Overview

For that assessment, you were asked to prepare a risk management framework for the organisation, and a plan for implementing this framework into the organisation.

The purpose of this task is to test your understanding and application of the key concepts of integrated risk management addressed in this unit.

Scope

You are to prepare a report in two parts as described below. Your project is to implement the framework into the organisation within the time period of 12 months, but you may also consider the risk associated with ongoing management of risk after this ‘project’ is complete and into operation.

Part 1 – Risk Management Plan

Risk context – Expand or refine the risk context you developed in Assessment 1, with emphasis on the internal and external contexts, and stakeholder identification and analysis.

Clarification of the criteria for assessing the consequence, likelihood and risk level, appropriate to the risk context. These should be in tables.

Develop of risk register for five (5) project risk events, and five (5) organisational level (Board of Directors, and Senior Management) risk events.

Quantitative risk analysis of two significant risk events. In your discussion provide a brief comparison of the approaches that can be used for quantitative risk analysis. You are not required to be using probabilistic analysis software, but you should use an appropriate method such as PERT.

Detail treatment plans for the two (2) of the highest level risk events identified in 1.3 above.

Part 2 – Business Continuity Management

The Administration Building for the business is a three storey building and is less than 10 years old. It has both stair and lift access, and some secure car parking at ground level. The building has a fire safety certificate with fire sprinklers in the ceiling cavity, a fire hose in foyer, and fire extinguishers at appropriate locations. The office is generally open plan with some partitioned offices, meeting rooms, kitchen, lunch room and storage areas. Electrical and communications cabling is run through partitioning, along walls or ducted from the ceiling space. A transformer and switchboard is located within the secured carpark. This switchboard serves the entire complex.

With this additional information in mind, you are to undertake the tasks below.

Identify and describe two (2) critical business functions.

Undertake a business impact analysis for one risk event from each of the critical business functions identified in 2.1.

Describe a strategy for managing the business interruption risk described in 2.2 above.

Scenario

You are employed by MPM Contractors Pty Ltd, a vertically integrated electrical engineering contracting company based on the outskirts of Brisbane, Queensland.

The business was established in 1969 by brothers Tim and Gerald Smith. They were licensed electricians and between them they were successful in undertaking contracts for commercial and industrial building work in South-east Queensland. Over the subsequent five years, the brothers were able to expand the business into some heavy electrical work in the coal mining sector in the Bowen Basin in Central Queensland. The regional work they were undertaking also provided opportunities to do work for Local Government Authorities (Councils) as they started to expand their water and sewerage infrastructure (power reticulation, switchboards and controls for pump stations and treatment plants).

The business has been run as a family business which saw it grow to its current state of 500 employees, an annual turnover of $60 million, and a net profit in 2019/20 of $1.5 million. Tim and Gerald handed the day to day running of the company to their eldest sons, Tim Junior and Gerald Junior in 2010 who continued to run it in a very traditional way. In early 2019, the family realised that to remain competitive they would have to change the business and to do that they needed to appoint a CEO from outside the business and establish a Board of Directors to control the company, and lead it into the next 10-20 years.

In August 2019, after an exhaustive selection process, Mr. Alex Goveny was appointed as CEO with the members of the Board being: Tim and Gerald Smith, Tim Junior, and two independent directors, Francis Twigg (a commercial lawyer) and Paul Just (a senior partner in a large accounting firm).

After due diligence and other investigations in January 2020, the company was restructured as represented in Figure 1. All personnel except for Sue Fernell were existing employees in related activities. It should be noted that the business has many employees who have been in the business for their whole career, starting as apprentices and moving into supervisory or management roles.

Since early 2017 with the downturn in parts of the mining industry and reduction in government spending, the marketplace has become very tight. Prices for work have been squeezed, but fortunately, some competitors have left. In summary, margins are tight, but the company’s good reputation allows it to gain repeat business in niche areas with improved margins (e.g. switchboards & MCCs). The Board also wants to maintain the highly skilled and loyal employee base and not go the way of competitors who have a small base staff level but extensively use sub-contractors or contract employment to undertake work.

Another challenge for the business is that while it is diversified and there are advantages in that, as the company takes on larger projects, these projects are not contained within groups and thus, require input from other divisions/ groups to deliver the work.

The business was established on a much larger plot of land than originally required, but has allowed expansion of the business over time. It is now spread across five buildings and in 2007 the business purchased a block across the road to house the HV operations. There is no more available land and any further expansion would rely on neighbouring or nearby businesses leaving.