Worapote Promnart

Task 02: Implement, monitor and review risk management (Portfolio)

Review the MacVille simulated business information
Review the provided MacVille Risk Management Policy and Risk Management Strategy and
complete a written report for your manager 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.
Review the MacVille scenario in the appendices
MacVille is an import coffee and restaurants with top quality coffee, which is produced and
distributed in line with the highest social and environmental standards. The expectation
outcome for this venture is to help secure the five years objective of being the number one
volume importer in the market for imported coffee and be a supplier for fine coffee shops and
restaurants in Australia.
MacVille has established a relationship with a small village in the highlands of Papua New
Guinea (PNG) that grows coffee beans. MacVille is committed to providing equipment and
high-level skilled training to the village so that the local villagers can harvest and roast the
beans in-country. This endeavour is a major marketing coup for MacVille, as they can
strongly market the Fairtrade certification aspects of this, due to the large investment they are
making into the village and the skilled-trade ability they are giving to the villagers. The
venture is not expected to have any effect on domestic production, jobs, advancement, etc.,
due to increased efficiencies, expansion into new markets, and increased sales made possible
by the venture.
 Worapote Promnart

Schedule of monitoring activities

Monitor and Control Project Work is the process for MacVille monitoring and controlling the
processes used to initiate, plan execute, and close the project to meet the performance
objectives defined in the project management plan. The process of the following monitoring
processes, which also use the input and generate or modify the output of this process:
 Scope Verification
 Perform Quality Control
 Manage Project Team
 Performance Reporting
 Manage Stakeholders
 Risk Monitoring and Control
 Contract Administration

The Monitoring and control processes are an integral part of all the process groups, and
interact with each process in numerous ways:

 Measure according to Project Management plans

 Measure according to performance baselines set during planning processes.
 Determine variances from the plans.
 Configuration Management to check against the technical specifications
 Recommend changes, defect, preventative and corrective actions as required.

Six risks identified for setting up MacVille coffee plant in PNG

One of the initial key elements to study before setting up of a business is to identify potential
risks. The risks might have possible implication both at the current or future conditions of the
business. Therefore, it is important to carefully identify possible risks and take necessary
control measures to minimise it.
The risks might emerge both from external and internal factors. In order to identify the risks,
tools such as SWOT analysis or checklist, research notes, meetings with stakeholders must be
carried out. Through this process, potential likely risks can be identified where necessary
control measures could be initiated against each risk.
Similarly in the case of MacVille coffee plantation project, SWOT analysis has been carried
out to identify the risks of this project. Based on this analysis, the following risk has been
identified that are detrimental and likely to occur anytime.
 Worapote Promnart

Internal risks
1. Small size or player in the global market: The business size could also pose a risk
to venture into a new market. If the size of the business is not big enough, it could impede
growth, popularity and capturing the market. Small size could be due to lack of fund,
technical knowledge, skills and experience.
Therefore, MacVille coffee project could be a small player as compared to other companies
who are already in the business with lot of supply chains and customers loyalty. It is
important to identify and assess our size as risk to initiate to venture into the business.
2. Lack of skilled and trained staff: Although we have committed and trained staff at
the current moment but such commitment and skills may not meet the required expectation
with the change in technology, customers need, product diversification etc.
Therefore, lack of skills and knowledge should be identified as risk to assess our own
shortcomings.

Portfolio

A risk management strategy should also include a management framework for the effective
management of risk within an organisation. According to AS/NZS ISO 31000:2009, such a
management framework ‘ensures that information about risk, is adequately reported and used
as a basis for decision-making and accountability at all relevant organisational levels’.

The risk management framework provides an effective structure within which to identify,
analyse, evaluate and treat risks. This framework provides the associated tools and techniques
to apply the risk management process to a particular project or risk management undertaking.

Key concepts in the framework consist of being:

 Proactive rather than reactive to the threat of risk

 Mindful of future activities and events
 Focused on the ‘known unknowns
 Aware of the inverse relationship between information and risk
 Worapote Promnart

Risk management framework

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 is 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
 Worapote Promnart

○ 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. 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.
 Worapote Promnart

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.
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.
Risk management process diagram
This diagram shows the various stages in the risk management processes and those areas
‘communicate and confer’ and ‘monitor and review’ that should be managed concurrently.

The risk management process

Incomplete audit report

Appendix 2: MacVille risk audit report template

Risk description Control/s Objectives/targets Measures Results

implemented
 Worapote Promnart

Risk 1: Prepare a risk Reduced flexibility Review key Incomplete

Development of a policy covering to adjust to administrative
risk policy key elements of opportunities or Processes.
management's away from risks.
risk management
approach.
Risk 2: Access Perimeter Confirm and Provide training, Incomplete
Control Weakness, security communicate policies and
Unpatched system commitment to risk procedures for
systems because of management. safe work
performance issues practices.
Risk 3: Decision- Consideration Formalise and Remove the Completed
making in relation should be given communicate a hazard or risk of
to changes to risk to greater detail consistent approach exposure.
scores, mitigation recording the to managing risk.
arrangements justification the
Risk Register.

Continuous improvement

Risk management is recognised as an integral part of good management practice. It is an

interactive process consisting of steps, which, when undertaken in sequence, enable continual
improvement in decision making. Risk management is the term applied to a logical and
systematic method of establishing the context, identifying, analysing, treating, monitoring
and communicating risks associated with any activity, function or process in a way that will
enable organisations to minimize losses and maximize opportunities.

A good plan of action often includes a mixture of different things such as:

 priority and quick attention to hazards associated with high or critical risks
 a few cheap or easy improvements that can be done quickly, perhaps as a temporary
solution until more reliable controls are in place
 long-term solutions to those risks most likely to cause accidents or ill health
 long-term solutions to those risks with the worst potential consequences
 arrangements for training workers on the main risks that remain and how they are to
be controlled
 regular checks to make sure that the control measures stay in place; and clear
responsibilities who will lead on what action, and by when.
 Worapote Promnart

MacVille should inform all relevant persons about the control measures being implemented,
in particular, the reasons for the changes.

MacVille should also provide adequate supervision to verify that the new control measures
are being implemented and used correctly.

Any maintenance in relation to the control measures is an important part of the process. Work
procedures should detail maintenance requirements and verification of the maintenance to
ensure the ongoing effectiveness of the control measures.