Implementing the Risk Management Process in New Kitchen Heaven Retail Store - Essay Example

? A Report on Implementing the Risk Management Process in New Kitchen Heaven Retail Store (NKHRS) of the due: Implementing the Risk Management Process in New Kitchen Heaven Retail Store Abstract This case study seeks to examine the essentiality of implementing risk management process in New Kitchen Heaven Retail Stores (NKHRS). Risk management process in most cases helps in identifying and measuring the level of risks an organization is exposed to. In this case the various risk management processes are looked at to help in addressing the level of exposure by NKHRS. This report also looks into the basic importance of having a risk management process in the retail store. The processes will involve risk identification, assessment, risk mitigation, impact reduction and the various contingency plans. Similarly the paper explores major areas of risk for the store such as Information technology, Facilities and Retail. Suggestions on the various options and solutions of managing the risks to help provide the way forward for NKHRS will be provided. The various processes of monitoring, updating and reporting risks for effective operations of the retail store will also be examined. Introduction Risk is the probability that a chosen action or activity including the choice of inaction might result into a loss or undesirable outcome. This implies that a choice has an element of influence on the outcome (Reuvid, 2010). Risk management process is therefore the systematic application of the policies, methods and practices of management to the tasks of establishing the context, analyzing, evaluating, monitoring, treating and finally reviewing the inherent risks. Risk management process is therefore an ongoing process that aids in identifying potential problems that could emerge when new projects are undertaken within a business. A solid risk management process facilitates the smooth running of a project. By identifying and addressing a list of project risks which are also part of the larger project or business management system, many disclosures and roadblocks are eliminated. Essence of risk management Consequently the risk management process is an essential factor that should be considered in an organization so as to enable its business to effectively run. It ensures that a well structured a framework for more effective strategic planning to enable maximization of opportunities and minimization off losses is put (Kerzner, 2009). It equally promotes greater openness in decision making and improves communication in an organization as well as providing an effective and systematic approach which enhances the management focus on areas of risk concentration in their operations. Moreover, risk management widens the management’s perspective and encourages initiative and proactive behavior that improve the level of accountability in an organization. Identifying the Risk Factors Considering the compilation lists of the NKHRS project risks, it is realized that the major risks are concentrated in three sections, that is, in areas of Information Technology, Facilities and Retail. In the area of Information Technology there is the risk of getting a professional contractor to install the Ethernet so as to enable effective operations. Similarly, there is the risk of getting the Point of Sale and server hardware in time for the smooth operations .In the area of facilities it is noted that there is a risk in obtaining the right and desirable location bearing the right price range This location might as well be risky in terms of the availability of the goods and the products accessibility to the consumers. In this case a plan should be developed to decide on whether to find the right location for a high producing store to avoid great loss in sales or to consider a different alternative that can generate good profits (Culp, 2006). Consequently, in the Retail category there is the risk of the availability of the products at the right time to the customers and that the shipment date for the product should also be done in time without delay (Alexander & Andresen, 2007). This therefore calls for the right logistics to be put in place so as to enable the store run smoothly in terms of its continuous operations. Risk factors and contingency plans In the category of Information Technology there is a risk of delay or no installation of the Ethernet that is the T1 connection due to unavailability of first choice professional contractor. This is a hardware risk and therefore, the there should be a contingency plan that puts in place a backup contactor who can help install the T1 line connection in case the first contractor does not avail himself in time. The risk of the Ethernet that is the T1 connection not being install can be reduced by engaging a contractor several months prior to the installation process. The point of sale (POS) terminals and hardware requires a contingency plan to help to put in place the use of transfer strategy. In this case, vendors would be required to prudently integrate the qualities of a good time utility mechanism which is desired by most of the consumers (Hoffman, 2002). If the deliveries cannot be done at the right time, then the vendors would be required to provide and pay for rental services and equipment until deliveries are done. The management can also practice the use of phased implementation and piloting method so as to eventually face off the manual delivery system finally shifting to online processing method. This would help reduce the risk of failing to deliver products effectively hence avoiding unnecessary losses. Considering the category of facilities desirable for a new location of the store is $780,000 with the probability of making undesirable location being at 60%, it is advisable that the manager goes looking for more than one ideal location while considering how to improve the original location of the store in case the right address is not found to reduce the risk of losses associated with the wrong location that is very high. The manager of the store should ensure proper floe of information to the vendors and consumers so as to facilitate accessibility for improved sales (Jordan &Silcock, 2005). The risk management team of the store should therefore come up with various contingency plans to ensure increase in sales by carrying out sales promotions and product advertisements. This would help to reduce the eminent risks. The retail section should mitigate the risk of product unavailability to avoid the loss of 125,000 dollars. Therefore, the decision of opening this store in conjunction with Garden and Home show should be considered and implemented because it would help in diversifying the retail store risks resulting into maximum output. If all these are implemented in effectively with each stage backed by a contingency plan, store will open the new facility within the appropriate time schedule and without any inconveniences. Regular monitoring, updating and reporting should be put in place to help in the management of risks concerning the retail store (Coyle, 2004). This can be done by conducting regular risk updates to incorporate new risks and eliminate the old ones that appear to have been mitigated; this can be done by conducting regular risk survey plan on the operations of the retail store and ensuring that the system is well maintained. The system should have an upgrade system that is flexible especially when new information is incorporated. This for example; would help in informing the client or vendor on the latest information on a particular product or how to make an order under the new system. The organization should put in place intervals of conducting a risk review of the store to help detect new risk areas, for example; frequent assessment of the risks in stages. There should be a plan on how to establish feedback processes to give warnings of potential risks to the business, for instance; developing information the system that is able to provide client feedback to the management. In addition, the system should be able to provide customer reaction towards the offered services and the operations of the business (Jordan &Silcock, 2005). This would assist in effectively assessing and monitoring the emerging risks to promote appropriate decisions. Expected Monetary Values of risks facing NKHRS Risk of choosing an undesirable location 60% of $ 780,000 = $ 468,000 Risk of losing sales (2.5M – 1.2M) = $ 1.3M Risk of product unavailability 60% of $50,000 = $ 30,000 Loss of sales from not opening the store is $ 125,000 Executive summary This examined the case of NKHRS to determine the importance of incorporating risk management processes in the retail store. In this case risk management process would help to boost management decision making process for the smooth operations of both the individual stores and the overall business (Duckert, 2010). In this paper it is noted that an effective risk management process is enhanced by implementing the processes such as risk identification, assessment, mitigation and the development of contingency plans. Through these processes the paper has identified areas of great risks as noted extract conversation between the manager and one of the store’s staff. The risks identified are categorized into three parts that is information technology related risks, risks from facilities and retail operational risks. In the category of information technology lays the risk of installing a T1line that involves the availability of the contractor that is still not known. The point of sale service (POS) and the server hardware are also ineffective for operations of the retail shop. Similarly, in the facilities section, it is noted that there is a risk of not obtaining the desirable location for the effective operations of the business hence posing a threat of losing more customers in the region. Consequently, in the retail section there is a threat of product availability and delays in its delivery. Then New Kitchen Heaven Retail shop should therefore, put a lot of concentration in ensuring that the risks involved in the three sections are managed by making and implementing the available corresponding contingency plans(Frenkel, Hommel &Dufey, 2005).. The paper also examines the various ways of monitoring, updating and reporting the risk so as to help the management to make proper management decisions. Appendixes Risk factor-an activity that increases the probability of risk occurrence Risk assessment- is the process of examining the possible dangers that are likely to occur due implementation of a certain purposeful action in a business. Contingency plan-this is a plan formulated as a back up to the main plan. Desirable location- this is the ideal suggested business location for an enterprise. Point of sale service (POS)-this is the location where transactions takes place also referred to as “check out”. It is from here that customers interact with goods / services and undertake purchases. References Brian Coyle (2004): Risk Awareness and Corporate Governance: Global Professional Publishing Christopher L. Culp (2006): The Risk Management Process; Business Strategy and Process; John Wiley and Sons Publishers; Douglas G. Hoffman (2002); Managing Operational Risks: Twenty Firm Best Practice Strategies: John Wiley and Sons Publishers Edmund H. Conrow (2003): Effective Risk Management: Some Keys To Success: AIAA Publishers Ernie Jordan, Lurke silcock (2005): Beating It Risks: John Wiley and Sons Publishers Gregory H. Duckert (2010); Practical Enterprise Risk Management; John Wiley and Sons Publishers Harold Kerzner (2009); Project Management; A System Approach to Planning, Scheduling: John Wiley and Sons Publishers Jonathan Reuvid (2010): Managing Business Risk: A Practical Guide To Protecting Your Business: Kogan Page Publishers Marco Alexander, Caiza Andresen (2007): The Process of Risk Management for Projects: Grin Verlag Publishers Michael Frenkel, Ulrich Hommel, Gunter Dufey (2005): Risk Management: Challenge and Opportunity: Springer Publishers Read More