Risk management plan

Posted: October 17th, 2013

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Risk management plan

            Piranha Services is a demolition contractor servicing the building and construction industry with a strong commitment to serving all clients equally. Piranha has a team of experienced workers who area dedicated in the provision of high quality work. As a unique feature, Piranha advocates for the need for greater involvement in recycling and re-use of materials that would be disposed. The services offered by Piranha include rubbish removal, tenancy clean-outs and demolition.

Piranha Services have various major processes, procedures and requirements that expose the firm to risks. The processes include:

Warehousing– Piranha stores most of its clean-out property in warehouses until it can be disposed of. The storage of such property presents an opportunity for losses through fire as well as losses occurring from theft.

Auction sales – Piranha engages in regular auction sales of their property as well as other branch properties. This may pose a financial risk if the auction does not yield the expected income.

Part A: Establishing Risk content

The risk management process shall be for Piranha Services Company. The risk management process shall involve all the people within the organization but potentially to different extents and with the legal department taking up the biggest role. This process shall also address all safety issues that have been troubling our workers alongside their health. Here, the focus will be on provision of appropriate safety uniform for the worker while on site. The process will seek to address the legal policies that must be met considering this work is highly dangerous. Lastly, the risk management process will cover the issue of meeting clients’ deadlines by completing projects on time. These are among the major issues to be considered.

i)                    Strengths of current risk management plan

The current risk management plan had the following benefits. One, it was supporting strategic and business planning. Piranha Services could engage in future planning of their activities after minimizing and considering the risks. The current risk plan also avoided unwelcome surprises and presented fewer shocks to the firm. The nature of work at Piranha involves meeting disastrous and unexpected situations like demolitions that go wrong. The risk management plan that was in place made sure they would not be caught off guard when a certain activity went wrong.

ii)                  Weaknesses of current risk management plan

However beneficial the plan was, Piranha’s risk management plan had the following weaknesses. One, it dir not provide sufficient cover for health and safety of its employees. The firm did not have any insurance cover to treat their workers or even reimburse them in the event of an accident. Two, Piranha Services did not have a tangible legal structure that would satisfactorily attend to the firms’ legal needs especially considering that this line of work is very dangerous.

Goal and success factors in Piranha Services

Goals are desired results that a firm plans to achieve while success factors are necessary for an organization to achieve its goals. Therefore, these two are complimentary.

Goals

i) Production goals – Piranha needs to improve their service provision in order to cover a larger clientele than they are currently serving. The need to demolish and reconstruct is clearly universal and so Piranha is aiming to increase their customers up to 10,000 clients before 2013.

ii) Safety goals – Piranha aims at upgrading the safety levels in all their firms to increase their workers’ health levels as well as confidence in the workplace.

iii) Operational goals – Piranha aims at increasing the machinery within their ranks to automate the whole construction completely process by 2014.

Part B: Risk Identification

In this section, the tool used in identifying the potential risks that the workers at Piranha Services are exposed will be an environmental analysis and a behavioral analysis.

Environmental Analysis

Health complications– The workers operate in very disease-prone areas. Old, abandoned houses, construction materials as well as rubbish dump sites that the workers are exposed to may be a source of various types of health complications for them.

Death risks– Piranha Services works in demolition and this presents a threat in that workers can be killed when establishments are being brought down. The tearing down of the environment around the buildings makes it very unstable, thus every worker is vulnerable. The building blocks can also collapse on workers.

Legal obligations– Demolition work is dangerous and as such, Piranha Services will have to establish and implement an insurance cover for workplace injuries and death. They will also need to establish compensation schemes as well as retirement benefits.

Meeting deadlines-Piranha Services have a large client base and most of the time, they fail to honor deadlines set for work. This will lead to defaulting and loss of customers on their part.

Lack of training- The employees are not sufficiently trained to work professionally. Most of them are casual laborers. Most of the employees lack training in first aid techniques as well as disaster management.

Inadequate equipment/ tools– demolition requires very sophisticated tools that may be missing or very little in some special fields for example, partial demolition of buildings.

Delayed construction/remodel- Construction works require many procurement processes that may delay the amount of work that Piranha Services can do over a period.

Loss through natural disasters– In the process of operations, Piranha may encounter certain losses that may occur because of nature for example fire, floods or hurricanes that may damage equipment and other company property.

Behavioral analysis

The workers at the construction sites where Piranha Services do their demolitions have no particular regard for complying with the safety standards. They engage in risky jobs without wearing safety clothing. At a particular site, workers did not hear their helmets, hand gloves and heavy-duty boots. Apart from this, the workers also did not wear the appropriate uniforms, which easily identified them as being Piranha employees. These observations concluded the fear that many risks the workers were exposing themselves and the company.

Part C: Risk Analysis

Risk Identification table

Part D: Risk Management Plan report

Treatment plan

The control measures put in place to mitigate the above risks faced by Piranha Services include:

i) Improving health monitoring– The health status for all Piranha workers needs to be improved to provide them with the best conditions in which to work in. This will include introducing more health precautions such as education on the biological dangers of working demolition sites.

a) Strengths– The health of the workers is very important in maintaining high productivity. Within the construction sector, this is even more beneficial as it requires a lot of physical contribution. Piranha will now not have any problems with intermittent attendance by workers based on health issues.

b) Weakness– This will involve more company funds in setting up the health scheme for the workers. Piranha might therefore incur losses in the initial stages of implementation.

ii) Increasing machinery- The volatility of the working area will require the purchase of more machinery to aid in demolition thus limiting the number of men who are exposed to debris. These extra men can be relocated to the waste management wing.

a) Strength- The volumes of work done by Piranha will go up significantly as machinery will hasten the demolition process.

b) Weakness– This will involve more company funds in setting up the health scheme for the workers. Piranha might therefore incur losses in the initial stages of implementation.

Implementation of health insurance covers– This will ensure that the workers will still be able to be treated for injuries and diseases thus increasing their productivity.

a) Strength-Insurance covers for the workers will mean an assurance when it comes to having able laborers to work throughout the period that Piranha is operating.

b) Weakness– It will also involve a lot of initial capital to administer the health programme for all the workers as well as realizing the effect that healthy workers have on the firm.

Purchase of protective gear– The workers will be more efficient if they were equipped with gas masks, luminous jackets, flashlights and other forms of personal protection.

a) Strength- Protective gear will increase the safety levels and this will encourage the workers to contribute more effort towards attaining the firms’ objectives and goals.

b) Weakness- It will involve the firm using their own funds in order to purchase new gear, as the workers cannot equip themselves in a standard way.

Monitoring plan

The process of continuous risk monitoring will be implemented in the following way:

i)                    Establishment of a department within Piranha Services that deals with risk management solely. Commonly such offices are either under Administrative services, as a fully-fledged department or as insurance.

ii)                  Clarifying the functions of the department. The role of this office will be to implement the laid down objectives that pertain to mitigating all manner of risks in the firm. They will also be responsible for constantly monitoring the progress of the goals to make any necessary changes where the risk becomes dominant again.

The recommendations from the Department of Risk Management are therefore important in achieving their goals as well as the overall firms’ goals. However, there reaches a particular period when a certain risk reaches the recognition and contribution of the whole company. It might be a health or safety threat as in the case of Piranha. In such situations, an analysis will be done in order to confirm the validity of these claims. First, the Risk Management Department must make their own recommendation, which will be forwarded, to the top executive for deliberation before being considered. The health status within piranha is such a sector. It will require the contribution of the workers themselves, the administrative staff and the top executive to come up with a tangible and lasting solution to Piranhas’ problem.

It is the department of Risk Management that will set how often to monitor the plan. However, in my opinion, this should be done after the end of every financial year. This is because most of these packages in the plan have financial ramifications and will require financial analysis as well. It is also advisable to put the monitoring period at the end of the financial year to investigate into new emerging risks at a lower cost.

After implementing the first part, Piranha Services need to monitor their risk management plan continuously. The following success measures can be used:

The rate of health cases per month- The Company will have to assess the number of illnesses that are reported within the first month after implementing the risk management plan.

 The number of death cases per month­– The more stabilized and safer working environment should be able to reduce death cases at the workplace to almost none.

Financial documents- The firm’s financial reports should be used to measure the effectiveness of implementing the risk management plan. If the plan is consuming too much funds, it might have to be re-analyzed or scrapped off in favor of another one. However, if it is cost friendly, the company can adopt it in the long term.

The communication of the plan should be done through calling a conference. This should consist of the entire worker at all levels from the technicians to the clerks, the executive, the suppliers and the shareholders. Any other representative of the involved parties for example the state should also attend. The conference should serve to communicate to everyone the new health schemes as well as the other packages in the plan. An extensive and in-depth description of every aspect should be done. After this, internal memos will effectively drive the point home.

Although the plan was created with all consideration in mind, it still has plenty of areas that might have to reconsider in the future. These include:

a)      Health coverage- At the moment, under the new risk management plan, Piranha is footing the bill for providing health cover for all its workers. However, in the wake of globalization, firms can no longer cater for the welfare of their employees and the firm might have to share costs with the workers or completely turn over the burden of servicing the health care schemes over to their employees. This is because of rising health costs as well as other business factors like competition etc.

b)      Automation- piranha will have to shift into more of ICT related systems in order to keep up with the competition. This will involve running information-based systems such as websites and online financial transactions. Piranha will therefore have to switch their investment and insurance strategies to cover the fast-growing ICT sector.