Bsbrsk501

Manage risk BSBRSK501A

Student Workbook

Part of a suite of support materials for the

BSB07 Business Services Training Package

Student Workbook BSBRSK501A Manage risk

1st Edition 2010

Acknowledgment

Innovation and Business Industry Skills Council (IBSA) would like to acknowledge Equip Grow Lead for their assistance with the development of this resource.

Writers: Shane MacDonald, Emily Logan and Peter Baskerville

Industry reviewer: Rod Peters, David Parry and Greg Field

Copyright and Trade Mark Statement

© 2010 Innovation and Business Industry Skills Council Ltd

All rights reserved. Apart from any use permitted under the Copyright Act 1968, no part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, or otherwise, without written permission from the publisher, Innovation and Business Industry Skills Council Ltd (‘IBSA’).

Use of this work for purposes other than those indicated above, requires the prior written permission of IBSA. Requests should be addressed to Products and Services Manager, IBSA, Level 11, 176 Wellington Pde, East Melbourne VIC, 3002 or email sales@ibsa.org.au.

‘Innovation and Business Skills Australia’, ‘IBSA’ and the IBSA logo are trade marks of IBSA.

Disclaimer

Care has been taken in the preparation of the material in this document, but, to the extent permitted by law, IBSA and the original developer do not warrant that any licensing or registration requirements specified in this document are either complete or up-to-date for your State or Territory or that the information contained in this document is error-free or fit for any particular purpose. To the extent permitted by law, IBSA and the original developer do not accept any liability for any damage or loss (including loss of profits, loss of revenue, indirect and consequential loss) incurred by any person as a result of relying on the information contained in this document.

The information is provided on the basis that all persons accessing the information contained in this document undertake responsibility for assessing the relevance and accuracy of its content. If this information appears online, no responsibility is taken for any information or services which may appear on any linked websites, or other linked information sources, that are not controlled by IBSA. Use of versions of this document made available online or in other electronic formats is subject to the applicable terms of use.

To the extent permitted by law, all implied terms are excluded from the arrangement under which this document is purchased from IBSA, and, if any term or condition that cannot lawfully be excluded is implied by law into, or deemed to apply to, that arrangement, then the liability of IBSA, and the purchaser’s sole remedy, for a breach of the term or condition is limited, at IBSA’s option, to any one of the following, as applicable:

(a) if the breach relates to goods: (i) repairing; (ii) replacing; or (iii) paying the cost of repairing or replacing, the goods; or

(b) if the breach relates to services: (i) re-supplying; or (ii) paying the cost of re-supplying, the services.

Published by: Innovation and Business Industry Skills Council Ltd Level 11 176 Wellington Pde East Melbourne VIC 3002 Phone: +61 3 9815 7000 Fax: +61 3 9815 7001 e-mail: reception@ibsa.org.au www.ibsa.org.au

First published: June 2010

Print version: 1.0

Release date: June 2010

Printed by: Fineline Printing 130 Browns Road Noble Park VIC 3174

ISBN: 978-1-921749-76-6

Stock code: RSK501ACL

Table of Contents

Introduction .............................................................................................................1

Features of the training program .....................................................................1

Structure of the training program ....................................................................1

Recommended reading ....................................................................................1

Section 1 – Introduction to Risk ............................................................................2

What skills will you need? ................................................................................2

Understand risk and risk management ...........................................................2

Establish the context ..................................................................................... 10

Understand importance of relevant legislation ............................................ 13

Section summary ........................................................................................... 27

Further reading ............................................................................................... 27

Section checklist ............................................................................................ 27

Section 2 – Identifying Risk ................................................................................. 28

What skills will you need? ............................................................................. 28

Review the external environment ................................................................. 29

Determine strengths and weaknesses ......................................................... 32

Review and document objectives ................................................................. 34

Identify risks ................................................................................................... 35

Research ......................................................................................................... 42

Involve others in risk identification ............................................................... 46

Section summary ........................................................................................... 48

Further reading ............................................................................................... 48

Section checklist ............................................................................................ 48

Section 3 – Analysing and Evaluating Risk ........................................................ 49

What skills will you need? ............................................................................. 49

Determine likelihood of risk .......................................................................... 50

Assess consequence of risk .......................................................................... 52

Evaluate and prioritise risk ............................................................................ 54

Determine risk treatment options ................................................................. 57

Develop an action plan for treating risks ..................................................... 64

Section summary ........................................................................................... 78

Further reading ............................................................................................... 78

Section checklist ............................................................................................ 78

Section 4 – Treating Risk .................................................................................... 79

What skills will you need? ............................................................................. 79

Implement the risk action plan ..................................................................... 79

Monitor the risk action plan .......................................................................... 88

Evaluate the risk management process ....................................................... 93

Section summary ........................................................................................... 94

Further reading ............................................................................................... 94

Section checklist ............................................................................................ 94

Glossary ................................................................................................................ 95

Appendices ........................................................................................................... 96

Appendix 1: Risk action plan template ......................................................... 96

Appendix 2: MacVille risk management policy ............................................ 97

Appendix 3: Scenario – Shoez ...................................................................... 99

Student Workbook Introduction

BSBRSK501A Manage risk © 2010 Innovation & Business Industry Skills Council Ltd Page 1 of 100

Introduction Features of the training program

The key features of this program are:

 Student Workbook (SW) – Self paced learning activities to help you to understand key concepts and terms. The Student Workbook is broken down into several sections.

 Facilitator-led sessions (FLS) – Challenging and interesting learning activities that can be completed in the classroom or by distance learning that will help you consolidate and apply what you have learned in the Student Workbook.

 Assessment Tasks – Summative assessments where you can apply your new skills and knowledge to solve authentic workplace tasks and problems.

Structure of the training program

This Training Program introduces you to the concepts of identifying risk and how to then apply the appropriate risk management strategies. You will develop the skills and knowledge in the following topic areas.

1. Introduction to Risk (SW Section 1/FLS Session 1). 2. Identify Risk (SW Section 2/FLS Session 2). 3. Analyse and Evaluate Risk (SW Section 3/FLS Session 3). 4. Treat Risk (SW Section 4/FLS Session 4).

Note: The Student Workbook sections and Session numbers are listed next to the topics above.

Your facilitator may choose to combine or split sessions. For example, in some cases, this Training Program may be delivered in two or three sessions, or in others, as many as eight sessions.

Recommended reading

Some recommended reading for this unit includes:

 Australian Capital Territory Insurance Authority, 2004, Australian Government, Guide to Risk Management, viewed May 2010, .

 Risk Management Institute of Australasia, 2010, Realising Opportunity, viewed May 2010, .

Section 1 – Introduction to Risk Student Workbook

BSBRSK501A Manage risk Page 2 of 100 © 2010 Innovation & Business Industry Skills Council Ltd

Section 1 – Introduction to Risk Before you can undertake risk management, there a number of key concepts that you must understand. This chapter will define risk and risk management, and help you establish the context in which risk management takes place.

Scenario: Preparing for risk management

You have recently been successful in securing the job of operations manager for a chain of shoe repair stores with ten outlets. Your previous experience was in sales management and more departmental areas of management but never as the operations manager of a chain of stores.

You note that one of your specific responsibilities is to manage the risks that are likely to happen in this particular organisation. Before attempting to identify the organisation’s risks, you first take time to review the concepts of risks, risk management and the context that risk will be applied to. From your previous roles, you are very aware of the risks of non-compliance with relevant laws, and so you decide to also review the legislative framework in which this organisation operates.

What skills will you need?

In order to work effectively as a risk manager you must be able to:

 understand risk and risk management  establish the context for risk management  understand the importance of relevant legislation.

Understand risk and risk management

What is risk?

Risk is inevitable. It is a natural part of our physical, social, financial and competitive environments. It is defined as the chance of something happening that will have an impact on objectives or goals being achieved. It is measured in terms of consequence and likelihood. Organisations must decide on a daily basis whether various risks are or are not worth taking, for example, when making decisions regarding investment or the health and safety of employees. For some, the ability to manage risk better than anyone else becomes a valuable resource that they use for their own advantage.

In business, there is a strong correlation between risk and reward. For example, investing in the share market is riskier than investing in Government Bonds, so as a consequence of the risks involved, share markets traditionally offer the higher returns.

Only an estimated 10% of all risks are actually unforeseeable.