Amerika Restaurant Management Strategies - Case Study Example

RISK MANAGEMENT: AN IN DEPTH OVERVIEW By Class code Lecture’s name Institution name Institution location Date: 30th May, 2011 Executive summary Risks cannot be avoided in any business and this has become a reality even in the operation of the Amerika restaurants. In the many of the restaurant’s undertakings, the identification of the very many risks involved should form the paramount focus of the enterprise. These areas of high risk should have remedial measures taken against them to reduce the many negative impacts it can have to the enterprise as a whole. The main objective in the development of the risk management plan is to control the risk the enterprise is exposed to. The identification of theexposures and the development of the appropriate risk strategies will have a positive impact. The risks will be well tackled and the appropriate measures employed through proper decision making mechanisms and risk control measures. RISK MANAGEMENT PLAN: AMERIKA RESTAURANT Risk management involves adoption and application of processes aimed at identification, assessment, analysis, and control and monitoring of some likely adverse event- otherwise referred to as risks, and their consequences. Risk is usually inherent in the structure of an entity. In a business organization, risk is inherent in what the business does and in its composition; management, personnel, inventory among other things. Consequences of risk in an organization are also diverse ranging from financial loss to public or political embarrassment (Lafley & Charan 2008). Risk management helps to ensure that an organization has identified its likely adverse events and that has taken necessary steps toward controlling such events and their consequences. It is the duty of the management of any organization to unsure that proper risk management strategies are put in place in different areas of operation in an organization. In doing this, the management has to focus in putting controls in different areas of operations in the organization. In order to apply efficient risk management strategies, managers have to plan (Sheffi 2007). A risk management plan helps the management integrate different controls measures in an organization into one whole system of controls. Besides, the plan gives visible, formalized and consistent processes of combating risk thereby enabling the management to implement and support them with continuous improvements. This enable building on what controls an organization has so that they can be more efficient. Consistence in upgrading an organization’s control systems is required since risks may regenerate and affect the organization in a different form. This is a risk management plan of a restaurant in America called Amerika restaurant. Its purpose is to set out a scheme for ensuring that risk management is considered and included in the operations of the restaurant and even to provide guidelines for its implementation. Amerika restaurant has been in business for two years and is located in Georgia. It has a wide range of inventory, a team of employee, a wide market niche, and a wide capital base. It has several branches within and outside Georgia. In its two years operations, the restaurant has been successful and has become very popular. Since the restaurant began operations, the management has been trying to monitor likely risks and have formulated policies to deal with such risks. 1. Risks in the business 1.1 Risk identification and responsibility Risk is inherent in an organization structure. Therefore, the duty of its identification rests with stakeholders in the organization.Since the restaurant began, management has been involved in making policies that are aimed at identifying and mitigating consequences of risk factors. Identification of further risk factors will involve formal risk assessment workshop, brainstorming sessions, interviews, or use of anonymous forms to highlight risk factors (Kiev 2002). All members in the entity should be involved in risk identification while it is the work of the management to respond to risk factors identified. Risk management team will be involved in assessing cited risk factors and analysis thereof. 1.2 Risk assessment and Responses Risks will be assessed in terms of cost and scope. Some occurrences may not cause direct monetary loss but such will be quantified according to how much is needed to prevent their consequences. The monetary value of impact of a risk will be determined in order to determine appropriate responses. 1.3 Consultations and participation/ sources of information Sources of information include but not limited to: Consultants External Audit Stakeholders- senior mangers, branch managers, personnel 1.4 Risk analysis Both systematic and un-systematic risks will be dealt with and various methods will be used to analyze the risks. Such techniques include. Probability Analysis Sensitivity Analysis Delphi Method Close tabulations 2. Risk: In depth 2.1 System Characterization and risk identification Common threats sources for the restaurant can be categorized into natural threats, human threats, environmental threats and system threats. 2.2Motivation and threat action Threat source Threat action Motivation Management Fraud, misrule, misapplication of policies, Monetary gain, mistake, Personnel Sabotage, fraud, Monetary gain, challenge, mistake External sources Competition, defamation, bleach of contracts Challenge, monetary gain, malice, revenge, System (information) Wrong, outdated information; Ware out, negligence Table1: Human Threats: Threat-Source, Motivation, and Threat Actions 2.3 Risk assessment and risk analysis Below are risk criteria that are used in this plan Risks affecting management and accountability of its performances Risks affecting the restaurant’s performance against strategic priorities. Risks affecting the restaurant’s reputation Risks affecting the integrity of the restaurant’s decisions and processes Risks affecting the integrity of information Risks affecting health, safety welfare of workers and even visitors. Risk affecting the restaurant’s ability to perform. Risk affecting assets and security A single threat can traverse different areas; For instance, information system failure may affect management and consequently the performance of the restaurant. The different causes of threats affect each other as shown below. Source of risk Effect to: External forces Management personnel system External forces low High high high management high High moderate high personnel high High high high system high High high moderate Table1 This table shows that the threats that face the restaurant are interrelated. This means that a threat may have a series of consequences. Therefore different risk factors identified for the restaurant have been assigned different rates according to how such a risk factor is expected to affect the operations of the restaurant. An analysis of threats according to the criteria given has showed that the levels of threats are as in fig1. A range of five threats that affect of the categories in the criteria were accesses. Figure 1: A graph of risk levels a) Residual: represents the remaining level of risks after all measures implemented by the management are in effect. b) Under Action: represents risks which have been addressed but the consequences are not yet experienced or risks which are currently being addressed. c) Controlled: represents risks that have been addressed – the management is satisfied with how the riskshave been addressed. 3. Risk policies The restaurant is dedicated to dealing with threats that may hider realization of its goals; to do this it will have a risk management team that will work throughout its operations. All staff, senior and branch managers are responsible for managing threats within their span of control. This will be done by promoting the work of risk management team and therefore all are challenged to assist with the identification of all types of risks that could impact on the Organisation as a whole (Kaplain & Norton 2006). The team will be involved in the implementation of risk management policies, assessing their success and even advising the management accordingly. It will be the custodian of all risk management information. The risk management team will comprise of a member from senior management, branch mangers representatives, external auditor and a risk management consultant. The different representatives will link the team to different branches. Risk management is a senior management’s responsibility. The management must ensure that the necessary resources are availed to the risk management team and that are effectively applied to enable the accomplishment of the mission at hand (Jashapara 2004). The management must incorporate result of risk assessment in decision making processes. The procedure to deal with a risk will involve: Identification : by all stake holders Evaluation: by risk management team Advice: by risk management team to the senior management Response : by senior management as advised by the risk management team Monitoring and audit: by risk management team All Managers should receive a copy of this risk management plan containing the restaurant’s policy on risk management, guidelines on risk management implementation immediately. This should give them time to discuss it with their staff in order to help them understand their roles concerning risk management. 4. Risk treatment Risk treatment will be determined by the risk management team under cost benefit analysis. The team will then advice the senior mangement on way forward. Reactions to differnt adverse events will be different according to the nature of the event and as adviced by the risk management team (Fleming & Asplund 2007). Risk Avoidance: Those risks which threaten an area of operetion of the restaurant and whose mitigating costs are way beyond the benefit expected from such an area will mean that such areas will be terminated to avoid the risk. b) Risk transfer: There are those risk whose consequences can be transfered to something else which would withstand the challange. c) Risk reduction: some risks will be less risky and unavoidable. For such an action will be taken to control or reduce their consequences d) Deferral: some risks will be less probable. Actions and decisions to such risks may be benched for sometimes e) Retention: some risks will have consequences that are less costly that the cost of prevention such risks may be borne by the business. The restaurant will develop a culture of risk awareness. Risk management team is expected to work on continuous basis. The stakeholderswill be sensitized of risk inherent in the business so that they can be used to identify further likely adverse events. On identification of risk the stakeholders should notify the risk management team which should asses and analyze the situation and advice the senior management on what to do (Brearly, Myers & Allen, 2008). 5. Risk documentation From analysis, four major sources of risk factors were identified as management, personnel, external forces and systems. The risks caused by the management will be dealt with though strengthening of internal controls and making the information system of the restaurant more efficient. Information system will help the restaurant to be well prepared for different eventualities. Management information system should be well developed so that the management can have good basis for making sound decisions. Major problem identified for failure to perform in strategic priorities is lack of sufficient information by managers. Those risks caused by the personnel will also be addressed largely though making the information system more efficient (Collins 2001). Current management information system need to be upgraded so that the management can be able to plan for future and even to implement strategic priorities. The control system of the restaurant needs to be strengthened. Managers should be in a position to supervise and review what the employees are doing. Good system control will ensure that problems caused by both management and personnel are reduced; this is in regard to accountability and stewardship (Luecke 2004). Therefore, areas of authority, responsibility, communication should be looked into to ensure that the control system is strong. Information system will also help in ensuring that the restaurant has a good view of external forces that influences its operation. Such forces include political issues, security issues, competition and technology (Hubbard 2009). 5.1Way forward: To make the information system more effective: Accounting system should be computerized Channel of communication should be made clear to all and roles be clearly stated. The issue of business process outsourcing will be highly advocated for in this risk plan to enhance the smooth running of the business and mostly in adoption processes of new technologies The establishment of compliancy routine checks will be vital to make the whole process retain the integrity and also maintenance of ethics both in the business world and also to surrounding communities. To strengthen the control systems: Authority should be well defined Personnel development programs should be initiated Incentive programs should be initiated The issue of censorship will be a vital tool in the fighting against outsider intrusion that may be a threat to the enterprise. 6. Monitoring/ Audit The duty of monitoring the security system of the restaurant rests with the risk management team (Brighan & Gapenski 1991). To do this the team will be involved in a continuous implementation and review activity. All implemented threat reactions will be evaluated at different intervals of time to asses the success realized. The team will always report its finding to the senior management and give advices accordingly. There will also be annual review of risk registers by both the risk management team and the senior managers. This review will be thorough and views of all stakeholders will be enlisted. The formal annual review will include: A summary ranking of risk factors. This will be compared with previous summaries to show how the implemented policies have been successful. It will also enable comparison of risk factors by branches to show how the branches are responding to the challenges. A statement of how the restaurant has performed over the whole year in regard to risk. This statement should review success cases as well as failure cases. The review will initiate risk management activities of the following year with an aim to implement such recommendations as the reviews may generate. The task will be undertaken by the risk management committee. This will be backed by the auditing team also that will allow the ascertaining of the findings to tackle the various risks at hand. 6.1 Criteria of the risks The restaurant has established the various risks that may slow down its operations. These risks have always been the most restraining factor in the restaurant’s business growth: The risks concerning the various ability of the organisation to perform have been the most outstanding ones. The risks may ruin the enterprise’s reputation which in return may lower the quality of the policies that have been put in place to allow the proper functioning of the different machineries inthe organization. Other risks may affect the management and the roles accountabilities of the various managers in the organization which in return might affect the various performances in quality delivery in the services sector. Other risks that may also be a problem in the organisation will be those affecting the strategic placements that allow the competitive advantage to prevail. Risks might also be present in the enterprise in the way the business conducts its decision making process and also how the information channels are structured. Risks will also exist in the safety of the workers in the enterprise which may involve the health of the personnel and the visitors to its premises. 7.0 Summary of organization’s risks In the verification of the various risks in the Amerika restaurants, there is the need to assess the various components on the various parameters that the organization has to take in the proper curbing of these risks occurrences. Residual risks are mainly the risks which normally remain after all the other risks have been catered for in the management plan. These risks are mainly more concerned with the policies that have their own loophole and they cannot be wholly eliminated (Sheffi 2007). These risks can be easily be catered for through the proper establishment of the reactive measures which deal with the risks as they crop up. Other risks which cannot be wholly covered for is the proper inclusion of risks in the under action plan. This plan mainly stipulates the many roles that have to be shared between the different organization members in the proper running of the organization. The plan also shows the various resources that require to be available in the comprehensive management of the risks. Therefore, the proper resource costs need to be very precise and any contingencies can be included (Hubbard 2009). Targets have to be established which will require the good timing scales to prevent the abrupt emergence of risks that may topple the organization. Other risks areas will be those concerned in methodologies that will be adopted in the check or control the risks and they must provide the assurances that the organization must achieve the common goals of development. The process of achieving this will be only be the periodic assessments of the various parameters that prevent these risks and the proper upgrading for the betterment of the organization. It should also be anticipated that the scope of the risk management plan should be developed at the very beginning of the risk assessment process (Hubbard 2009). 7.1 Detailed analysis Within every exposure that the organization will be subjected to, detailed risk elements need to be looked at. The organization risk register would form the most comprehensive background of the risk management process. Some of the risk registers that are more common in the corporate coexistence of the different business is the proper professional liability. This requires that proper information is provided to the relevant stakeholders or otherwise they risk exposure media impacts or financial losses. Third party mutual understanding should be well stipulated to avoid breaches of contracts or the attraction of commercial litigations (Kiev 2002). References Brearly, RA, Myers, SC& Allen 2008, Principle of corporate finance, McGrawHill/Irwin, New York, NY. 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Sheffi, Y2007, The resilient enterprise: Overcoming vulnerability for competitive advantage, The MIT press, London. Read More