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Risk Management

This document defines risks, risk assessment, and risk management for a business called Gas 'n Go. It identifies strategic risks like changes in market demand, equipment maintenance needs, pricing volatility, and health and safety concerns. It then provides tables to rate the impact, likelihood, and risk score for identified risks and determines appropriate risk management strategies.

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18 views4 pages

Risk Management

This document defines risks, risk assessment, and risk management for a business called Gas 'n Go. It identifies strategic risks like changes in market demand, equipment maintenance needs, pricing volatility, and health and safety concerns. It then provides tables to rate the impact, likelihood, and risk score for identified risks and determines appropriate risk management strategies.

Uploaded by

Eats Foodie
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CHAPTER 7

RISK ASSESSMENT AND PLANNING

This chapter defines the business risks, as well as their measurement and assessment for the anticipated
responses to each risk.

Risk Assessment

The following are the scales used to assess the risks which employs the use of different risk
measurement techniques to quantify and evaluate such risks.

Rating Level of Impact Impact Description

5 Catastrophic If the risk is the ONLY CONTRIBUTOR on the inability of the Organization to meet
its objective.

4 Major If the risk SIGNIFICANTLY CONTRIBUTED on the inability of the Organization to


meet its objective.

3 Moderate If the risk affects A PORTION OR SEGMENT of the business or process but may slow
down the ability of the organization to meet its objective.

2 Minor If the risk affects A PORTION OR SEGMENT of the business or process but may NOT
slow down the ability of the organization to meet its objective.

1 Insignificant If the risk has NO OR LEAST IMPACT on the attainment of the organizational
objective.

Table 7.1 Impact Rating

Rating Level of Likelihood Likelihood Description

5 Certain The impact will occur in LESS THAN 12 MONTHS and with MORE THAN 80%
chance of happening.

4 Likely The impact will occur in LESS THAN 24 MONTHS or 2 years and with 50% - 80%
chance of happening.

3 Possible The impact will occur in LESS THAN 60 MONTHS or 5 years and with LESS THAN
50% chance of happening.

2 Unlikely The impact will occur in every rare situation or case and expected to occur in the
NEXT 10 YEARS with about 10% CHANCE of happening

1 Remote The impact will occur, but it is NOT POSSIBLE WITHIN THE NEXT 10 YEARS and
even the chance that this will happen is LESS THAN 10%.

Table 7.2 Likelihood Rating


Rating Opportunities for Risk Management Improvement

1 No controls in place.

0.80 With controls in place but are inflective.

0.60 With fairly effective controls in place but needs improvement.

0.40 With highly effective controls in place, but need little improvement.

0.20 With controls in place which are working and and stands as the industry leader.

Table 7.3 ORMI Rating

RRS Risk Heat Index Description

1-4 Low Will acquire continuous assessment and monitoring of the existing controls.

5-9 Medium This will require review and possibly change in certain policies that may affect
the operations.

10-12 High Change in certain strategy, policies, and tactics where benefits will be realized
and mitigation may be made.

More the Critial Mitigation is highly imperative.


12

Table 7.4 Residual Risk Score (Risk Heat Index)

Risk Identification

A. Strategic Risks
1. Market Demand Risk. Changes in customer demands have a significant impact on the business.
While customers initially appreciate better products and services, they quickly get used to,
expect and demand them.
2. Equipment and Maintenance Risk. Gas n' Go uses vending machines to dispense fuels and
operate the business. Improvements and regular maintenance of machines are needed to
prevent dissatisfaction from the customers.
3. Pricing and Revenue Risk. Prices of fuel are critical to determine due to the unstable prices and
multiple factors in the market. Higher or lower prices may impact the profitability of the Gas 'n
Go business.
4. Health and Safety Risk. Safety and a healthy environment are important for the business to
implement in order to prevent negative impacts on both the internal and external environment.

Strategic Risk
Risk Impact Likelihood Inherent Opportunities Residual Risk Risk Management
Rating (a) Risk Score Risk Score for Risk Score e=c×d Strategy
Management
(b) c=a×b Improvement
Rating

(d)

Market 4 5 20 1.00 20 The business


Demand Risk needs to assess
historical demand
trends while
monitoring
potential future
economic
developments in
future events that
could affect
demand in order
to lower demand
risk

Equipment 3 2 6 0.20 1.20 Establish a


and comprehensive
Maintenance preventive
Risk maintenance
program based on
operating
conditions and
manufacturer
recommendations.
This entails regular
inspection,
equipment
cleaning, and
component
replacements.

Pricing and 3 4 12 0.40 4.80 Utilize dynamic


Revenue Risk pricing models
that adjust prices
based on real-time
factors like fuel
market variations,
local demand, and
competitor
pricing. This
ensures
competitive
pricing and
maximizes
potential revenue
during peak
demand periods

Health and 2 2 4 0.40 1.60 Prevent by


Safety Risk maintaining a
clean
environment,
educating
management
about emergency
protocols, and
implementing the
necessary safety
measures.

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