Developing A Risk Management Plan (RMP) For A Small Business Or Organization

Company Overview

Develop a Risk Management Plan (RMP) including how this plan would be implemented, monitored and evaluated for effectiveness for a small business or organization.

Company overview

Woolworths is a popular Australian grocery retail centre that provides a variety of products to its customers. The company was initially set up in 1924 as a grocery-selling store but due to the rise in competition in the market, it started to sell other products such as beauty and health care products, supplies for babies and stationary items. Therefore, the risk associated with the company is more as it needs to comply with every legal statute that exists in the country (Woolworthsgroup.com.au 2018).

Stakeholder analysis

The internal stakeholder of Woolworths consists of the employees and the owners. The external stakeholder includes the customers and the Government. The stakeholder analysis includes:

Stakeholder	Impact	Influence	Priority level
Employees	Contributes to the productivity	Helps in increasing the productivity	2
Owners	Motivates and encourages employees. Develop strategies	Ensures loyalty of the employees remain	3
Customer	Contributes to the success of Woolworths	Helps in increasing the revenue of the company	1
Government	Ensures that legal laws are complied with	Maintains political ties with other countries	4

Table 1: Stakeholder analysis

(Source: Created by author)

Scope of risk management

The scope of risk management that Woolworths require to undertake is based on any new projects that are undertaken by the company. Therefore, it is necessary that the company identify the risks associated with the business that complies to employment and providing the employees with the basic salary. At the same time, the customer analysis is also required to be maintained so that the company can identify the demands of the customers.

Inner context

Organisational structure: The risk associated with organisational structure is that the hierarchy of control can be complicated. Employees need to understand their immediate boss so that they can report to him about any problems that are faced within the work. A poor organisational structure can hinder the progress of Woolworths for being the best grocery retail store in the country (Holt-Lunstad et al. 2015).

Resources: The risk associated with the resources can be its longevity and the availability. The resources may the employees as well as the raw materials that are necessary for the manufacturing of the products. The fact that Woolworths tries to sell varieties of products in the market, makes it vulnerable to fall short of suppliers. Therefore, the risk mitigation for the resources needs to be based on the type of manufacturing process undertaken by Woolworths.

Culture: The culture of an organisation can be at risk if it is acquired by a different organisation (Modarres 2016). In the case of Woolworths, the company is associated with Coles as a conglomerate and thereby some of the values of Woolworths may be inspired by that of Coles. The risk in this case involves gaining the trust of the people with the change in the cultural factors of the company.   

Stakeholder Analysis

Power relations: The power relations consist of the relationship that exists between the employees and the employers. The risk can be stated with the fact that the power relations may not be taken seriously by the employee and employers because the power distance between the two entities in Australia is less. Hence, risk may occur during the decision-making activities of the organisation, as the employees may want to be a part of important decisions related to the welfare of Woolworths. 

Risk perception: The perception of risk may be different among the employees. As stated by Modarres, Kaminskiy and Krivtsov (2016) risk can occur in every department of an organisation and therefore, the perception of the risk may differ. This can cause conflict within Woolworths and because of this; the company may have to suffer from loss of customers and employees.

Strategy: The strategic risk can be associated with the internal and external factors that dictate the success of a company. In the case of Woolworths, the company can face risk with the fact that the external analysis of the company may provide it with a large amount of threats. These threats can be associated with the factors that involve politics and the environment that form an important part of success for business (Kou, Peng and Wang 2014).

Motivation: The motivational factor may cause risk in an organisation in a way that employees may not remain satisfied with the advantages that are provided to them. This can cause huge problems for the owners, as they need to identify new ways to motivate the employees and hope for the success of Woolworths. Therefore, it can be said that the internal context of risk can have a significant impact on the business of Woolworths.

Outer context

Political: Aven (2015) has stated that the Government of Australia provides support to the companies. However, there may be risks associated with the continuous change of policies owing to the change in the economic and climatic change of the country. Some of the risks that can be associated with the political factors include restriction of trade rights that may prove as a problem for Woolworths. This is because the products manufactured by the company are exported outside of the country.

Economic and market: The continuous fluctuation in the economy hinders the progress in the market. The marketing factors of a Woolworth can be hindered due to the fall in the economic condition of Australia, most importantly during the recession. Therefore, the manager of the company needs to ensure that the economy of the country does not affect its progress in a negative manner by applying price strategy on the products.

Scope of Risk Management

Social and cultural: The social and cultural aspects of the people need to be analysed for proper business. In the case of Woolworths, the risk associated with this particular factor can be related to the products manufactured and the promotional method used. Any ethical biasness need to be considered so that Woolworths does not violate ethical laws of the country (Iooss and Lemaître 2015). 

Legal: The legal risks associated can be maintaining with the legal compliance of the country. For example, Woolworths need to comply with the organisational law, employment law; environmental law and fair wage law so that it can maintain a legal business. However, changes in the law need to be taken into consideration so that the company does not violate any of the rules merely due to the failure of remaining updated with the legal stature.

Technological: The technological risk can be the failure of the machines used by Woolworths. In the modern day, over dependence of technology usually provides organisations with an advantage in the competing market. Therefore, any failure in the technological aspects may provide a huge problem for the organisation (Cox 2018). Hence, it can be said that the technological factor pose one of the strongest risk for Woolworths.

Environmental: The environmental risk involves the sustainability factors. For Woolworths, the sustainability can be a risk for the company as the environment of the country need to be maintained. Hence, it can be said that Woolworths need to manufacture the products or dump its wastes keeping in mind the sustainability of the country.

Analysing and evaluating the risks for the organisation

Risk	Likelihood	Consequences	Level of risk	Criteria	Risk priorities
Maintaining sustainability	Medium	May loose the trust of the people and deviate from the social responsibility	Medium	Medium	5
Technical failure	High	May not be able to continue manufacturing and interacting with customers	High	High	1
Changes in Government policies	Medium	May create hindrance in policies and procedures related to trade	Medium	Medium	4
Changes in legal rights	Low	May probe organisations to commit illegal conduct	Low	Low	8
Economic recession	High	May deplete the purchasing power of the customer and reduce profitability	High	High	2
Changes in the tastes of the individuals	Low	May lower the loyalty of the customers	Low	Low	7
Organisational structure	Low	May create misunderstanding between employees and employers	Low	Low	6
Lack of resources	Medium	May not provide the company with the required ability to maintain production	Medium	Medium	3

Table 2: Risk register

(Source: Created by author)

The hierarchy of control present in Woolworths involves a hierarchical flow of power. This means that the employees need to report to the immediate supervisors about any discrepancy within the organisation. At the same time, it is also necessary that Woolworths maintain the hierarchy by analysing the problems that are associated with the transferring of information from the bottom tier to the top tier

Documenting risk management plan

Mission:The mission of Woolworths is to become the heart of the community in which it serves and become the best retail company for families (Woolworthsgroup.com.au 2018)

Objective: The objective of the company is to improve its stock turns and optimize the efficiency of the networks in which it serves (Woolworthsgroup.com.au 2018)

Vision: The vision of the company is to become the most responsible retail company in the world (Woolworthsgroup.com.au 2018)

Analyzing Context of Risks

Critical success factors: The critical success factors of the company is its employees and the resources that are used for the manufacturing of the products (Woolworthsgroup.com.au 2018) 

The financial objective of the company is to ensure increase its revenue from $42.132 billion to $60 billion within 2 years (Woolworthsgroup.com.au 2018). This can be possible by providing necessary products to the customers.

iii. The WHS requirements and relevant legislations for Woolworths need to be the Work Health and Safety Act of 2011. The statutory compliance in this legislation is that every company need to ensure the safety of the employees and provide them with the minimum wages that they are entitled to get. The requirements of WHS of Woolworths are the safety of the work policies particularly during the movement of goods from one part of the organisation to another.

Woolworths is in a partnership with Coles. According to Andriof et al. (2017), Woolworths and Coles together comprise for 80% of the retail market of the Australian market. The organisational culture and the employees of both the companies work together to ensure that the retail sector in Australia maintain its existence in the competitive market.

The short-term goal of Woolworths is to ensure that the loyalty of the customers is maintained. The loyalty of the customers can be maintained by ensuring the raw materials for the manufacturing of the products are maintained. The long-term goal is to expand the business in international markets and increasing its reputation in the international market by franchising (Woolworthsgroup.com.au 2018).

The risk identification method that can be used by undertaking a brainstorming method. This can provide the employees and the employers of Woolworths to work together and ensure that the risk associated with every department is identified and mitigated in an effective manner. The advantage of brainstorming is that various solutions can be gained about the manner in which risks can be identified and mitigated. For example, the risk associated with the lack of supply of raw materials can be mitigated by ensuring that the bargaining power of suppliers is reduced. 

The tools that are associated with the analysis and mitigation include the contractor tools, monitoring tools and customised tools. These tools provide a comprehensive analysis of the risk management factors and ensure that proper management of the risks are devised. The support to the risk management programme is provided that can be used by Woolworths to customise the solutions associated with the application of the tools. Therefore, it can be said that the application of the tools can help Woolworths to monitor the progress of new strategies that are adopted by the company.

Risk	Deadline	Action	Training required	Monitor and evaluate the plan	Reference to legal rights	Engage in third party audits
Gain the support and loyalty of the customers	Within 5 months	Provide discount coupons and maintain interaction with the customers on a regular basis	Yes	The monitoring can be done based on the effective use of the contractual tool	The Competition and Consumer Act 2010	No

Table 3: Risk treatment plan

(Source: Created by author) 

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Woolworthsgroup.com.au. 2018. [online] Available at: https://www.woolworthsgroup.com.au/icms_docs/182380_Corporate_Governance_Statement.pdf [Accessed 5 Jun. 2018