Training Session On Regulatory Environment And Risk Management In FMCG Industry UK

Overview of the UK’s FMCG industry

1.The regulatory environment is a complex concept that includes the set of number of rules, regulations and laws that must be adhered by an organization. Fast-Moving Consumer Goods (FMCG) industry is one of the industries that have a strict regulatory environment. (Vibhaw & Kapoor, 2017). The regulatory environment of FMCG is crucial for the firm like ABC that is operating in the FMCG market because such firms manufacture and sell the goods that are purchased by people on a regular basis for the consumption such as – processed food, beverages, cosmetics, dry foods, consumer electronics etc. My training session on the fast-paced development of the regulatory environment of UK’s FMCG industry will focus on providing deep insights about the rules, regulations and the laws that have to adhere in context of operating effectively in the UK’s FMCG market. My training session as a head of compliance for ABC will help the trainees in understanding the current regulatory environment and also regulatory compliances of UK’s FMCG industry. The discussion below focuses on the training plan that will be used for training the attendees.

Topic	Start date	End Date
An overview of the UK’s FMCG industry Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	10/11/2018	15/11/2018
BREXIT and the UK’s FMCG sector	16/11/2018	20/11/2018
Importance of regulatory environment	21/11/2018	25/11/2018
Overview of the UK’s FMCG regulatory environment	26/11/2018	2/12/2018
Product liability according to UK’s FMCG regulatory environment	3/12/2018	10/12/2018
Food Safety and Regulatory Compliance	11/12/2018	19/12/2018
Compliance of Registration/ Licensing	20/12/2018	25/12/2018
Mergers and acquisitions	26/12/2018	28/12/2018
Commercial disputes	29/12/2018	31/12/2018

The above table indicates the list of topics that will be covered in the training session along with the time frame of each of the training session of each of the topic. The topics discussed in the training sessions will help the attendees in understanding the regulatory framework and the compliances in the UK’s FMCG industry. In context of training the attendees I will use a large amount of secondary data associated with the FMCG regulatory framework of UK. In this context, I will use the latest reports on the FMCG regulatory framework such as –

1. Ernst & Young report on the food safety and regulatory compliances(Ey.com, 2018)
2. Criteo’s trend report on the FMCG sector of UK(Criteo, 2017).
3. Herbert Smith Freehills report on implication of BREXIT on the FMCG sector of UK

Apart from the reports that have been mentioned above the training material will also includes the articles from popular websites such as Business Standards, The Sterling Choice, Economic Times, Acuvate etc.

Apart from the sources mentioned above, I will use the matter collected from the internet regarding the trends and changed regulations and compliances in the FMCG market of UK.

The training session with the attendees will be conducted with the help of some objectives that will direct the training session along with setting the boundaries for the training session. The objectives of training session are discussed below:

1. To help the attendees in understanding the concept of regularity framework and compliances in the industries
2. To make the attendees understand the importance of regulatory framework in an industry.
3. To provide an overview of the FMCG industry of UK to attendees.
4. To provide deep insights about the regulatory framework of FMCG industry of UK to attendees.
5. To help attendees in understanding the implications of BREXIT on the FMCG sector of UK

The objectives stated above will be covered with the help of topics that have been mention above.

The topics will provide a complete view of the FMCG market of UAE. The attendees will be provided information on the importance of regulatory framework for both ABC and industry in a highly dynamic market environment. In order to understand the regulatory framework and compliances of the UK’s FMCG industry it is essential for attendees to understand the structure of the industry. Brexit has significant impact on the FMCG sector of UK. (Herbert Smith Mills, 2015). Therefore the training session topic will discuss the impact of Brexit on the FMCG regulatory framework in terms of Product liability, Food Safety and Regulatory Compliance, Compliance of Registration/ Licensing, Mergers and acquisitions and Commercial disputes (Sanghi, 2015).

BREXIT and the UK’s FMCG sector

In order to ensure that the training session is achieving its objectives day by day an interactive session will be organized by me at the end of each training session. This interactive session will be used for the attendees to ask all the queries along with providing a feedback for the session. The interactive session will also help me in determining the understanding of attendee’s regulatory framework of UK’s FMCG market along with its implications in ABC.

3.As a part of my training sessions the attendees will be provided knowledge and made understand about the risk management process and its use in the different business functions. The new members of the compliance team have to be give detailed information about the risk management process and practices in detail as they are new to compliance job and they also do not knowledge or experience of risk management practices.

The figure presented above is a risk matrix that is used in the process of risk management for assessment of the risks in the organization. This particular matrix is used for determining the level of risk on the basis of probability of risk occurrence and consequences of the risk. It is one of the simple techniques of increasing the risk visibility along with assisting the management in making the organizational decisions.

Risk is lack of certainty about a particular choice or action. Probability is chance associated with occurrence of an event or situation. The risk assessment matrix presented above serves a useful purpose on in the organizations be categorizing the risks on the basis of its probability and consequences. The risk matrix helps the organization in determining the risk that has to be addressed on priority. For example: A risk XYZ (e.g. accident) has high probability along with high consequence then this risk has to be address before any other risk. In the regime of risk management the risk matrix helps the management in understanding the probability and the harms caused by risks in a simple and effective manner (SolarWinds MSP, 2017).

The risk assessment matrix is highly relevant in a regulated firm such as ABC. The matrix is relevant in context of prioritizing the risks present in the organization. Prioritisation of the risks helps the management is deciding about the risk that have to be first addressed and mitigated so that it can cause any level of harm. Lastly the risk assessment matrix is highly relevant in a regulated form such as ABC in context of providing a visual representation of the risks comparison on the basis of probability and consequences of the risks. (Project Manager, 2017).

Importance of regulatory environment

Risk management is one of the subdivisions of the general management in the business or organization. Risk management helps in structuring and formalizing the skills that are required by the managers in organizations in context of making the management decisions. (Team Gantt, 2018). Risk can be defined as the combination of likelihood and consequence of a risk. The two products that have been selected from ABC include food product (milk) and the cosmetics (moisturizer).

The risk management process will be discussed in context of the two products of ABC milk and moisturizer. A risk assessment process will be explained in context of products that have been selected from ABC – food product (milk) and the cosmetics (moisturizer). The risk assessment of these two products will be done with the help of risk assessment process that have few stages that are discussed below:

Risk identification – The first stage of risk assessment is the identification of the risks associated with the products. The risk identified for the milk that is a perishable product is the risk of perishability. The moisturizer that is a non perishable item is associated with the risk of being out of stock.

Risk description – Once the risks associated with each of the product are identified then comes the need of risk description in which the needs are described on the basis of few measures such as scope, nature, stakeholders, potential action for risk treatment e.g.

Risk	Milk	Moisturizer
Scope	The scope of the risk is small as it will affect few lots of the milk products	The scope of risk is high as it will affect the sale of the product
Nature	The nature of risk is the compliance risk	The nature of risk is the compliance risk
Stakeholder	The stakeholders include customers and supply chain partners	The stakeholders include customers and supply chain partners
Potential action	No inventory for the product should be maintained	Inventory for the product should be maintained

Risk estimation – The next stage of the risk assessment process is the stage of risk estimation in which the risk is estimated on the basis of its probability and consequences. The risk of both the products can be estimated on the basis of score that will highlight the potential degree of risk.  The risk estimation can be done with the help of 3 x 3 matrixes. (Bright Hub, 2015).

	Low	Medium	High
High		Milk	Moisturizer
Medium
Low

	High	Medium	Low
Consequences	Financial impact exceeds	Financial impact exceeds	Financial impact exceeds
Probability	Likely to occur every month	Likely to occur every 3 months	Likely to occur every 6 months

Risk evaluation – Once the risk is estimated it has to be evaluated in terms of deciding that it has accepted or mitigated. In this example: the risk associated with moisturizer has to mitigated and risk associated with milk should be addressed (Ennouri, 2003).

Risk treatment – In this stage of risk assessment the risk is treated with particular course of action. In this context, the risk of milk can be treated by avoiding keeping the inventory and producing the products according to demand. In case of moisturizers the inventory should be maintained so as to treat the risk (Rabechini Junior & Monteiro de Carvalho, 2013).

Overview of the UK’s FMCG regulatory environment

Monitoring Risk – In this stage the risk associated with both the products has to be continuous monitored so that they do occur in future. (Kaminski et al., 2018).

Review – Lastly the risks should be reviewed continuously. (Jovanovi? et al., 2016)

The recently appointed head of compliance has been given a mandate by the executive board to design, implement and manage the compliance function and is due to attend the next board meeting to provide an overview of these plans.

I have been given the mandate by the executive board to design, implement and manage the compliance function of ABC.  In this context the discussion below presents the report associated with the same. The compliance function plays a crucial role in ensuring that the systems and controls are in its place and also compliant with the regulatory requirements so that high and consistent quality of goods can be manufactured in ABC.  The compliance function will contribute to the overall success of our organization by ensuring that controls and governance systems are at their places and they work effectively. A Noncompliance on the other hand can ruin the overall corporate reputation and financial performance of the companies.

In this context, ABC should consider that compliance function apart from being the important function for compliance department it is a key role of the governance system of the organization as well. The function of compliance in the organization will specialize in following – controls and compliance systems. In this context a compliance department in the organization should be formed with the head of compliance and executives. The overall objective of the department should be to oversee, manage and effectively comply with all the legal requirements and legislations related to the FMCG industry of UK.  The roles and responsibilities of the managers and employees working in the compliance department should be clearly defined. For example: the major responsibilities of compliance manager will include – assessment of effectiveness and adequacy of procedures and measures, making decisions about the actions that have to be taken in the situation of compliance deficiencies with the obligations and regulations. The compliance of ABC in context of manufacturing the consumer goods should include – legal, corporate and technical regulations and practices that must also be compliant with the regulatory framework of UK’S FMCG (Camstar, 2015).

3.Some of the critical success factors of the compliance program in the organization is follows:

Support of top management – The corporate governance of organization plays a crucial role in design and implementation of a compliance system in the organization. In this context the top management should strategically make decisions regarding the proactive compliance (ATKearny, 2015).

Product liability according to UK’s FMCG regulatory environment

Employee Engagement: The employees of the organization should be engaged effective in the compliance program is such that problematic areas related to compliance can be identified beforehand (Forbes, 2018).

Some of the major challenges that can be encountered during the implementation of the compliance program are discussed below:

1. Lack of commitment from the top management – A lack of support or efforts from the top management is one of the major challenges. In this context, the top management should focus on making strategic decisions regarding the compliance program with the help of large amount of information present with them.(Compensation BLR, 2000).
2. Lack of effective communication regarding the compliance legislations and requirements –Another major challenge is the lack of communication among the managers and employees. For this challenge the focus should be on communication with the employees with help of mails and open house sessions.
3. Lack of discipline regarding the enforcement of compliances and legislations – The discipline is must for the success of a compliance program, a lack of discipline leads to failure of the program. In this context positive and negative reinforcements should be used(ACL, 2018).

4.a.As the bank in UAE has asked me to fill the position of interim Money Laundering Reporting Officer (MLRO) in the bank for a short duration of time, it becomes my prime responsibility to look into the acts of money laundering and report any cases which are suspicious. After i was told about the scenario of dealing between Mr. Smith and Mr. Adams, I found the following areas of concern and risks that can be posed due to less-explained transactions of Mr. Adams done with the bank.

1. Due to the absence of the money laundering officer for a long time, there is a probability that the rules regarding the reporting of money laundering activitiesare not followed or not as per the CFT or AML regulations and laws. The case of Mr. Adams may be related to the acts of money laundering as the information regarding their transactions are not monitored carefully by Mr. Smith and even the bank does not possess any documented information about the same. If this happens to be the case, the bank can be called guilty of breaching the laws and may get trapped in legal, reputational and commercial consequences (Moosawi, 2012).
2. The CRM department of the bank does not keep the entire report of transactions taking place between the client and the bank and this may lead to the risks of insufficient transparency and disclosure practices. All the major transactions need to be well documented. If the transactions are not well documented and the bank does not contain sufficient information about them, there is a probability that these transactions may be illicit. Sometimes, such kinds of transactions may also be related to the activities of terrorism (Dubai Financial Services Authority, 2010). If the transactions are found to be illicit, the bank may get indulged into commercial, legal and reputational consequences. This may lead to criminal development risk for the bank (Central Bank of UAE, 2006).
3. The third risk may be due to the conflict of interestbetween Mr. Smith and the organizational objectives. As suggested by the case, Mr. Smith is more concerned about managing and maintaining his clients for long time. He gives priority to the interest of the clients rather than the interests of the organization. He is keeping the organizational policies, principles of corporate governance as well as the its reputation at stake just to entertain a wealthy client base which may provide him some personal benefits or increase his reputation and position in the bank (Central Bank of UAE, 2006).

b.Since Mr. Jones is not provided with even the basic information by Mr. Smith about his client Mr. Adams, he can take the following recommended steps:

• The first and the foremost priority of the firm must be to appoint the MLRO for a full time basis. The officer must be responsible enough to check the compliance of the anti-money laundering policy of the banks and must check whether all the guidelines of the policy are met to meet the legal obligations. The officer must keep a close check on the suspected employee like Mr. Smith and report the discrepancies to the senior authorities further. Being the interim MLRO, I must begin performing these activities as early as possible (Business Matters, 2016).
• Stricter cash handling and account handling procedures must be introduced in the bank by the authorities so that the chances of money laundering can be eliminated or reduced to minimum. Senior staff must be appointed to monitor huge transactions (Simonovski & Nikoloska, 2016).
• The bank must focus on the transactions on which are not clearly mentioned on paper or the ones with less information provided. It must be made compulsory for all the CRMs to provide the basic information like Customer Due Diligence (CDD) to the CRM back office employees when demanded.
• Jones on the other hand, must report the case to the senior authorities if the transactions of Mr. Adams are not clearly mentioned and Mr. Smith is not providing him even with the basic information. The senior authorities may ask someone to interfere in the case and check whether everything is legal with the transactions and ensure that no CFT laws or regulations are breached while processing the transactions (Dubai Financial Services Authority, 2010).
• According to the corporate Governance principles put forward by the Central Bank of UAE, the bank must devise long–term financial strategies and oversee its implementation. It must devise a mechanism to identify the improper behaviour of the employees or risky transactions to avoid the cases of money laundering, bribery, fraud or corruption. For this, they can try to implement the three-staged cycle of money laundering including steps like placement, layering or integration as suggested by numerous financial institutions (The Asian Banker, 2017).

References 

ACL, 2018. Common compliance management challenges. [Online] Available at: https://www.acl.com/compliance/5-common-compliance-management-challenges/ [Accessed 01 November 2018].

ATKearny, 2015. Compliance in Manufacturing: A Very Personal Affair. [Online] ATKearny Available at: https://www.atkearney.com/industrial-goods-services/article?/a/compliance-in-manufacturing-a-very-personal-affair [Accessed 01 November 2018].

Bright Hub, 2015. A Critical Tool for Assessing Project Risk. [Online] Available at: https://www.brighthubpm.com/risk-management/88566-tool-for-assessing-project-risk/ [Accessed 01 November 2018].

Business Matters, 2016. 6 ways to prevent money laundering. [Online] Available at: https://www.bmmagazine.co.uk/in-business/advice/6-ways-prevent-money-laundering/ [Accessed 01 November 2018].

Camstar, 2015. Manufacturing Compliance. [Online] Available at: https://camstar.industrysoftware.automation.siemens.com/en/resources/glossary/manufacturing-compliance/ [Accessed 01 November 2018].

Central Bank of UAE, 2006. Corporate governance guidelines for UAE Bank directors. [Online] Central Bank of UAE Available at: https://www.centralbank.ae/pdf/Draft-CGGuidlines.pdf [Accessed 01 November 2018].

Compensation BLR, 2000. 13 Biggest Problems with Compliance Programs. [Online] Available at: https://compensation.blr.com/whitepapers/Disability/Disability-Insurance/13-Biggest-Problems-with-Compliance-Programs/ [Accessed 01 November 2018].

Criteo, 2017. UK FMCG Report. FMCG Magazine.

Dubai Financial Services Authority, 2010. Anti-Money Laundering and Combating the Financing of Terrorism: The DFSA Approach. [Online] Dubai Government Available at: https://www.dfsa.ae/Documents/Leaflets%202010/AML%20and%20CFT%20-%20The%20DFSA%20Approach%20English.pdf [Accessed 01 November 2018].

Ennouri, W., 2003. Risks management: new literature review. Polish journal of management studies, 8, pp.288-97.

Ey.com, 2018. Food Safety and Regulatory Compliance Services. [Online] Available at: https://www.ey.com/Publication/vwLUAssets/EY-food-safety-and-regulatory-compliance-services/$FILE/EY-food-safety-and-regulatory-compliance-services.pdf [Accessed 01 November 2018].

Forbes, 2018. How The Compliance Function Is Evolving In 2018 — Five Key Findings. [Online] Available at: https://www.forbes.com/sites/steveculp/2018/03/27/how-the-compliance-function-is-evolving-in-2018-five-key-findings/#5e135f561654 [Accessed 01 November 2018].

Herbert Smith Mills, 2015. BREXIT: Implications for the FMCG sector. Herbert Smith Mills.

Jovanovi?, F., Miliji?, N., Dimitrova, M. & Mihajlovi?, 2016. Risk Management Impact Assessment on the Success of Strategic Investment Projects:Benchmarking Among Different Sector Companies. Acta Polytechnica Hungarica, 13(5), pp.221-41.

Kaminski, P., Mikkelsen, D., Poppensieker, T. & Robu, K., 2018. Sustainable compliance: Seven steps toward effectiveness and efficiency. [Online] Available at: https://www.mckinsey.com/business-functions/risk/our-insights/sustainable-compliance-seven-steps-toward-effectiveness-and-efficiency [Accessed 01 November 2018].

Moosawi, H.A., 2012. An analysis of the Practice and Standard of Corporate Governance in the UAE Banking Industry. British University in Dubai.

Project Manager, 2017. 6 Steps in the Risk Management Process. [Online] Available at: https://www.projectmanager.com/blog/risk-management-process-steps [Accessed 01 November 2018].

Rabechini Junior, R. & Monteiro de Carvalho, M., 2013. Understanding the impact of project risk management on project performance: An empirical study. Journal of Technology Management & Innovation, 8, pp.64-78.

Sanghi, A., 2015. Will the single policy framework for FMCG, e-commerce, retail prove viable? [Online] Available at: https://www.firstpost.com/business/will-the-single-policy-framework-for-fmcg-e-commerce-retail-prove-viable-3123490.html [Accessed 01 November 2018].

Simonovski, I. & Nikoloska, S., 2016. Profiling of High Risk Profiles of Clients in Order to Prevent Money Laundering and Terrorism. Journal of Anthropology Reports, 1(1), pp.1-7.

SolarWinds MSP, 2017. Risk Management Process Definition. [Online] Available at: https://www.solarwindsmsp.com/content/risk-management-process-definition [Accessed 01 November 2018].

Team Gantt, 2018. What Is a Risk Assessment Matrix? [Online] Available at: https://www.teamgantt.com/risk-assessment-matrix-and-risk-management-tips [Accessed 01 November 2018].

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Vibhaw, N. & Kapoor, S., 2017. Microbeads: An environmental challenge for the FMCG industry. [Online] Available at: https://www.business-standard.com/content/b2b-chemicals/microbeads-an-environmental-challenge-for-the-fmcg-industry-117060300213_1.html [Accessed 01 November 2018].