference list. In addition, please ensure that your reference list commence on a fresh page.
Format for BUS7AO Evaluating Risk Assignment