Risk Management and Corporate Governance - MyAssignmenthelp.com

Question: Discuss about theRisk Management and Corporate Governance. Answer: Introduction Risk can be defined as the impact of uncertainty on the objectives of the company. It is the possibility of gaining or losing something of value. It is the possibility of damage, hazards, accidents, obligations, loss or any undesirable incidence which is caused by external or internal susceptibilities. According to Institute of Risk Management (2018) it is the process which comprises of comprehending, assessing and addressing risk to ensure that the organizations achieve their goals. It depends on the complexity and the nature of industry in which the company operates. In this context, Enterprise Risk Management (ERM) is a cohesive methodology to manage risk across the entity. The hospitality industry is confronted by challenges relating to day to day safety and security. The risks relating to theft, burglary and safety related to pools, spa, personal grooming, valet parking, food and hard drinks are the issues which raise the safety and security concerns. Also, the housekeeping, laundry services and kitchen tasks are prone to fire outbreaks .To mitigate the said risk, an efficient risk control program can play a crucial role in assisting the hotel industry to provide safe and secure environment for its consumers and work force. Risk management begins with risk analysis and comprehending the risk of conducting business. The risk control procedures shall not only comprise of methods and programs to deal with safeguarding the work force and consumers but also risk management procedures for assets and day-to-day processes (Travelers, 2013).In this context, the risk analysis and risk management programs would be applied to the Caf 63, Racecourse Road, Brisbane with emphasis on its kitchen operations. The Notion of Risk What is Risk? Risk comprises of the probability of the occurrence of an unwanted event. It may also be defined as the impact of uncertainty on accomplishment of the goals of the organization. Risk concerned with the goals, plans and procedures and ultimately the mission of the company is termed as Strategic Risk. The risk affecting the delivery and success of the projects is referred to as Project Risk. The risk concerned with the human resources, internal systems and procedures is termed as Operational Risk. These risks have an effect on the results of the business divisions, individual projects, business procedures and mechanisms (Tourism Australia, 2015). Business in the hospitality industry is continuously exposed to risk which comes along with providing services and facilities to the guests. With reference to this industry, the quantum of risk increases in proportion to its workforce. The emergence of new risks with the changing trends in the hospitality industry is another factor which focuses the need for risk management. Caf 63 is one of the cafes in Brisbane which serve around 20, 00,000 customers every year. Like the other industries operating in the hospitality industry, it is exposed to certain risks (Caf 63, 2017). There are certain risks confronted by Caf 63 specially relating to kitchen operations, housekeeping and laundry. What is subject to risk? The following is a list of risk exposures which are confronted by Caf 63. Some of them are: Food Contamination: Food safety is one of the major issues of concern for businesses operating in the hospitality sector. Food is prone to infections such as salmonella, campylobacter from infected chicken ,vibrio from raw shellfish and E. coli. Another virus which can contaminate food is Norovirus. It spreads when food comes in contact with infected people and surfaces. Poor Handling: 50% of the accidents occur in the kitchens due to carrying out some manual handling related task. Mishandling of the appliances by the kitchen staff can lead to musculoskeletal injuries such as trauma or pain in the back or knees and elbows etc. Slips, trips and falls: The workers in the kitchen can fall or slip due to water pooling. Old pipelines tend to leak, especially where there are taps, basins and other activities in which usage of water is involved ( Kristina Wijaya ,2017). Dangerous Chemicals: Dangerous chemicals are used in the kitchens as cleaners, which are hazardous to the health of the workers. For example: Bear Line cleaner can cause blindness if it gets into the eyes. Burns and cuts: The kitchen staff is exposed to burns and cuts if they do not handle the knifes and sharp edged appliances carefully. Electrical Hazards: The kitchen staff is also exposed to electrical hazards if they dont handle the electrical appliances carefully. Carbon dioxide gas: CO2 is denser than air and it is odorless and sluggish .If leaked ,it would drop down to the floor and rise .If there is no facility to detect the leakage and alarm systems are not installed, it would pose a threat to the lives of the workers (Deloitte, 2013). Why is it necessary to implement risk management process? What is Risk Management? According to Government of Western Australia: Department of Mines, Industry Regulations and Safety (no date) risk management can be identified as an integrated part of good managerial practices and governance. It consists of repetitive steps, demanding the need for continuous improvement in decision making. It is an organized method involving the establishment of context ,recognizing, assessing ,prioritizing the risks, managing ,observing and communicating the risk related with any procedure or mechanism. It helps in assisting the organization to reduce its losses and increase opportunities. The important components of risk management are: Risk Management Establishment of Context: The main context or background should be set in which the rest of the process will be executed. The benchmark against which the risk would be analyzed and the structure of the risk assessment would be defined. Risk Identification: The assessment of what, how and why things could emerge in the context of further analysis. Assessing the risk: Testing the current processes regarding risk management in terms of results and probability in terms of the applied procedures. Prioritizing the risks: Contrasting the risks against the conventional risk measurement benchmarks, so that it can be ranked and prioritized. Managing the risk: The risk with the least priority should be reviewed and regulated while suitable risk mitigation plan should be formulated to treat the risks with highest priority. Observing the risk management program: Observing the implementation of the risk management program and rectifying its discrepancies. Communicating and consulting the implementation of risk management program at its each stage, with internal and external stakeholders (OECD, 2014). Necessity of Implementing Risk Management Processes An efficient risk management strategy is important for the personnel of the hospitality industry. It assists the employees to recognize, evaluate and mitigate the risks arising from a variety of sources such as financial constraints, legal contingencies and obligations, accidents, natural calamities and data or cyber security breaches. According to InterContinental Hotels Group (2013) the necessity for implementing the risk management process lies in its features. Some of them are: The risk management plan recognizes, regulates and observes the risks affecting the organization. It focuses on the accomplishment of goals and safeguarding the business models, brands and goodwill of the organization among the stakeholders. It also assists in implementing the strategy and the procedures for change. Also it helps in safeguarding the resources, physical and nonphysical, procedures and mechanisms of the organization. Risk Management can be incorporated in Cafs commercial activities through: Strategic Risk Analysis which can be a part of the Strategic Annual Plan (SAP). An Operational Risk Analysis in alignment with annual operational planning (AOP); Assessment of the project risks with the evaluation of the project plans. Analyzing the risks of frauds. Investigation of the risk profile on quarterly basis. Analysis of the risk of acquisition of the products and services. Insurance risk Analysis. Investigation of the risks pertaining to the workers health and safety. Venue Risk Analysis The Venue Risk Analysis comprises of Risk Ranking System and Venue Risk Analysis Form .The Risk Ranking System shows how risk would be assessed. Venue Risk Analysis Form is a procedure to assess the risk. Risk Ranking System Kwon et all.(2014) suggested that Risk Ranking is one of the most common procedures used for Risk Management. It is also known as Relative Risk Ranking, Risk Indexing and Risk Matrix. Its purpose is to focus on the risks faced by the system. Risk Ranking operates by bifurcating the risk into constituents and analyzing those constituents and their individual input to overall risk. The risk ranking model is most suited to contrast and manage a portfolio of complex risks. It is facilitated through breaking down of the risk into risk scenarios with components. It requires agreed set of risk factors and evaluation benchmarks. It will help the management to contemplate the aspects affecting the risk faced by the company. The aspects contemplated are: Event Likelihood Its Impact Financial severity Severity of Injury Reputation Impact severity Risk Ranking System will list the probable risk events which will cause harm to the kitchen operations of Caf 63.It will state the risk which may unfavorably impact the Caf operations . It also states the controls or safeguard mechanisms adopted by the company to mitigate the risks. At every step, the priority and probability of each factor associated with the risk would be decided and the efficiency of the safeguard mechanism regarding each factor and risk would be analyzed. Risk Ranking System regarding the kitchen operations of Cafe 63, Racecourse Road, Brisbane Risk Risk Description Available Controls Severity Likelihood Level Slips, trips and falls (Workplace Health and Safety Queensland, 2014) Injuries due to sudden fall in the kitchen causing insignificant injuries to the workers. Anti-slip mechanisms as needed; appropriate lighting. Minor Very Likely A Injuries Cuts due to mishandling of objects in the kitchen causing minor hurt to the workers (Food standards Agency, no date). Proper handling and wearing of gloves for protection against sharp objects. Moderate Likely B Food Contamination Food poisoning causing death or sever illness to the customers (Derbyshire County Council, 2017). Work permit from health inspectorate. Moderate Possible C Heat or cold Hot water burn while working in the kitchen causing major injuries. Pipes; mixer taps conform to building regulations Major Possible C Infection Faulty pipes contaminate water causing moderate injuries. Pipes conform to building regulations Significant Unlikely D Fire Fire breakout in the Kitchen causing death of the workers. Emergency exit plan in place. Fire defense conform to building regulations Significant Very Unlikely E Natural Calamity Loose objects fall on the staff due to earthquake causing severe injuries. No loose objects kept outside the cupboards. Implementation of the emergency exit plan. Significant Very Unlikely E Dangerous Chemicals Leakage of the CO2 Gas causing death of the workers. Appropriate system to safeguard the staff from leakage of dangerous gases should be established in place. Gloves and masks while handling them should be worn by the workers. Major Very Unlikely E Electric Hazards Falling over cables or loose wires and risk of short circuit causing severe injuries. Proper maintenance of the wires and their regular inspection. Major Unlikely D In the Risk Ranking System of Caf 63, the specified risks faced by the company, its description, available controls, severity, likelihood and levels are stated. Burns, cuts and falls are prone to least risk with the highest likelihood of occurrences while electric hazards and dangerous chemicals are prone to highest risk with the least likelihood of occurrences. Food contamination and heat or cold are prone to medium risk with moderate likelihood of occurrences. Infection due to faulty pipes and Fire outbreaks are prone to significant risk with the insignificant likelihood of occurrences. Risk Rating Matrix In the above mentioned Risk Ranking Matrix, for the risk with the Severe and Major Consequences, such as Electric Hazards and Dangerous Chemicals , immediate action need to be taken for removal, prevention or transferring the risk. The risk with the Moderate Consequences, like Infection, Contamination, plans need to be formulated for their risk removal, transfer or prevention. For the insignificant and minor risks such as Slips, trips and falls, the managerial personnel need to be informed regarding the training of the kitchen staff to deal with it (Reuvid, 2012). Venue Risk Analysis Form The Venue Risk Analysis form is designed to contemplate the predicted hazards and controls implemented to reduce or remove the risks. It also considers the precautions involved in handling the emergency risks. It should be approved by the top management and should be implemented at the earliest to prevent the possible risks. Training should be given to the staff in order to prevent the risks and its consequences. In the Venue analysis form, a ranking list is formulated and the probability of the risk is assigned accordingly. The likelihood and the probability of the risk is numbered accordingly. There are various factors which are considered in the venue risk analysis such as the workforce involved, frequency of harm caused and its occurrence (Verbano Venturini,2013). Risk Risk consequence and people affected Risk likelihood Impact and Consequences Control measurements recommendations Risk Rank Responsible person 1. Slips, trips and falls Injuries due to sudden fall in the kitchen causing insignificant injuries to the workers. Very Likely It can cause injuries to the kitchen staff resulting in the medical expenditure of Caf on their treatment. Consequence would be increase in the rate of absenteeism of the employees. Anti-slip mechanisms as needed; appropriate lighting. Training of the employees is needed. A General Administrator of the Caf. 2. Injuries Cuts due to mishandling of objects in the kitchen causing minor hurt to the workers. Likely The employees would not be able to work properly and the rate of absenteeism would increase. Proper handling and wearing of gloves for protection against sharp objects. B General Administrator of the Caf. 3. Food Contamination Food poisoning causing death or sever illness to the customers. Possible Loss of goodwill of the caf in the market thereby decreases in its revenue. Work permit from health inspectorate and regular checking of food items by the internal administration. C Head Chef of the Caf. 4.Heat or cold Hot water burn while working in the kitchen causing major injuries. Possible Inconvenience to the workers while working in the kitchen. It may cause serious accidents. Pipes; mixer taps conform to building regulations and regular checking by the internal administration. C General Administrator of the Caf 5.Infection Faulty pipes contaminate water causing moderate infections (Government of Western Australia: Department of Health , no date). Unlikely The customers can suffer from food poisoning thereby causing loss of revenue to the caf. Pipes conform to building regulations D General Administrator of the Caf 6.Fire Fire breakout in the Kitchen causing death of the workers. Very Unlikely It can cause loss of life and property to the caf, thereby decreasing its revenue. Emergency exit plan in place. Fire defense conform to building regulations. Training of the workers should be conducted on regular basis. E General Administrator and Technical Head of the Caf 7. Natural Calamity Loose objects fall on the staff due to earthquake causing severe injuries. Very Unlikely It may cause death or severe accidental injuries to the customers as well as staff. No loose objects are kept outside the cupboards. Implementation of the emergency exit plan and training of the workers in this regard. E General Administrator and Technical Head of the Caf 8. Dangerous Chemicals Leakage of the CO2 Gas causing death of the workers. Very Unlikely Due to leakage, the death or severe injuries of the staff and customers is possible. Appropriate system to safeguard the staff from leakage of dangerous gases should be established in place. Gloves and masks while handling them should be worn by the workers. E Technical Head of the Caf 9.Electric Hazards Falling over cables or loose wires and risk of short circuit causing severe injuries. Unlikely Loss of life and property is possible. Proper maintenance of the wires and their regular inspection. D Technical Head of the Caf With reference to the given Venue Risk Analysis Form, the risks such as Slips, trips, falls and injuries have the probability of occurrence as most likely and their impact would be injuries to the staff and cash outflow due to the medical expenses of the employees. The possible measures could be adequate lighting and proper training to the employees. According to Bedasa et al.(2018) while the risk such as Food Contamination and Burns due to hot water have the probability of occurrence as possible resulting in severe illness to staff and customers thereby causing loss of revenue and goodwill to the caf. The other risk such as Fire ,Natural Calamity, Electric Hazards have the possibility of occurrence as Unlikely or Very Unlikely with the direct impact on the staff and customers .It can cause loss of life and property .The suggestive measure is safeguarding the system and proper training to the employees (Vasvri,2015). Conclusion Thus, to conclude, the risk management of the kitchen operations of Cafe 63, Racecourse Road, Brisbane is essential for its long term survival in the industry. The risk assessment of the organization not only helps the management in safeguarding it from hazards but also assists in formulating long term policies regarding for its successful survival in the long run. It also helps in enhancing goodwill of the organization which can help it in attracting more customers and investors. Furthermore, the risk assessment analysis helps the organization in identifying, analyzing, evaluating, regulating , monitoring and communication the risk and planning certain strategies to mitigate them (Severian,2014). The kitchen operations of Cafe 63, Racecourse Road, Brisbane are posed to certain threats such as fire, natural calamity, electric hazards, slips and falls, injuries due to contaminated water or hot and cold water .These can be reduced through planning proper systems in the caf and proper training of the employees to handle the hazardous and emergency situations. The senior management should monitor and supervise the proper implementation of the policies and strategies regarding the risk management on continuous basis. Also, if any of the personnel is aware of the probable hazards occurring in the organization, they should immediately report to the senior management, so that the risk management measures can be implemented well in advance to avoid the risk (Cagliano, Grimaldi Rafele ,2015). References Bedasa, S., Shiferaw, D., Abraha, A. 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