Page 12 - CIMA MCS Workbook November 2018 - Day 2 Suggested Solutions

CIMA NOVEMBER 2018 – MANAGEMENT CASE STUDY

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 goods from suppliers, inferior products reaching consumers etc. GRAPPLE
must be prepared for such eventualities.

Reduce (high likelihood/low impact). In this case, GRAPPLE 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. in the course of the production maintenance
programmes sourcing similar replacement parts from alternative suppliers.

Avoid (high likelihood/high impact). Where a risk falls into this category, we must consider
avoiding the activity altogether. This may involve for example not providing training for
employees on appropriate safety procedures, the introduction of new technology or using
inappropriate staff on selection procedures for fruit.

It is important to note that the management of risk is a continuous process and GRAPPLE must
have regular reviews of the risks documented. This is best achieved by the introduction of a risk
register. It is important that GRAPPLE also considers uncertainty when carrying out all of its
procedures in fruit juice production for example (raw material purchase, pulp preparation,
pressing etc.) through contingency planning, detailing plans of action dependent on the possible
risks that may be identified. These plans will need to include clear guidelines on, for example,
insurance arrangements to avoid costly legal cases.

If a new process or indeed a new department proves necessary, very clearly agreed objectives
need to be drafted and agreed which must be in line with the overall strategy of the core
business. These objectives must be supported by formal documentation clearly setting out their
rights, powers and reporting lines of all personnel involved to ensure that their output can be
monitored and that their ideas are adopted, providing they comply with the overall strategic
objectives of GRAPPLE. This is particularly important in the area of risk management given the
significant effect that failure to achieve quality products may have on profitability and reputation.

The department should be staffed with appropriately skilled employees and clearly seen to be
supported by senior management in order to highlight the importance of the new function. The
Main Board must be seen to back this approach and also be seen to support the department’s
output. A chain of command should be set up so that findings are reported to the correct person
who is sufficiently senior to ensure that recommendations are considered and options for future
risk mitigation strategies evaluated. As with hygiene and health and safety of cleaning, it should
also be made clear that the responsibility for risk lies with all those employed by GRAPPLE.

Clear communication with staff will be critical to ensure that the new department/system
achieves its objectives. It will therefore be necessary to consider the most effective means of
communication e.g. GRAPPLE could instigate internal communication for circulation, e.g.
newsletters or blog posts where issues such as recent technological development/changes are
highlighted which could potentially have an effect on risk. Similarly recent events where the effect
of risk may not have been considered at the earliest opportunity should form part of this

102 KAPLAN PUBLISHING