Introduction
Effectual Real Estate Holdings Ltd. is a medium level Real estate management company. The company is multi-faceted in the way it conducts business. The main business activity involves agency work wherein, the company receives contracts on rent collection on a monthly basis. Additionally, apart from rent pooling, Effectual Holdings is also involved in construction work; building of apartments and other mid-class rental premises. All of the services provided by this company are purely contractual except for the case where the company is undertaking developmental work on its own accord. Effectual Holdings has been known for its continuous delivery of high quality work as well as selflessness and diligence in its services to the clients. Effectual Holdings is also in the microfinance business, however, this is on a much smaller scale comparative to the other two business activities it is involved in. The company funds small businesses and aspiring entrepreneurs with a startup capital, which is then repaid at a certain interest.
The entire business realm of Effectual Holdings primarily focuses on small to medium enterprises (SMEs) and therefore, the total annual revenue circulated in the company’s activities is relatively average. The growing client base of Effectual Holdings serves as proof of thriving business for this company and with a recent surge in employee head count from 75 to 100, it shows that the grass is greener for the company’s future perspective. Additionally, with respect to the conventional parametric categorizations of a business, the 100-employee mark is a great leap for Effectual Holdings from small to medium-sized. However, there exists a catch in terms of the employment base in this company. 100 is the number of permanently employed workers at Effectual Holdings. Considering that it is also a construction company, craftsmen are frequently hired upon new contracts.
Hence, the employee base at its maximum can harbor close to 200 employees. Currently, Effectual Holdings has signed a two year contract with Globud Car Dealership Company for the construction of their three-story business center. Upon completion, Globud will renew the contract for a second phase whereby Effectual Holdings shall oversee the rent collection and publication of an annual gazette outlining the trend of other services in and around the Globud business premises e.g. trash collection, maintenance activities etc. This paper seeks to indulge on a comprehensive analysis of the risk management goings-on of Effectual Holdings with respect to this on-going contract with Globud Company.
Risk Management Strategy and Plan
This is an array of tools i.e. procedures and undertakings that work towards risk management. That is, a risk management strategy should have a top to bottom breakdown of all the existent risk factors in a business’s environs, and brisk undertakings that seek to alleviate if not totally remove these risks. A risk management strategy takes off starting from a plan. This plan is the risk management plan. Each and every form of business is exposed to a countless number of risks. In this strength, therefore, there should exist a well laid out risk management plan. The broadness of the risk management plan is determined majorly by the size of a business. For Effectual Holdings, a 20-page risk management plan should suffice. It will focus on the major risk factors and methods of countering them. In any risk management plan, there must be a set of conventional provisions, regardless of the size or nature of the business. These are:
Identification and enlisting of risks
ranking of each risk in terms of its probability of occurrence and extent of damage
breakdown of the existing risk counteraction parameters
plan of action
Risk Identification
This is always the first step in formulating a risk management plan. Appreciating the latitude of conceivable risks aids in the development of accurate, economical stratagems for countering the identified risks.
It is usually considered good practice to think largely while analyzing the natures of risks that a business such as Effectual Holdings is susceptible to. This gives better footing as opposed to evaluating the obvious kinds of risks e.g. fire, natural disasters, theft, etc.
Assessing the business
The first step in risk identification is analysis of the business. This is reflected upon along the lines of precarious business activities that oftentimes take place, including the main services, capitals and workforce. Also, things that might affect these key activities, like power failure or natural calamities must be taken into account. Business assessment assists in eventual summarization of the aspects that are totally crucial.
Methods of Risk Identification
Once there is a vivid framework describing what business activities need to be considered, the identification process thus begins. The best approach at this is always to prepare a self-analyzing questionnaire whereby the business will ask themselves some questions and try to envision the way out.
Analysis and Evaluation of risk impacts
After risk identification, it is required that the established risks be analyzed and evaluated. This is done so as to obtain a ranking in terms of the possible impact caused by the risks. The trivial risks are segregated from the more impactful ones.
Risk Responses Strategy
Avoidance: this method eliminates the causative factor to the actual risk.
Transfer: Involves literally transferring the risk overhead to another party e.g. purchasing an insurance for a project so that when it succumbs to any of risk factors, the insurance company shall be held accountable.
Mitigation: This method has two approaches: alleviate the possibility of the risk occurring, or alleviating the negative impact of the risk after it has already occurred. Each of the two approaches has its own strategy.
Risk Responsibility Plan
Oftentimes, most if not all of a project’s stakeholders are responsible for risk handling in case one occurs. However, the most burden in terms of accountability befalls the project manager while other partisans like the designers, initial risk owners etc. are simply consulted.
Risk Monitoring and Control
Risk Monitoring Control is the process of staying up to date with the risks identified, as well as observing the lingering risks as well as new ones. It also involves ensuring proper execution of risk management plans and monitoring their efficacy in risk alleviation. It is carried out through response audits, risk reviews, technical performance reports and risk response plans.
Risk Work Breakdown Structure
This is an ordered projection of the risks identified, organized in their respective categories.
Risk Communication Strategy
Involves the processes of preparation, onset, control, recovery and evaluation of risk communication.
Risk treatment
Treating risks comprises of analyzing all the options to deal with deplorable perils to the business. Deplorable risks vary in severity; some need immediate undivided attention and treatment while others can be supervised and treated in future.
Review and Updation of Risk Management Plan
There is always need to carry out an assessment, evaluation and subsequent updation of the prepared risk management plan as regularly as possible. This is owing to the fact that risks are dynamic and can also impact change upon the business. Frequently revising the risk management plan is indispensable when it comes to identifying fresh risks and observing the efficacy of the risk treatment stratagems.
Business Impact Analysis
This is the grand scheme of risk management and it involves undertaking an analysis geared towards establishing the probable impact of the risks considered, in the wellbeing of the operations of the business.
References
Reamer, F. G. (2000). The social work ethics audit: A risk-management strategy. Social Work, 355-366.
Tjoa, S., Jakoubi, S., & Quirchmayr, G. (2008). Enhancing business impact analysis and risk assessment applying a risk-aware business process modeling and simulation methodology. In Availability, Reliability and Security (pp. 179-186). IEEE.
