GOVERNANCE, ETHICS AND SUSTAINABILITY 1. Introduction In an organisation, it is very necessary to effectively analyse the different types of risks time to time that can impact the organisation in a negative manner. This risk management assignment effectively focuses on the calculation of risk exposures that play a very influential part in organisational operations. In order to understand the importance of calculation of risk exposure beforehand, an organisation named Woolworths have been selected in this risk management assignment. Woolworths is considered to be the retail giant in Australian retail sector. It is the owner of the maximum market share in the Australian retail sector.
2. Findings
2.0 Risk Exposure There is an effective need to calculate the risks that are associated with the growth, culture and management of information within Woolworths. As influenced by the idea of Sacks et al. (2016) referred in this risk management assignment, it can be stated that risk exposure calculator is an effective tools, whose results are directional. It has been observed that this calculation effectively aids in the process of letting the management have knowledge of the company’s falling in a specific risk zone. In the viewpoint of Laetz et al. (2018), there are three zones that are considered after the calculation of the risks in all the categories considered under the risk exposure calculation.
2.1 Pressure points due to growth
2.1.1 Pressure for performance In the context of Woolworths, it can be stated that there are many factors that effectively influences the performance within the organisation. As influenced by the idea of Brancato et al. (2017), it can be stated that in Australian retail sector, the emerging organisations like Aldi and Coles are providing stiff competition to the organisations like Woolworths and Wesfarmers. There is a requirement of effectively increasing the rate of performance. Currently, the organisation has highly concentrated on the increased production in order to
compete in the existing market with the emerging retail businesses. Hence, if the risk is calculated for the increased pressure of performance out of 5, then the score would be 4 (Woolworthsgroup.com.au, 2016).
2.1.2 Rate of expansion In the context of the present scenario in this risk management assignment, it has been observed that the organisation is planning to expand in international markets especially in Asian markets so as to capture the market. In order to do so there is a need to effectively have a budget, sufficient to meet the financial crisis, if observed. This source of revenue is effectively is generated from the profit that is gained by the organisation in the domestic markets. With the emergence of organisations like Coles and Aldi the market share has lowered by 15% in the last 5 years. This has also dropped the sales. Hence, the expansion rate of the organisation can be scored a 3 (Woolworthsgroup.com.au, 2016).
2.1.3 Inexperience of key employees In recent few years, Woolworths have been facing issues regarding retention of its employees. With the increase in recent emerging retail organisations, the employees have switched their loyalties and moved to different organisation to seek better opportunities and salary. As influenced by the idea of Doerrenberg et al. (2015), it can be started that there is a need to effectively retain the employees within an organisation as losing employees is a terrible cost to the organisation. In the viewpoint of Hoang et al. (2015), it has been analysed that organisation spends so much time and capital on the training and development and if these employees leave the company, it leaves a negative impact on the organisation. Woolworths have hired new employees, who are not enough experienced with the retail organisations. Hence, the score in this category for the inexperience of the employees is 4 out of 5. Pressure points due to growth Pressure for performance
Rate of expansion
4
Inexperience of key employees 3
4
Total score
11
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2.2 Pressure points due to culture
2.2.1 Rewards for entrepreneurial risk taking As influenced by the idea of Klingenberg (2018), it can be stated that many entrepreneurs take risks in order to make the organisation launch their innovative products and services. In the viewpoint of Allore et al. (2017), there are many risks that are associated with any sort of new project. However, if analysed in a proper manner, there can be positive results following the risky decisions that are being taken by the organisation. In the context of Woolworths, it can be stated that the managers have effectively taken many risks in order to launch their new products. The launch of their new organic range is one such launch, which is associated with many risks. In this condition, it has been observed that the organisation has effectively invested and rewarded the individuals associated with the Organic range. There are certain risks such as controversies with the farmers and many others, which can prove to be negative for the organisation. Hence, a score of 3 is appropriate out of 5 in this category (Gobas et al. 2018).
2.2.2 Executive resistance to bad news It can be stated that there are many organisations, wherein the executives have effectively developed a resistant to the bad and de-motivating news. As influenced by the idea of Manuel et al. (2018) as referred in this risk management assignment, it can be stated that all the organisations do need motivation. Motivation or good news is something, which drives the employees to work harder. However, there is a need to effectively have the understanding of the risks that impact the organisation in a negative manner. Risks can never be good news but they are the most important entities that need efficient concentration. In the context of Woolworths, the emerging risks can be the competitive risk. Hence, managers are required of employees conveying them with the possible actions that can take place, if the competitive edge is not gained back by Woolworths. After complete analysis, it can be stated that the score in this category is 2 as it has been observed that the organisation has taken many steps in order to gain back its market share. This is only possible, if the Risk assessments leads have conveyed the risk to their management or higher levels. Hence, the score is justified.
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2.2.3 Level of internal competition Performance reviews within Woolworths are conducted based on the personal goals and the 360 degree performance appraisal approach. As influenced by the idea of Dhudasia et al. (2018), it can be stated that there are negative as well as positive impacts of internal competitions within an organisation. In the context of Woolworths, it can be stated that the organisation has fair and just performance appraisal tools. However, it has been observed that organisation has experienced employee loss after the declaration of annual promotions. Hence, it can be analysed the internal competition is very high and in this case, organisation has the chances of experiencing risks or brand damage if the internal competition continues to multiply itself. Hence, some strategies are required to be drafted in this context. Hence, at this point, in the context of on-going internal competition within Woolworths, it can be stated that the organisation’s score is 4 out of 5.
Pressure points due to culture Rewards
for Executive resistance Level
entrepreneurial risk to bad news
of
internal Total score
competition
taking 3
2
4
9
2.3 Pressure points due to information management
2.3.1 Transaction complexity and velocity As influenced by the idea of Markaki et al. (2018), it can be said that managers are required to understand the tractions that are happening within the organisation. Along with focusing on the drafting of different types of strategies, there is a need of effectively focusing on the arcane language of experts while making deals. In the context of Woolworths, it can be stated that Woolworths in an experienced organisation and its employees as well as management is completely aware about the different things that are happening within the organisation. The managers are well qualified and understand the language of transaction and the risks that are associated with the huge level of transaction while in the process of expanding the business. Hence, in this case, the score can be 1 out of 5 (Wow2017ar.qreports.com.au, 2017). 4
2.3.2 Gaps in diagnostic performance As influenced by the idea of Kennedy et al. (2016), it can be stated that in the times when, the sales are high, there are incidents wherein the managers do not take a note of the abnormalities in the transactions. However, it has been observed that when the sales are not too high and the organisation is not making huge amount of profits, the management is keen on taking out the errors in the transaction. Hence, considering this fact and in the case of Woolworths, it can be stated that the present condition of Woolworths states that the profit margin of the organisation is not very high in comparison with the previous instances hence; there are not very wide gaps within the performance. Hence, the score can be relatively 2 out of 5.
2.3.3 Degree of decentralised decision making
In the viewpoint of Allore et al. (2017), it can be said that there are times wherein while in the process of expansion or decentralisation, the lower levels managers are being allocated with some serious or vital responsibilities. In this case, it has been observed that they tend to take some risky decisions while in the process of proving their responsibilities. In the context of Woolworths, it has been observed that taking of some risky decisions by the lower level managers in as the store managers have led to fall in the market share and losing of competitive edge of Woolworths. Hence, in this case, the score can be relatively 4 out of 5, which is quite high. Pressure points due to information management Transaction complexity
Gaps in diagnostic Degree and performance
of Total score
decentralised
velocity
decision making 1
2
4
7
Complete score if the three focused entities are concerned Pressure points due to growth
Pressure for performance
Rate of expansion
Inexperience of key employees
Total score
5
4 Pressure points
Rewards
for Executive
4
11
Level of internal Total score
due entrepreneurial risk resistance to bad competition
to culture
Pressure points
3
taking
news
3
2
Transaction
Gaps
due complexity
and diagnostic
4 in Degree
9 of Total score
decentralised
to
velocity
performance
decision making
information
1
2
4
7
management Total Score
27
3. Analysis After complete analysis of the risk exposures and the identified score, it can be stated that the total score of Woolworths is 27, which falls under the caution zone. As influenced by the idea of Kennedy et al. (2016), it can be said that if the score lies in between 9 to 20, then the organisation is in the safe zone. If the score lies in between the 21 to 34, then the organisation lies in the caution zone. If the score lies in between 35 to 45, then the organisation lies in the danger zone. In the context of Woolworths, it can be stated the there is a matter of concern and the managers are required to draft strategies in order to lower their score in the culture and growth (Hbr.org, 1999).
3. Conclusion and recommendation After complete analysis of the risks and the calculations in this risk management assignment, it can be recommended that there is a need to analyse the risks that are associated in an effective manner. In this case, it can be suggested that the managers are required to evaluate the current practises of the employees on a regular basis so as to check, if the employees are completely adhering to their responsibilities or not. After detailed analysis in this risk management assignment it can be stated that there is a need to effectively train and motivate the employees so as to make them motivated and sharpen their knowledge and skills. This will prove to be very effective for the organisation. Hence, it can be concluded in this risk management assignment that the organisations such as Woolworths is required to focus in 6
calculating their risk explore factors so that they can calculate the risk that are associated and the amount of negative impact they can provide the organisations with.
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