Risk Management Plan
Communications Plan
Communication plans is developed to identify people who are involved in the risk assessment including identification, analysis and evaluation as well as those who will be involved in the risk treatment, monitoring, and review. Risk communication is reflected in each step of the project implementation. Risk should be communicated with the primary goal of eliciting risk information as well as managing the perception of stakeholders of the project. The following are the categories of people involved in the risk communication plan:
- Company staffs
- Customers
- The community
- Media
- Regulators
- Contractors and subcontractors
- Suppliers
- Insurers
Risk Management Plan
According to Barkley (2004), risk management plan is the entire process of identifying, assessing, as well as developing appropriate strategies for managing a given set of risk. This process is essential for a new business venture like the one being undertaken by Acme Home Improvements, Incorporation in Canada and Mexico markets. The primary aim of this process is to help the company understand the potential risks involved to the business in pursuit of the new markets named above and find ways of minimizing their impacts to the business so as to allow smooth business continuation process. This risk management plan gives details of the specific type of risks involved and specific strategies for dealing with them. It also considers the allocation of time, resources, as well as budget in dealing with such risks (Bartlett, 2004).
Business assessment
Acme Home Improvements Incorporation is a renowned company in the United States market operating in the retail store industry. By the year 2009, the company had 125 leading stores in the market keeping a wide range of products including building materials, seasonal and garden/yard items, plumbing and electrical supplies, hardware and tools, paint, flooring and wall coverings. The retail store business is highly competitive due to the presence of numerous providers scrambling for every buyer. In the US, Acme Home Improvements is competing against other providers such as Ace, Home Depot, Lowe’s, and TruValue among others. Being in the retail sector, there are critical business activities involved such as resources of staffs, availability of products, storage space, power failures, indoor spacing, and exterior spacing among others. All these factors, among others, would determine the nature of risk involvement in the opening of new subsidiary in Mexico City.
Risk Identification
The project team and appropriate stakeholders are all involved in the risk identification process. The process of risk identification involves evaluation of organizational culture, environmental factors, and project management plan: the project scope, quality, cost, and schedule are critical factors under consideration (Kendrick, 2015). After application of appropriate methods of risk identification such as brainstorming, diagramming, interviewing, and SWOT analysis, the following risks were identified:
- Technical risks
The technical risks involved include the implementation and use of new technologies in the daily operation of the business. Acme Home Improvements Incorporation will have to implement, manage, maintain, as well as upgrade its retail business technology. The employees are also required to be acquainted with the technology and know the proper ways of using it.
- Cost risks
The cost risks involvement is estimated in terms of resources, equipment and the overall dollar amount that will be used to complete the project. These will have direct financial impact to the company because people have to be hired, resources and equipment bought. The company will incur hire cost because it is building an entire new store consisting of average 100,000 square feet of indoor space and 10,000 square feet of exterior space.
- Financial risks
Acme Home Improvements Incorporation will have to come up with a wide range of financial risks associated with starting a new subsidiary in another country including budgetary requirements, tax obligations, debtor management, cash flow, creditor management, and remuneration among other general financial concerns.
- Contractual risks
The contractual risks available are based in the fact that Acme Home Improvements Incorporation will hire a contractor to complete the building of its new subsidiary store in Mexico City. There are risks associated with loss of vital material suppliers, contractor failures to complete the construction as required, safety of the construction workers, public safety, as well as the cost involvement.
- People risks
As a new subsidiary in Mexico, the company has to hire new staff to operate and run the store. Apart from the regular employees, the company will hire propel to complete the construction of the store. Health and safety of the regular employees as well the store contractors may pose some serious operational risk to Acme de México subsidiary. In particular, the contractors and the neighboring communities may raise health concerns relating to sound pollution as well as worsening air quality during the construction of the Acme Mexico City (AMC) store.
- Compliance or legal risks
Since Acme Home Improvements Incorporation will be opening a new subsidiary in Mexico in conjunction through joint venture with a local provider, the company will face various compliance or legal risks including the requirements of regulations, legislations, and standards. The two companies will have to merge their code of practice and establish a contractual agreement. In addition, Acme Home Improvements Incorporation will have to comply with additional rules in Mexico such as expectations, procedures, rules, and policies, which may be different from the one, practiced in US market.
- Environmental risks
Even though not flooded as in the United States market, Acme Home Improvements Incorporation will have to face the risk of competition from other retail providers in Mexico City. The company would certainly face stiff competition from already established retail stores such as Home Depot, which already established product line and high market share. Secondly, the Mexican people may develop negative attitude towards new stores in their town thus choose to avoid them.
Risk Analysis and Evaluation
This section analyzes how the risks identified above might affect the success of the project. The listed risks are rated according to their likelihood and impact on the project. The following table gives a summarized detail of the result of our risk analysis and evaluation.
| Likelihood/ Probability | Seriousness/ Impact | |||
| Low | Medium | High | ||
| Low | Financial risks | Environmental risks | Contractual risks | |
| Medium | Technical risks | Compliance risks | ||
| High | Cost risks | People risks | ||
Risk Mitigation Plans
This section gives details of actions that will be taken in case the risks identified above takes place throughout the project’s lifecycle. This involves identifying actions and planning for actions that are likely to reduce the likelihood of the risk from occurring or minimizing its impact in case it occurs. The following are the risk mitigation plans identified as appropriate for this project.
- Financial risk is less likely to occur because the company has solid financial base. However, in case it happens, the company can mitigate it by seeking additional financial sources through borrowing or issuance of corporate bonds.
- Technical risk is likely to occur but it has low impact on the project. It can be mitigated by offering regular training to all employees: the training should cover the application of technologies.
- Environmental risk has medium impact but it is less likely to occur. It can be mitigated by branding the product in local package and hiring of local staffs.
- Compliance risk is mitigated by ensuring that the company complies with all legal requirements of the government of Mexico.
- Cost risk is mitigated by setting aside equate finances for the purchase of resources and equipment and hiring of staffs and contractors.
- Contractual risk is less likely to happen though it has highest impact. It can be mitigated by hiring trusted contractor and putting in place all safety requirements.
- People risk is most likely to occur and it has the highest impact on the project. It can be mitigated by training employees and putting in place all safety measures.
Project Dashboard
This project will use a Project Management Dashboard (PMD), a customized system that contains variety of tools which are used for tracking and controlling the project metric. The project manager will use the PMD tools to identify problem in the project as well as monitor vital signs and trigger specific corrective measures to ensure that the project is completed effectively (Kendrick, 2015). The project dashboard will use metrics that focuses on the activities to be completed such as contraction of the new store, the parking space, as well as hiring of suppliers among other critical activities. This will help the project manager to understand clearly the correct status of the project. The metrics used here will be designed to give every team member a daily and weekly report on various aspect of the project’s dimension.
References
Barkley, B. (2004). Project risk management. McGraw Hill Professional.
Bartlett, J. (2004). Project risk analysis and management guide. APM Publishing Limited.
Kendrick, T. (2015). Identifying and managing project risk: essential tools for failure-proofing your project. AMACOM Div American Mgmt Assn.
Kendrick, T. (2015). Identifying and managing project risk: essential tools for failure-proofing your project. AMACOM Div American Mgmt Assn.