BSBRSK501 MANAGE RISKS

A Project that requires the preparation of a risk management plan for a real or fictitious department or company to show evidence that the context of the organization can be understood and risks can be identified, analyzed and treated effectively.

1.1 Context/Scope - Set the scene

KFC International's, a global fast food chicken restaurant, has franchises in different continents. The objectives of KFC International is to maximize profitability, improve shareholder value and deliver sustainable growth year after year.

KFC has six levels on its organization structure. The highest level is the management board which hosts the president and the regional directors, including the Chief Financial Officer. This level is followed by the general managers, assistant general managers, unit managers, team members and finally the workers. KFC has also well-defined policies as regards to their employees such as anti-harassment & non-discrimination, employment classifications (such as full time or part time employment), Leave & Time-off benefits, meal & break periods, safety & health and employee conduct.

KFC International is present in Africa. KFC Africa is committed to bring innovations in its customer services of the African group. The Risk Management will thus focus on the Customer Services department where self-service kiosks will be installed for use by customers - thus speeding the process of customer purchases. In this context, A PESTLE analysis has been carried out for KFC Africa. The PESTLE analysis helps KFC understand the market dynamics and hence, work on improving its business continuously. The analysis detailed below.

The functioning and operations of KFC Africa could be affected by governments' policies which regulate the fast food operations. Regular political unrest in some of the African countries can also impact KFC Africa. Economic factors, such as Covid-19 pandemic and fall in economic activities in almost all African countries, make it difficult for KFC to open other outlets as there has been a slowdown in fast food consumption. Social factors such as militants against the killing of animals, chicken included, also affect the sales of KFC. It is also difficult to increase the sales of KFC in countries like India where most of its population are vegetarians. KFC has embraced technologies - it has developed mobile payment systems which allow customers to pay electronically. Examples are pay with Apple Pay or Android.. KFC, operating in a number of countries, has to take care of all the laws prevailing in the respective countries. Any non-adherence to the law can put the company in a difficult position. Also, KFC should disclose relevant information. The environment factors affecting the business should be seriously considered. For example, customers are becoming more environment friendly; therefore, KFC should adopt measures to make its products more environment friendly and sustainable. Among the measures taken was to make its supply chain environment friendly.

1.2 Identification:

A SWOT analysis at KFC revealed the following: Among the strengths is that KFC is the second best global brand in the fast food industry; KFC secret recipe allows it to have a competitive advantage against its competitors; KFC position in China is growing steadily where half of its revenue comes from with more than 4,000 outlets; KFC is the market leader offering chicken as its primary product. The weaknesses identified are untrustworthy suppliers, negative publicity, unhealthy food menu and high employee turnover. The opportunities are increasing demand for healthier food, home meal delivery and introducing new products to its chicken range. The threats are saturated fast food markets in the developed countries, trend towards healthy eating, local fast food restaurant chains and lawsuits against KFC.

The following fifteen risks have been identified using the SWOT analysis: KFC loses the second best global brand ranking, disruption to distribution operations, disease affecting chickens, loss of warehouses due to natural calamities, trucks grounded due to non-compliance, system failures within ordering and distribution system, sabotage, political and social unrest in African countries, loss of interest for KFC foods, malfunctioning of outlets' equipment, negative publicity, shortage of skilled labor, non-adherence to health and safety regulations, regular interruptions in electricity supply and closure due to national lockdown.

The table below present the risk management plan for 10 identified risks:

Risk Category	Risks	Cause of the risks	Consequences	Controls in place
Ranking	Losing the second best global brand rank	Services of the self-service kiosks are not up to expectations	Loss in revenue	Aggressive marketing
Natural Calamity	Disease affecting chickens	Diseases in African regions	Shortage of chickens	Selection of chicken suppliers who have the highest standards of stock hygiene
Loss of warehouses	Natural calamities such as flood	Shortage of chickens	Chicken suppliers should have warehouses in areas not prone to floods
Closure due to national lockdown	Covid-19 pandemic	Decrease in sales	Proposed home deliveries
Health and Safety	Trucks carrying chicken grounded	Non-compliance to health and safety requirements	Lateness in stock receipts	Regular inspections to chicken suppliers by KFC health and safety officers
Environment	Interruptions in electricity supply	Inability of power producers to meet demands	Power outages in self-service kiosks	Purchase of UPS to be used in self-service kiosks
Health	Loss of interest for KFC foods	Non healthy ingredients used during preparation	Decrease in sales	Healthy foods placed on KFC menu
Personnel	Non-adherence to health and safety regulations	Lack of attention from employees	Removal of operating license by local authorities	Regular inspections by KFC International officers to KFC Africa outlets
Shortage of skilled labor	Labor employed in other business due to non-attractive pay at KFC	Existing staffs overburdened with tasks and activities	Offering more attractive salary and other work conditions
Technology	Malfunctioning of outlets' equipment	Overuse of equipment	Delay in services	Equipment bought and kept as spares

TO BE ANSWERED.

1.3 Analysing Risks

Refer to the criteria for analysing risks. Then proceed as follows:

1. Define a rating by impact criteria (3 ratings or 5 ratings.... You choose) + describe
2. Define a rating by likelihood criteria ( x ratings) + describe the ratings
3. Decide about a matrix to combine the two criteria and end up with different levels of risks

e.g 4x3 matrix; 5x5 matrix......... - for 3 or 4 or 5 levels of risk ( You choose)

4. Decide about the risk tolerance for the organization and show this in your matrix.

5. Construct an impact-likelihood table

1.4 Treatment

• For each risk identified, decide on the treatment option (accept, share, mitigate, avoid) and mention different possible countermeasures (as per the treatment option) to address the identified risks
• Select the preferred option(s) and justify on the basis of costs and benefits.
• Allocate responsibilities & assign a "due date" where appropriate.
• You can now present an enhanced version of the table you presented in the previous section so that you end up having arisk register.

1.5 Monitoring/Reviewing

• Devise some appropriate performance standards to assess the effectiveness of the treatments (performance standards can be task-oriented or results-oriented)

Decide about a monitoring frequency -weekly/monthly/quarterly /yearly basis (justify).