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Unit 2 Risk Management Level 5 HND Diploma Business

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Risk management for Business

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INTRODUCTION

Risk is the potentiality of occurring a factor which may have negative and positive effect upon an event from meeting its aim and objectives and risk management is taking an appropriate action in advance to prevent the event from uncertainties. Risk management is a process of recognition, analysis and acceptation or mitigation of uncertainty in management of finance, human, tangible and intangible resources. Risk management is a tool that enables management to take action before occurring situation in organisation (Risk Management, 2018). This essay is based upon Moomba Festival which is to be held in South Australia in month of March. This event comprises so many events and conferences related to sections. This fate is 64 years old but maintains its objective and prosperity. This report is based upon risk management of Moomba Festival.

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TASK

There are two types of risk, one is strategy driver and other is operational risk. Strategic risk includes market drivers, technologies, regulatory and macro environment risk etc. On the other hand, operational risk factors are financial, security, people related and business process risk. Uncertainties which are related to Moomba Festivals are a part of strategical risk (McNeil, Frey and Embrechts, 2015).

Measurement and management of risk is not an easy task as it contains some specific steps which are explained as beneath:

In the very first step, a proper framework should be decide so that all future possibilities could be predicted and managed accordingly. If event manager plans all uncertainties like this festival is getting attraction of many people and becoming popular on year basis then to hamper all services and facilities could be removed.

Risk Identification is a next step and in this section all factors should be analysed in order to measure kind of risk that may have some positive and negative influences. For example, future risk could be recognised by taking past year's data into consideration and probability of occurring a situation along with its impact upon business Activities of Moomba Festivals.

Once risk is identified then it is to be analysed that what is the type of risk and how it could be managed by eliminating, reducing, transferring and distributing risk factor. By taking aid of this evaluation, event manager can find out relevant solutions also according to the type of risk (Bessis, 2015).

Risk response plan is next phase of risk management process, this stage includes how an organiser retaliate upon a risk factor and what will be the corrective actions in order to manager risk in Moomba Festival. For example, if any other event is taking place on the same time and it has its impact on festival by reducing visitor so response plan for this condition is that how organisation can make their Activities more attractive in order to fascinate more audiences in festival.

Other phase is that once association is decided to popularise their Activities then action plan would be made like addition of some more human activity like additional events of music like concerts with popular singers etc. Once this plan is ready then it is clear that all actions and task would get examine so that efficiency could be measure for make some improvisations in corporation.

After analysing all previous stages, review will be constructed so that all necessary decision could be made. These reviews could be get from possible and potential audiences whom are regular visitor of Moomba Festival.

There are some methods that can manage risk factors in events. Evaluation of risk is a quite prominent actions because this activity takes corrective decision upon a future occurrence which may have negative effect upon business operations of an event. There is a diagram which can evaluate risk in most appropriate manner (Cardona, 2013).

Low Probability

&

High Impact

High Probability

&

High Impact

Low Probability

&

Low Impact

High Probability

&

High Impact

Above table is illustrates the factors of probability of occurring a situation in market and what will be its effect in business operations of Moomba event. There are some situations that are have different possibilities which are explained as beneath:

Probability of occurring a situation is low but its effect is high then it is required from organisers that they establish efficient forecast tools and then take curable actions in order to minimise lower effect and to maximise positive effect on a serious note.

When probability of happening an event is high and its impact on operational Activities is also high then all situations and its negative and possible effects should be measured in advance so that losses could be eliminated from event happening. This is a most critical format of risk management where chances of negative effects are also high along with positive impacts.

Other situation is when chances of happening an event is low which may have negative and positive influences and along with this impact of this situations is also low then organisers of event can ignore this condition as it contains low risk factor (Hull, 2012).

Last but not the least, other situation is when chances of happening a situation is high but its impact on association is low then in this type of occurrence, management of event does need to make any prior decisions.

This tool is applicable in Moomba Festival also because this fate is running from past 64 years and it is a pressurise thing that all prestige and prosperity of event should be maintain for further success of event. By applying this tools organisers can predict all possible situations which would have some influences upon Activities of program. When all situations is forecasted very efficiently then other step is to measure all impacts upon Activities in order to maintain efficiency of function. When situation is analysed and some possible results is found then event organisers can manage their all human resource like how many staff members are needed and what will be seating arrangement, how efficient services would be for all those days in which event would take place. For example, in context of Moomba Festival, all of sudden number of visitors became high then this situation will lead to sabotage of resources. This is understood with an accurate example like if expectation of numbers of visitors are one million but crowd has exceed then all management which is prepared for expected number of visitors but now things has been changed and it will result into necessity of more resources like human, tangible and intangible. To protect all these things, it is required from managers that they predict all situations in most appropriate manner so that this type of hampering could be eliminated.

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This tool is applicable in following manner in some extent (Cole and et. al., 2013).

Main objective of applying this situation analysis risk management tools is to prevent event from uncertainty but if this could not be done then at least risk factor could be reduced. If risk factor could not be diminish and eliminate then it requires transfer of risk by taking help of some tools like insurance and outsourcing. In insurance, organisers can take financial protection against any uncertainty in order to protect and maintain adequacy of program. If there is no chance left other than accepting risk factor then there are many plans for contingencies for managing risk so that all resources could not be sabotage or hampered. Rather than this, predicted uncertainties could be diversified like some actions are allotted to human resource department for examples keeping all assets of Moomba Festival safe and always keep some extra asset for dealing over crowd. All services should have some backups so that situation of mismanagement could not be happen in festival (Christoffersen, 2012).

There are some other methods that can be taken for managing all risk factors and method is illustrated as beneath:

Situation analysis is an other mode of managing risk. This is a systematic and evaluation method which analyses past and present technological, political, economical and social factors which have some major and minor effects upon event happening (Situational Analysi, 2018). This analysis is done to identify risk factors that are having their impact on event happening. Main aim of making this analysis is recognition of intrinsic and extrinsic elements which are having effects upon some resources like financial, human, assets for example tangible and intangible. Other objective is evaluation of festival's present and future strengthen, weaknesses, opportunities and threats. This could be done by taking help of PEST/SWOT analysis. There are various factors which are linked with some risk extent and has capabilities of sabotaging happiness and prosperity of function and these elements are explained as follows:

Political Factors: If there is any single change in political and governmental factors then it will effect operations of event in positive or negative manner. If government made some laws regarding environment like strict regulation upon excess of pollution, discharge of wastage water in river is could not done then it will hamper clearance of waste material widely.

Economical Factor: If economic condition of any country is not strong then it can not organise any event or on the other hand if economy of nation is strong then handling a function capacity is strong (Aebi, Sabato and Schmid, 2012).

Social Factors: This section includes some aspects like lifestyle, income level, traditions, fashion, taste, preference, beliefs etc. When any changes occurs in these elements then this section can hamper association's working quality and functionality. Here is change in belief of population is a risk because it can be change in any time and this situation can lead events to make some revulsions like theme of event.

Technologies: There are any techniques that are used in term of serving all audiences whom are using as swings for example, Ali Baba, alpine slide, booster etc. These are instances of technologies that made happening an event is more enjoyable not only for kids but adults also. If changes are sudden then it would be consider as risk factor because if these permutations are not involved in festival then this action will hamper image of Moomba Festival in Australia (Lam, 2014).

As Moomba Festival is very prominent fate in Australia and keep maintaining their prestige and prosperity by accepting and managing all risk and are able in protecting their human, financial and intangible & tangible resources. This festival takes place near of a river and if government made the law that water of river should not be hamper in any case and if it happens then it will be a chargeable offences for event organisers. Making of this sudden change in rules and regulation has its impact on accomplishment of Moomba festival. On the other hand, economic conditions of Australia is quite strong and then government can organise any event and functions on large scale. If economy gets change and recession will come then this is a hard situation and this situation effects financial capacity of Moomba Festival. If people are getting bore with same type of activities then it is requirement of situation that can change theme and can make some addition and reduction in events. When this situation carries then it will make some changes in technologies and requirement of techniques will hamper functionality of Moomba Festivals. Whether more technologies are required or event management need to stop out some technologies in critical situations of economies.

Other part of situation analysis is SWOT analysis which is to be considered as an important tool in which corporation can analyse how much efficiency it has in order to manage and retaliate risk factor so that working adequacy could not get hamper and main motto of starting event or company which is profit making could be maintained. SWOT analysis provides information regarding internal and external situation analysis of given event which is Moomba Festival. Below are some points which would be included in TOWS matrix.

Strengths are related with core competencies of event like if activities that are taking place in function are very popular and happening then it will fascinate more number of people as audience. Providing best quality services along with fun of enjoying various human events are strength of Moomba festival and people know that attending this festival is a stress buster then it attracts more visitors (SWOT Analysis and PEST Analysis, 2018). This is a tool which is quite prominent and is a reason of success of event since past 64 years.

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Weakness of Festival organisers are not able in retaliating change that are occurring in surrounding market of function. For example, if there is a possibility of happening change in any factor like taste of customers, political policies of country etc. Then all these variations should be attended and predicted in most appropriate manner so that it should corrective action should be taken which could reduce, diminish transfer and diversify risk so that positive results could get.

Opportunities for Moomba festivals are making some extra dose of entertainment so that not young people but also children and adult population could get attracted towards festival. If there is any activity which is related with music and concert then age group of 30-50 years can also take interest into Moomba festival. This action is helpful in fascinating more number of audiences who will bring more earnings with them and them ultimately efficiency and attractiveness could be get and then maintain.

Threat for Moomba fate is that if any other event is happening in and Near with Australia then it will diversify audience whom are having same interest in Moomba fate and other event that is happening with same time. To reduce this thing, event organiser can make this event more colourful and joyful and should also starts new activities for all age group people so that association could manage all risk that are related with clashing of event dates.

Above analysis is based on situations that are occurring in market place and having prominent impact whether positive or n4egative impact on functionality of event. By taking help of situation analysis, event manager can monitor all risk factors that are related with functionality and main objective of doing this to protecting human resource along with providing security to tangible and intangible assets by making proper decision upon financial analysis (Sodhi, Son and Tang, 2012).

CONCLUSION

This report is concluded as that risk management is a tool that is done for preventing future action from uncertain activities so that functionality of operational actions could not get hamper. To measure and evaluate risk, there is a process that contains some steps which should be followed for analysis all positive and negative effects of risky factor. There are some tools that are helpful in analysing and managing risk in corporation like risk evaluation tool along with situational analysis that is a combination of two parts. One is PEST analysis and other is SWOT study.

REFERENCES

  • Aebi, V., Sabato, G. and Schmid, M., 2012. Risk management, corporate governance, and bank performance in the financial crisis.Journal of Banking & Finance. 36(12). pp.3213-3226.
  • Bessis, J., 2015.Risk management in banking. John Wiley & Sons.
  • Cardona, O. D., 2013. The need for rethinking the concepts of vulnerability and risk from a holistic perspective: a necessary review and criticism for effective risk management. InMapping vulnerability. (pp. 56-70). Routledge.
  • Christoffersen, P. F., 2012.Elements of financial risk management. Academic Press.
  • Cole, S. and et. al., 2013. Barriers to household risk management: Evidence from India.American Economic Journal: Applied Economics. 5(1). pp.104-35.
  • Hull, J., 2012.Risk management and financial institutions,+ Web Site(Vol. 733). John Wiley & Sons.
  • Lam, J., 2014.Enterprise risk management: from incentives to controls. John Wiley & Sons.
  • McNeil, A. J., Frey, R. and Embrechts, P., 2015.Quantitative risk management: Concepts, techniques and tools. Princeton university press.
  • Sodhi, M.S., Son, B.G. and Tang, C.S., 2012. Researchers' perspectives on supply chain risk management.Production and operations management. 21(1). pp.1-13.
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