Risk Management For Restaurants: International Journal Of Production Research

Manufacturer

Discuss About The International Journal Of Production Research.

The risk engaged with the harvesters is the occurrence of natural calamities such as Hurricane Katrina and Sandy which can cause an adverse impact on the restaurants. The solution to mitigate this risk would be limiting the wrath of nature by determining emergency preparation plans prior to the occurrence of the storm (Wang 685-698). This should be inclusive of meeting spots, emergency agreements, pre-employed vendors, and employee shelters that facilitate recovery contributions.

The risk associated with the manufactures is the improper mix of chemicals. Since in packed and stored food manufacturers often, that is a high risk for the healthcare of customers. Further restaurants are required to assure that the packaged food is free of harsh chemicals and harmful substances.

The risk associated with a distributor is the food safety concerns, and food poising is one of the main aspects of concern meant for restaurants. Due to contaminated food, most of the restaurants face foodborne illness (Manning 2649-2663). This can be mitigated through proper checking of food quality and disposal of previously stored contaminated food.

For restaurants, hygiene is the main concern; it is essential to have a clean and hygienic restaurant to prevent several accidents inclusive of employee injury due to misplaced items across the business area. Proper commitment is required by the business towards the overall cleaning and hygiene of restaurant. Restaurants also get health tests, so it is essential that the restaurant is complying with clean and hygienic aspects.

The risk involved with the customer is the food safety concerns (Falkner, Eva and Martin 122-144). Owner and their employees must be aware of appropriate storage of food storing while preventing catering of spoiled food.

Investment decision can be based on NPV analysis. Net present value refers to the variation among the present value of cash inflows and outflows over time. It is usually used in terms of capital budgeting in order to evaluate the profitability of a planned project.One of the most significant aspects of NPV is that it is based on the concept that money which is obtained on a future date is valued at less in the bank today (Carvalho, Marly and Roque 321-340). It provides an indication of the value created by the project for the business. This will help in obtaining an idea that how the project will make a contribution towards the value. The capital cost is used while computing NPV, so it is the minimal return rate required by the shareholder for business investment.

Distributor

Table 1: Statement showing the calculation of the net present value of Project X

Year	Inflow	Discounting factor (10%)	Present value
1	$  5,000.00	0.909091	$    4,545.45
2	$  6,000.00	0.826446	$    4,958.68
3	$  7,000.00	0.751315	$    5,259.20
Total inflow	$  14,763.34
Less: Initial investment	$  10,000.00
Net present value	$    4,763.34

Table 2: Statement showing the calculation of the net present value of Project Y

Year	Inflow	Discounting factor (10%)	Present value
1	$  4,000.00	0.892857	$    3,571.43
2	$  6,000.00	0.797194	$    4,783.16
3	$  8,000.00	0.71178	$    5,694.24
Total inflow	$  14,048.83
Less: Initial investment	$  12,000.00
Net present value	$    2,048.83

By considering the computation of the net present value of both the projects, it can be noticed that Project X is providing higher NPV in the similar time frame. Therefore, Project X is comparatively viable option for investment in order to generate a higher return.

In comparison with the compound interest, simple interest is an easy method to interpret and compute. In a situation where an investor has a short-term loan then, they are only entitled to interest on the due principle amount. However, in terms of investment, compound interest is a better plan as it enables funds to increase at a rapid rate and they would be subjected to a simple interest rate (Leiss and Heinrich 241-249). Compound interest makes sense while computing yearly percentage yield, which means the annual return rate of outstanding money.  When a borrower can forfeit their interest in temporary time, they can start paying off their main loan balance, by this they will compensate their loan more rapidly.

Risk identification: Initially, the risk is to be identified, recognized and depicted that might impact the entire performance or result.  Moreover, there is the presence of several techniques to identify risk associated with the task.

Risk analysis:  Once the risks are identified, it essential to develop an interpretation related to the risk nature and its likelihood to impact the objectives of the project.

Risk evaluation: the Project management is required to evaluate the risk by identifying the risk magnitude; it means the integration of possibility and outcome (Cagliano 232-248). Further, decisions are made by considering the same regarding if or if the not the risk is acceptable or how treatment is to be provided on the same.

Risk treatment:  In this step, project manager considers the top risks and establishes a plan to treat the same to attain the acceptable levels of risk. This will involve minimization of the negative risks, improving opportunities, and development of mitigation strategies, prevention plan and adding of risk treatment procedures for the most severe risks.

Risk monitoring and reviewing: During this step, risks are monitored and reviewed on a timely basis for prevention of major threats.

Market risk is the chances of an investor facing losses because of the variables affected by the financial market performance wherein the investor is involved.  It is the risk which comes with loss due to the factors impacted by the market. It can be defined as a risk of loss in a situation where there are fluctuations in market prices, returns led by macroeconomic factors, thereby impacting risky assets (Suprapto 664-683).  It is considered that investment value that might fall due to the changes held in market-related aspects.  For example, recessions, fluctuation in the rate of interest, natural calamities and terrorist attacks.

Liquidity risk can be defined as a risk wherein an entity or banks are not able to satisfy their short-term financial needs. This takes place because of insufficiency to convert securities or assets into cash with no capital or income loss in the same. It is referred to as a financial risk that occurs for a specified time period for a specified financial asset, assets or security that are not able to be traded in the market(Khan 203-216). It embeds from the insufficient marketability of a certain commodity which has no possibility to be purchased or sold to avoid a loss. For instance, a house valued at $500,000 might have no chancing of selling out due to the reduced performance of real estate, but when the market is up, the house might be sold even higher than its value.

Risk Description	Risk Impact	Type of Risk	Rank	Severity	Contingency and solutions
Security threats for the VVIP persons attending the wedding, since they are prime guests they always have the threat of their life. It is the main responsibility to take full care of their security by hiring guards, team and cops.	The consequence and impact of this risk would be that in case their life is threatened by our security mistake then it can cause significant legal issues.	Security risk	1	High	Mitigation solution would be hiring professional bodyguards, cops and teams. A proper background check will be held off the involved security persons. Their information would be gathered before hiring them.
General security and management for the VIP persons and prime guests and families. These include the general security aspects of taking full responsibility of arranged location, hotels, and overall accommodations.	The impact of this risk would be the damage and harm of the attending guests who will result into the severe sufferance of overall function.	Admin risk	6	Low	The solutions would be proper maintenance of electrical aspects, providing appropriate amenities, ergonomic items in place, sufficient workspace, wellbeing facilities, accessible fire extinguishers, first aid, secured storage and optimal housekeeping.
Host Liquor Liability this offers safety to the event host in guests were to experience bodily harm or property damage because of intoxication.	This risk will impact by overdosing liquor, medical problem due to excessive or hard liquor.	Safety risk	4	Medium	Proper placement of checked and licensed liquors, while checking their background, past information and experience. It is also necessary to ensure that they are the best and suppliers in the area.
Medical Payments: – If the bodily injury sustained requires medical attention, this portion of policy will take care of the expenses.	This risk will impact the damage or injury to attended guests due to uncertain events or loss.	Safety risk	5	Medium	Keeping first aid and professional doctors in place to ensure the immediate medical delivery to injured ones.
Contractors would be assigned for every duty and their performance, safety and working will also be ensured if they mislead their duty.	The impact of this risk would be the bad impression of the overall project and non-delivery of expected things.	Admin risk	2	Medium	The solution for solving this risk would be hiring regular and identified with professionalism and expected qualifications. Asking contractors to give risk assessment / method statement where applicable. Monitoring their work on a timely basis to ensure safety.
Staff management , taking complete consideration of the actions and measures taken by staff members to deliver expected rests with minimized risks and consequences.	The impact of this risk would be lead to mislead of staff, non-effective servings and poor performance.	Admin risk	3	Low	The solutions to this problem will be the employment of experienced staff. Proper training of staff. Digital devices considered during an emergency. No past experience is to be assured while providing them with in-house training.

 

References

Wang, Yulan, et al. “Service supply chain management: A review of operational models.” European Journal of Operational Research 247.3 (2015): 685-698.

Manning, Louise. “Determining value in the food supply chain.” British Food Journal 117.11 (2015): 2649-2663.

Falkner, Eva Maria, and Martin RW Hiebl. “Risk management in SMEs: a systematic review of available evidence.” The Journal of Risk Finance 16.2 (2015): 122-144.

Carvalho, Marly Monteiro de, and Roque Rabechini Junior. “Impact of risk management on project performance: the importance of soft skills.” International Journal of Production Research 53.2 (2015): 321-340.

Leiss, Matthias, and Heinrich H. Nax. “Option-implied objective measures of market risk.” Journal of Banking & Finance 88 (2018): 241-249.

Cagliano, Anna Corinna, Sabrina Grimaldi, and Carlo Rafele. “Choosing project risk management techniques. A theoretical framework.” Journal of Risk Research 18.2 (2015): 232-248.

Suprapto, Mohammad, et al. “Sorting out the essence of owner–contractor collaboration in capital project delivery.” International Journal of Project Management 33.3 (2015): 664-683.

Khan, Muhammad Saifuddin, Harald Scheule, and Eliza Wu. “Funding liquidity and bank risk taking.” Journal of Banking & Finance 82 (2017): 203-216.