Page 11 - CIMA MCS Workbook November 2018 - Day 2 Suggested Solutions

SUGGESTED SOLUTIONS

TASK 2 – RISK MANAGEMENT
Suggested solution

To: FD
From: Finance Manager
Date: Today
Subject: Risk Management

How GRAPPLE could improve its risk management process

The key steps for such a process are outlined below.

 Identify risk – public health issue in the context of soft drinks and their manufacture and
supply has become high in the agenda of national governments. There are many interested
parties and diverse risks to consider e.g. customers, suppliers, trade unions, trade
associations and regulatory bodies such as Health and Safety UK. This will require a
comprehensive approach.
 Analyse the risk by considering the potential impact and likelihood both internally to
GRAPPLE and any identifiable external risk e.g. sourcing and storage of materials, disposal
of waste, safety and welfare of workers, etc.
 Impact – attempt to quantify the magnitude of the impact if the risk occurs e.g.
inappropriate cleaning materials, lack of safety equipment on high power pistons in fruit
juice production or inferior products consumed by customers resulting in personal injury 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 – we can hopefully learn a great deal in this context from the processes
currently adopted when considering risks in the workplace
 Maintain record of risks and actions taken to deal with them via a risk register
 For a listed company, a Risk Committee should be in place to review and monitor the
process. For a non‐listed company such as GRAPPLE this may not be practical. The board
composition however should reflect the complexity of the company’s activities so we may
need to consider board appointments to reflect HR and IT for example. This will ensure that
all key activities within GRAPPLE are represented from a risk perspective.

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. breakdown of machinery in production, failure of
equipment in the maintenance process. It remains essential however 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
production automation technology for which we were unprepared.

KAPLAN PUBLISHING 101