Page 13 - MCS August Day 2 Suggested Solutions

SUGGESTED SOLUTIONS

TASK 3 – RISK MANAGEMENT
Suggested solution

Briefing note:

To: Finance Director
From: Financial Manager
Date: Today
Subject: Risk Management

Montel can improve its approach to risk by following a formal risk management process as
outlined below.

The key steps for such a process are outlined below.

 Identify risk – camera production is complex and there are likely to be many diverse risks to
consider e.g. to manage the expectations of the different stakeholders e.g. suppliers,
production workers, RnD personnel and the Camera and Image Processing Association.
 Analyse the risk by considering the potential impact and likelihood both internally to
Montel and any identifiable external risk e.g. faulty cameras and/or legal claims due to
incorrect advice during purchase by inadequately trained staff.
 Impact – attempt to quantify the magnitude of the impact if the risk occurs e.g. personal
injury during camera production or insurance claim
 Likelihood of this happening – attempt to assess the probability of the risk materialising
 Prioritise / rank risks
 Select and implement strategy to deal with risks identified, depending on the likelihood and
impact.
 Monitor and review
 Maintain record of risks and actions taken to deal with them via a risk register

Suggested approaches to mitigate/manage risks:

Accept (low likelihood/low impact). Risks which fall into this category can be accepted as a
normal part of business. It is anticipated that the risk is unlikely to occur and even if it does the
consequences can be coped with e.g. failure of camera equipment during use. In saying that, it is
essential that the risk continues to be monitored to ensure the impact of the risk has not changed
e.g. as a result of changes in camera technology for which we were unprepared.
Transfer (low likelihood/high impact). In this case, the risk should be shared in some way by
either being passed to someone else (such as an insurer) e.g. the cost of unforeseen accidents,
fire, theft, damaged film etc. In the industry it is usual for insurance to be in place which covers a
wide range of eventualities to include, lost production due to supplier failure, breach of
intellectual property, injury etc.
Reduce (high likelihood/low impact). In this case, Montel needs to consider ways to reduce the
risk. This is normally done by putting controls or procedures in place; although the cost of the
controls should not outweigh the impact of the risk which could include having contingency plans
in place should the risk actually occur e.g. additional back‐up generators for any of our automated
processes.

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