BSBRSK501 Manage Risk Case Studies

Australian Ideal College
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Task 1: Case Study: Scenario

As part of their overall strategy in the Australian beverage market, MacVille Pty Ltd have
developed a chain of cafes in the Central Business District (CBD) of Brisbane, Queensland
and the CBD of Sydney, NSW. The board of directors have made the decision to expand
their operations in Queensland with the purchase and re-branding of the existing Hurley’s
cafe in Toowoomba on the darling downs 130km west of Brisbane.
You are currently the assistant manager of their flagship Brisbane Queen Street store, and
have been given the opportunity to manage the new store in Toowoomba. The CEO for
MacVille’s cafes in Queensland is Paula Kinski.
She has assigned you the task of managing the risks involved with the operational aspects
of this take-over. A copy of her email is attached.
Email from CEO – Paula Kinski
From: CEO – P.Kinski

To: Assistant Manager – Queen Street
Re: New Toowoomba store
Congratulations on your new appointment. Prior to taking up your position as manager of our
Toowoomba store located in Ruthven Street, the board has asked that the risks in this
project be appropriately managed. I want you to undertake this task as it will give you
significant insight into the store’s operations, it will ensure a smooth transition to the MacVille
systems and will encourage you to give ongoing support for our risk management initiatives.
I would like you to approach this task in three stages and meet with me at the end of each
phase to review your work and discuss your plans for the subsequent phases. The three
stages in this risk management task will include:
1. Review.
2. Analyse and plan.
3. Monitor.
Your primary risk management focus is directed to the ongoing operations of the
Toowoomba cafe. The strategic and investment risks of this project are being managed by
the board. To this end, you are to consider any risks that could impact on human resources
management, financial operations, WHS, our supply chain and the local governance and
overall compliance issues.
By way of background, MacVille has agreed to employ all existing staff on three months
probation. The current supervisor James Mansfield, has been offered the position of 2nd in
charge and he has accepted.
While settlement on the purchase of the business is not for another few weeks, the seller
has agreed to grant us full access to the store’s operational processes and store information.
You should liaise weekly with the Queensland management team here at head office
concerning the marketing, finance and store management functions that you are
investigating. I will set up a regular meeting for you.
Head office has a report on a similar expansion conducted by the NSW team that may help
you in your research. You may need to review other statistical information and engage
specialists to help you with your investigation. The legal firm Goldsmith Partners are advising
MacVille on the Hurley cafe acquisition and would be available to help you with legal or any
compliance issues.
The landlord of the shop in Toowoomba, Ron Langford, is also a local councillor and has
offered his assistance in getting established in Toowoomba. He has offered his email
address for correspondence (ron.langford@tcc.com.au).
Once I have received and discussed your risk review report, we can move onto the next
stage of the risk management process.
Regards
P.Kinski
CEO MacVille Cafes (Qld)
Site visit – Toowoomba

You received permission from Paula to travel to the Toowoomba store to start your research.
Paula had cleared it with James Mansfield the current senior supervisor who will spent most
of the day with you helping answer your queries.
You arrived at the cafe and noted the two hours of drive time that it took to get to the cafe from
the CBD of Brisbane. You met with James who took you through a complete overview of the
store and the surrounding area. He was OK with the idea that you needed to take notes in
preparation for a report.
Paula had also arranged for you to meet with Ron Langford in his office later that afternoon.
Hurley’s Cafe
After lunch, you went over your notes to revise and edit key concerns and significant events
that you had written down earlier.
• The location of the store on the corner of the two main streets of the city makes easy
access for local customers and highly visible for tourists.
• The long drive from Toowoomba to Brisbane would make attending the weekly
managers meeting difficult considering many meetings did not finish until into the
evening after refreshments. There is also manager training sessions that need to
complete over the next 6 months in conjunction with a few other assistant managers.
Navigating the steep narrow climb up the range with trucks blocking the way is quite
difficult even in daylight hours. Being a competent driver you feel that it would be
unlikely that you would be involved in an accident, but it still concerns you
considerably.
• The two hour delivery would make fresh pastry deliveries from the company’s central
bakery plant impractical. The pastries would arrive after the morning rush. These are
a key part of the MacVille assortment.
• There is also a concern about getting the company branded supplies through as
quickly as a CBD Brisbane store could.
• Hurley’s cafe was a family run store and some family members were employed on
the staff. James was engaged by the family to supervise the operations of the store
and Mr. Hurley as manager would authorise wages but anyone can authorise
deliveries.
• When asked about written policy and procedures manual, James said that Mr. Hurley
set the policy and procedures verbally and on the few days each week he was in the
store he would show the staff how to do things the way he wanted them done.
• Water use – Running the dishwasher when only half full. Washing fruit and
vegetables under a fast running tap. Toilets all used the single flush system. Dual
flush would cost about $7,500 to upgrade. The dishwasher was always set to full
wash and had a Water Efficiency Labelling and Standards Scheme (WELS) rating of
3. The more water efficient 5-6 star dishwashers cost about $6,000 and above.
James explained that Mr Hurley instructed the staff to keep the non-native flowering
plants in the courtyard fully watered. The store currently uses 41,500lt a week.
• James spoke about the cafe attracting a large % of retirees because of the easy
access to busses and the stores central location.
• The same staff member that completed the cash register balancing also completed
the bank deposit form and did the banking as well. The banking was not done every
day and often $4,000 was kept on the premises overnight in the cash register. There
was no safe. There is a bank two shops away but the Hurley family bank is a couple
of blocks away and there was not always time to do the banking.
• James replied to you question about the possibility of break-ins saying that there was
a 50% chance of it happening and the risk was moderate.
• Not all takings from the cash register by family staff members were recorded.
• The fit-out in parts looked old and unattractive, with some chairs unstable and broken
and some parts of the worn carpet was simply taped over with gaffer tape.
• One of the staff was a qualified chef who had developed an innovative and popular
range of rice wraps that were tasty, gourmet and healthy. None of the other cafes in
the area offered these.
• No established process for dealing with injuries that happened at work.
• James gave a brochure about an innovative frozen par-bake cooking system that
was under the limit set by council for an exhaust system yet it cooked fresh bakery
items in 30 minutes from frozen par-baked pastries.
• The computer with all the stores employee details, and financial records was not
password protected and anyone could access the information.
• James’s response to your question about the lack of sales promotion techniques was
that he could not get the staff interested in the activity so he stopped trying to make it
happen.
• The employee detail form requested information about the employee’s entire past
health issues.
• The wage and superannuation records seemed to be incomplete with many
calculations being worked out by the number of hours worked multiplied by a set ‘in
the hand’ amount.
• James also provided a brochure about a company that could come and set up WIFI
in the cafe so that customers could use their computer notebooks and connect to the
internet while they were dining in the cafe.
Meeting with Ron Langford

In the afternoon you met with Ron Langford in his office to discuss the cafe, council by-laws
and aspects concerning the surrounding district. You took notes that included the following
significant information.
• Ron explained that there were opportunities for opening more cafes in the
surrounding shopping centres like Wilsonton, Clifford Gardens and K-Mart Plaza.
• Ron handed you an extract from a government report ‘Economic Brief.’
• Ron explained that the Federal Government was now introducing legislation that
backs up the local by-law concerning efficient water usage, particularly by industries.
The current by-law has fines of up to $50,000 for excessive water breaches. Ron did
explain that the council was giving some time to ‘make good’ under certain
circumstances on a case by case basis. Ron also agreed with the idea of installing a
water tank in the court yard for the cafe to use and would help get it built.
• Ron explained that Toowoomba was obviously a place for retirees and the population
was growing.
• Ron spoke about the Federal Government’s National Broadband Network being
rolled out in Toowoomba that would allow efficient and effective video streaming and
teleconferencing.
• Ron spoke about the current by-law that was due for implementation on the 1st of
next month allowing cafes to expand their footpath dinning and so put more tables
and chairs outside their premises.
• Ron also spoke of the fact that representatives of a large international chain of coffee
shops had been making enquiries around town about opening a store in the
Toowoomba CBD.
Queensland management team meeting

Soon after you got back from your research trip to the Toowoomba store, you were attending
a meeting with the Queensland management team and Paula gave you the report “Report
into the acquisition and re-branding of the NSW expansion store”. Paula said that there may
be some things to learn from the NSW experience. In the report you noticed the summary.
Key problems identified:
1. Lack of internal controls, particularly over cash handling, monitoring and recording.
2. Failure to meet compliance standards in WHS, Privacy and Industrial relations law.
3. Lack of written policy and procedures to guide staff in carrying out their duties.
4. Lack of a professional business culture in the family run business.
5. Failure of the business to monitor the external environment and find opportunities
and threats to the business.
For Task 2:
Case Study
The board has reviewed the previous report you developed, and has requested further
information for several of the identified risks, including options for reducing the risk levels.
These are as follows.
• Banking risk – theft of cash left on premises.

• Manager’s travel risk – physical injury.
• By-law Compliance risk – reputation/brand loss and fines.
Time lines to consider are based on risk priority levels and include the following.
• Pre-settlement – date of legal transfer of the business.
• Opening week – first week of company operations.
• Within 3 months – after the opening week.
• Within 6 months – after the opening week.
Responsibilities for actions include the following.
• Financial, insurance and banking issues – financial controller.
• Legal issues – Goldsmith Partners.
• Expenditure >$5,000 – MacVille board.
• New policy – CEO with MacVille board.
• On-site management, training – store manager.
• Changes to MacVille cafe Queensland operations – CEO.
• External audits – CEO with MacVille board.
Develop a report for the board that examines these risks and describes ways that each can be
treated, and forward a copy of your report to your manager to table at the next board meeting.
FURTHER CASE STUDY INFORMATION
Hurley’s Cafe
You revise your notes from the meeting with James Mansfield and identify the following points:
• In the context of MacVille’s investment here $4,000 would be considered to be of
minor consequence if it were burgled from the closed premises overnight.
Meeting with Ron Langford

You revise your notes from the meeting with Ron Langford and identify the following points.
• He also said that the Council water patrols meant that it is likely that stores not
complying with the by-law would be discovered.
Queensland Management Meeting

You go back over your notes compiled with the Queensland management team and note the
following.
• Further feedback from Paula included that the water compliance risk was one where
significant time and resources would be required and the board would view it having
moderate consequences for MacVille cafe’s Queensland. She also indicated that the
board views any potential risk that could result in the death of an employee as having
a catastrophic consequence.
Looking at the hierarchy of control the Queensland team were able to give you some good
brainstorming ideas to pursue. These include the following.
• Installing native plants to cut down water use.

• Making it a company policy to bank every day and eliminate the need to carry
overnight.
• Install a teleconferencing system.
• Install a water tank and reduce dependence on council water.
• Change banks to the nearer one to avoid the long walk.
• Install dual flush toilets.
• Insure overnight cash holdings.
• Finish management meetings at 3:00pm.
• Introduce new processes on water use and conservation.
• Change assistant management times to the morning.
• Write new policy and procedures for water use in Toowoomba.
• Install a water usage graph in the staff room.
• Give the manager an excusal letter allowing them to leave any meeting at no later
then 3:00pm every day.
• Replace the dishwasher with a 5–6 stat (WELS) rating.
• Have Goldsmith Partners apply for time to ‘make good’.
Case Study: Risk management policy

MacVille risk management policy
Purpose
Risk is inherent in all business activities. The aim of this policy is not to eliminate risk, rather
to manage the risks involved in all MacVille activities to maximise opportunities and minimise
adversity.
Effective risk management requires:
• a strategic focus
• forward thinking and active approaches to management
• balance between the cost of managing risk and the anticipated benefits
• contingency planning in the event that mission critical threats are realised.
Policy
MacVille will maintain procedures to provide a systematic view of the risks faced in the
course of our business activities.
• Establish a context: The strategic, organisational and risk management context

against which the rest of the risk management process in MacVille will take place.
Criteria against which risk will be evaluated should be established and the structure
of the risk analysis defined.
• Identify risks: Identification of what, why and how events arise as the basis for further
analysis.
• Analyse risks: The determination of existing controls and the analysis of risks in
terms of the consequence and likelihood in the context of those controls. The
analysis should consider the range of potential consequences and how likely those
consequences are to occur. Consequence and likelihood are combined to produce a
priority rating for the risk.
• Treat risks: For higher priority risks, MacVille is required to develop and implement
specific risk management plans including funding considerations. Lower priority risks
may be accepted and monitored.
• Monitor and review: Oversight and review of the risk management system and any
changes that might affect it. Monitoring and reviewing occurs concurrently throughout
the risk management process.
• Communication and consultation: Appropriate communication and consultation with
internal and external stakeholders should occur at each stage of the risk
management process as well as on the process as a whole.
Establish the context

Communication and consultation
Monitor and review

Identify risks
Analyse and evaluate

risk
Treat risk
Figure 1: Risk management process

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Australian Ideal College

Registered as Australian Ideal College Pty Ltd

Task 1: Case Study: Scenario

Email from CEO – Paula Kinski

From: CEO – P.Kinski

Site visit – Toowoomba

Meeting with Ron Langford

Queensland management team meeting

4. Lack of a professional business culture in the family run business.

• Banking risk – theft of cash left on premises.

FURTHER CASE STUDY INFORMATION

Meeting with Ron Langford

Queensland Management Meeting

• Installing native plants to cut down water use.

Case Study: Risk management policy

• Establish a context: The strategic, organisational and risk management context

Establish the context

Monitor and review

Analyse and evaluate

Figure 1: Risk management process

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