The board of Himalayan Tours met recently to discuss if the company should update its Risk Management system. The majority of directors agreed to engage a Risk Management consultancy firm to conduct an external audit to identify possible new risks that Himalayan Tours may encounter.

Suresh Gurung, a non$-$executive director $($NED$)$ with expertise in Marketing strategies, argues that an external risk audit would be a waste of money and the company should concentrate its financial resources on improving its on$-$line marketing and IT system. Suresh argues that most of the risks previously identified haven't changed much $$ and other risks are very unlikely to happen, so they can be ignored.

However, other board directors are concerned that new risks have recently emerged after the Covid$-19$ pandemic. Meanwhile, some of the previously identified risks may now be outdated, such as theft of travellers cheques because no$-$one uses them anymore. The majority of the board members finally decided to go ahead and commission the external risk audit.

The external risk management auditors identifies and assessed five $(5)$ potential key risks:

Risk A: Mutating Covid infections and other pandemics $-$ an in$-$bound tourist could arrive infected with the latest Covid$-19$ mutation. Risk A is assessed as high probability but low impact.

Risk B: Airline disaster $$ if a large passenger plane carrying in$-$bound tourists crashes, it will lead to an immediate loss of revenue. Risk B is assessed as low probability but high impact.

Risk C: Cyber$-$security threat $-$ a rival tourism business or cyber$-$criminals may hack into Himalayan Tours IT system and steal or ransom its data. Risk C is assessed as both high probability and high impact.

Risk D: Hired bus is suddenly unavailable $$ the outsourced bus charter company usually engaged by Himalayan Tours may not be able to provide scheduled bus trips to popular tourist sites, if buses have mechanical problems or need to be decontaminated after an infection. Risk D is assessed as low probability and low impact.

Risk E: Reputation damage issues $$ the risk management consultants advise that Himalayan Tours needs to develop a stronger organisational culture of risk awareness to protect the company$$s goodwill, reputation, clients and customers in the international tourism industry.

The relevant Professional Skills to apply in this scenario are Analysis, Evaluation and Communication.

Question

The TARA framework is a useful tool to assess and manage business risks:

Transfer risks with low likelihood of happening but high impact$($s$),$ if they do happen.

Avoid risks with high likelihood and high impact$($s$).$

Reduce risks with high likelihood and low impact$($s$).$

Accept risks with low likelihood and low impact$($s$).$

Explain which element of TARA is appropriate to develop an effective Risk Management Plan to manage each of the risks $-$ A$,$ B$,$ C$,$ D and E $$ identified by the external risk auditors.

Risk A: Mutating Covid infections and other pandemics

Risk B: Airline disaster

Risk C: Cyber$-$security threat

Risk D: Hired bus is suddenly unavailable

Risk E: Reputation damage