= Group Assignment 1 Task 2 _ DB702- RISK MANAGEMENT
This group Report is regarding a given business â€œLuna â€œ. In this report we are discussing the risks in the given business and then further doing analysis of it by recommending some solution that can help to minimize that chance of risk and also make sure that the cost of reducing risk does not go higher than the normal profit of the organization. Introduction:-
Lunaâ€™s is a brand new convenient store located at Fennville close to aspen estates. Aspen estate is an area where people live with high income. Most of young people live in this area. In this area there is no any convenience store around it with in distance of 5 km. so, this provide the huge chance for the store to maximize their sales or profit. It is a company owned by two partners named Thomas and Heidi Renner they both are perfect in their field. Heidi hold a vast experience in the food industry for 15 years. While the other one is certified public accountant. Thomas deals with the daily operations alongside the financial side of the Business. They work together as a good team to lead the business which provide the huge range of food products Lunaâ€™s provides the fresh produce which consist of all kinds of fruits like apples, pears, avocadoes, melons, kiwi fruits and other seasonal fruits. This provide the vegetables and non- vegetable items which includes frozen chicken or other types of meat plus some peas in form of frozen vegetables . This store also provides the drinks service as well which further includes the soft drinks and the Alcoholic drinks which shows that there is no problem with liquor license of the store. To keep in touch The people of the town with rest of the world this store provides newspaper as well. As to introduce the People about the specials of the Luna the store gives the free pamphlets with newspapers and the food That people buy from the store. To keep the people healthy and beautiful this provides the health and Beauty items in the store like creams, shampoos, soaps, perfumes .Luna provides the sitting area for Approximately 20 people they can do there on their breakfast lunch tea breaks and coffees as well. Risk involved in the Business (Luna):-
- Business Risk: - Business risk are kind of vast nature. These are kind of risks which classified in to two types.
Internal risk: -
- Internal risk and external risk
These kind of risk are produced from the activities that is happening inside the business enterprise. These kind of risk can be determined and the chance can be conducted. The various internal factors which arise to such risk are Human Factors: - the human factors are important cause of internal risk like in case of Luna it can happen with the sticks or lockout which arise from the certain accidents inside the store. As Luna also sales alcohols it is not easy to hire full licensed bar attenders. Internal risk in Luna arises from the supplier which supply the goods to store if the supply is not happening on the time it directly affect the Luna enterprise. As store is situated in highly developed area obviously the income of the store will be high and there is more chance of the store getting robbed. Technological factor :- This can arise by the introduction of new production or distribution techniques like our eftpos system is wave pass which means it if someone just put their card in front of the wave .pass eftpos machine and the cashier press the eftpos button it will take the money out without even asking the customer for their pin number . Sometimes some customers want to pay from their different account like savings or cheque but it will deduct money from the credit account which cannot be reversed. The various external factors which arise to such risk are:- Natural factor: - these are factor on which the entrepreneur can do nothing or do little. These outcome from the activities like floods, tornedo, earth quake, cyclone. Such events cause loss of life or they may spoil all the goods. Political factors: - political factors arises because of the political change in the country. Like change in trade policy, budget etc. for e.g.:- change in political party. Insurance risk: - this is a kind of transferable risk to the insurance company who insured the assets of the store. Compliance risk â€“ if there is no certain policies or procedures of the stored food products like proper visible expiry date on items then the food items will expire and it is a health and safety issue in the system. Legal Risk: - legal risks can occur in form of employees quit the job without giving any notice period also Someone misconduct the policies made by the organization. For e.g. some staff is steeling or someone is miss behaving with other staff by using abusive language etc. Business disruption risk:- Business disruption can come in form of strike from the worker working in the organization and other form can be supplier issues or delay in delivery of the products that can result on out of stock of some products for certain time is also a risk to sales or profit of the business. There can also be a power failure that can lead to business disruption for certain time period. Accounting and Finance risk:- Financial risks in this business can be on different levels so there should be a system of identifying the risk, further analyzing risks and reducing the risk. Analysis of internal risks in Luna:- Analysis of human factor :- As most of the liquor businesses close down due to serving drunk people or serving under age people ( i:e teenagers ) . Lunaâ€™s is the business which provides alcoholic products. in order to reduce the human risk one should avoid to enter the drunk people inside the store & to make sure to check the ID of the teen age people . As the surrounding of the Luna is highly developed so there is more probability of people getting drunk on the weekends so there should be extra security person especially on the weekends the understands the local community to look the welfare of the store . If the conditions of the store is out of control of the security person there should be the emergency phone list to call the police, fire, and ambulance to minimize the risk. Cashiers should know that the visibility of the smokes should be limited to the customers coming in the store. This also can help in reducing any robbing risks. Analysis of technology: - these days we see lot of credit cards are pay wave and they definitely are good and fast way of payment but there is always a risk of someone to lose that pay wave card and any person who finds that card can use it without pin number so due to technological disadvantage we canâ€™t remove the risk totally but we can put certain steps to reduce the risk such as putting credit limits to the card use for e.g. : if someone use the card using pay wave machine there must be limit to the amount of 80 $ so if someone want to redeem over 80$ from the card they have to use the pin number . Instruction near counter area or pay wave signs that indicates that the machines are pay wave so that if someone do not want to redeem the money from their credit account or in other words they want to use there check or saving accounts they know before giving their cards to the cashier . Intellisafe should be use near the counter so that there must be the limit to the cash in the till for e.g. no staff member or cashier should have more than $300 in the till. Analysis of Natural factors:- As Luna is the recently developed area obviously it is area where the risk of the natural disaster is less. But because of the environment change natural disaster can occur. So in order to avoid or reduce the risk the store is based on a really strong foundation. In case of short circuit Luna can face the fire accident so to minimize the fire damage the water sprinkler are installed in the building. There are also exit sign in case of emergency like fire or any natural disaster like earth quake. Fire extinguisher are also up to date and installed in each floor of the building and staff is well aware of how to operate that fire extinguisher in case of an emergency. Fire or smoke alarms are also installed in the building to minimize the risk. Analysis of compliance Risk:- In order to reduce the risk of getting more expired Stock there should be a system put in place such as FIFO that means first stock that come in the store should be sold first also stock should be rotated and checked by the staff on regular basis by each department . Legal Risk analysis :- To avoid this risk there should be at least 2 weeksâ€™ notice period and a certain agreement read and signed by both parties and both parties ( employers and employeeâ€™s ) should be aware of everything and also there should be a plenty or punishment in case of breaking organizational laws orders . Other legal requirement could be all the required legal documents should be filled and inspected regularly for e.g:- for food safety there should be check for the temperature checks and devices check regularly. Food storing devices can be checked with doing regular calibration of the devices. Business Disruption analysis :- there is always a chance of having power failure anywhere so there should be a backup system that help in case of power failure and doesnâ€™t not let the important information in the company database to be interrupted or deleted accidently or stopping the flow of work . other types of problems can arise like strike from the worker due to some reason can also stop the flow of work so there should be a proper management system that put in place so that if any worker have any issues in the organization can talk to the higher authorities and it get sorted with in certain time frame . For e.g. complaint boxes can also be installed that can help to understand if anything is going wrong or some area needs improvement. Analysis of Financial risk:-
Conclusion of Lunaâ€™s Business:- As like any other normal business this business also have certain internal and external risks that can affect badly to the performance of the organization of the company & like we have classified almost all risks in the business and done further analysis and provided their solution in a sequence . now we have also make sure that how much is the probability of the risk or how much chance of occurring a certain risk and how to minimize it by spending as less money as possible so that the cost of managing the risk does not go higher than the profit of the organization . Referencing:- www.Wikipidia.com www.Youtube.com.
- The management should have certain skills that can help in minimizing the financial risks in the business such as follow :-
- How to understand and evaluate business risk.
- Systematic framework or realistic models should help to reduce financial risk.
- Calculating the cost of risk and making sure that the cost of reducing the risk should not go more than the regular profit of the company.
- A satisfactory risk report can be made that can help to understand the risk in more detailed manner.