Risk management refers to the system of applied by business to integrate all business activities and manage different activities in order to reduce overall risk. This covers role of risk management and its functions which helps management to set the effective process of managing different kind of risk at workplace. Present report is based on Alliance Healthcare is one of the leading wholesalers and distributors of pharmaceutical, healthcare products (Alliance Healthcare, 2017). This delivers good quality of products of the nations 16500 dispensing points such as dispensing doctors and community pharmacies and hospitals. In this regard, role of risk management function in business are examined along with assessment of role of business function in the management of risk. Furthermore, main drivers or risk as well as business areas at high risk are explained. In addition to this, risk management strategies are analyzed in the business in order to ensure its long run survival with increased rate of return. Apart from this, different approaches of crisis management are business continuity plan
1.1 Role of the risk management function in business
The risk management function is very important for corporation as it helps to reduce risk to a great extent and assess business to integrate all activities effectively. There are different kind of risk related to quality of services, patient safety along with well being of employees These risk must be considered by management in order ensure better management of all business activities. However, potential medical error and mandatory federal regulations related to risk are also there which can be managed by business in an effectual manner (The Purpose of Risk Management in Healthcare, 2017). In this regard, role of risk management function in business are described as follows-
Access to cost effective sources of finance
Effective risk management plan facilitates to access cost effective sources of finance. For example, retained profit will be kept safe for further investment in Alliance healthcare. It enables management to maintain higher rate of return so that accordingly competitive edge can be created in the marketplace (Brent, 2007).
Safety of patients and employees
Health care sector generally have risk of safety of patients and employees. Owing to this, management of healthcare need to refer the safety of patients by providing them good environment. At the same time, employees associated with corporation should also be provided.
Higher quality of services
Risk management aids to bring perfection in the service quality whereby corporation can easily manage their operation activities in an effectual manner. Furthermore, quality of services is improved by retaining skilled and competent personnel in the marketplace (Caliskan, 2014).
Reduction in accident rates
The cases of accident are higher in health care sector which are generally related to medicine of expiry date etc. This assists corporation to deliver good quality of services to large number of buyers. Here, management can easily focus upon appropriate use of different tools and technique for maintaining good performance of business.
Management of emergencies
It is another aspect which assists management of Alliance health care management its emergencies related to patents and delivery of medicine for respective corporation (Elmassri and Harris, 2011). This aids to ensure better management of all business activities and integrate all related resources effectively.
1.2 Assessing the role of business function in the management of risk
The role of business function is risk management is very important as it assists management to apply suitable strategies . It consists of different functions such as operations, legal and accounting and strategic planning. Along with that management and quality assurance functions are performed by business so as to ensure better management of all business activities and determine higher rate of return for Alliance healthcare (Leszcynska, 2012). At the same time, corporation takes advantages of insurance of and internal audit along with health and safety. This proves to be effective for managing internal operation and supporting all business activities so as to increase overall rate of return and meet expectations of different stakeholders associated with business. This helps to integrate stakeholders and ensure well being of the business in the marketplace. Apart from this, business functions focuses towards compliance under which management shed light on rules and regulations which are imposed by government for ethical conduct of business (Macintosh and Quattrone, 2010). At this juncture, Alliance healthcare lays emphasis on internal audit so that issues can be found at very initial stage through which all activities can managed and accordingly flow of operation can be increased in the marketplace. Furthermore, quality assurance is used by corporation whereby company ensure that all medicine are produced y considering the better quality aspect by taking into account specific need of health care sector and patients. This proves to be effective for risk management and delivering good quality of services to large number of buyers or clients. Apart from this, safety related issues of employees are also considered and in the same manner they are provided better working condition so that working will get affected.
2.1 Analyzing the risk assessment process
The risk assessment process is very important in an organization under which team of qualified people do their task effectively for bringing perfection. For this purpose, following mentioned process of risk assessment is applied by Alliance healthcare
It is the first step of risk assessment procedure under which Alliance healthcare analyze the internal environment in the light of set objectives,. It can be done with the ghelp of internal audit and taking respective from different departments like HR, production and finance etc. This facilitates to understand risk prevalence stage and accordingly take appropriate strategy (Oliveira and et. al., 2010.).
It is the next step of risk assessment process under which potential risk related to safety, health and financial management are identified and then respective areas are taken into consideration for applying those strategies. It assists corporation to work on the same areas for effectiveness of firm.
This is the third stage of risk assessment procedure where team of expert tend to focus upon description of risk areas. It assists corporation to apply appropriate measures for its remedy and maintaining higher rate of return of Alliance Healthcare (Silvester and et. al., 2014).
Estimation of control measures
At this stage control measures are estimated with presence of suitable staff and employees. Under this, financial risk can be reduced by accessing cost effective sources of finance. At the same time, finance department can be handed over much more responsibilities so as to take appropriate action. Similarly, control measure can also be done with the help of integration of all department and focuses team working upon risk management.
Evaluation and review
This is the last stage risk assessment process wherein evaluation is done on the basis of outcome extracted from description. It would be effective to stakeholders to get detail information related to risk evaluation procedure. This facilitates corporation to manage all operation activities in an effectual manner (Stenstrom and et. al., 2014).
2.2 Evaluating the approaches to managing risk
In addition to this, it can be said that risk management is considered as one of mots critical aspect for every business firm. By having an improved focus on the risk management approaches the issue can be resolved in desired manner. It is necessary for business firm to ensure about risk management process. It means the identification of risk is significant which helps in sustainable development. Review of similar risk is also beneficial to consider which assist in meeting objectives. In this respect, management can focus on brainstorming is significant so that goals and objectives can be accomplished effectively (Valkokari and Helender, 2007). Brainstorming is team work where every member of the team gives their input of all possible risks and ways to handle them. By having an improved focus on the interview the issue can be resolved effectively. It is a process of calling in experts who are well versed in a particular project for input and feedback. With an assistance of this, issue can be resolved effectively. Under this, financial risk can be reduced by accessing cost effective sources of finance. At the same time, finance department can be handed over much more responsibilities so as to take appropriate action. It assists corporation to apply appropriate measures for its remedy and maintaining higher rate of return of Alliance Healthcare.
It has been noticed that by having application of check list the issue can be identified in appropriate manner. By having an appropriate analysis and observation of tools the issue can be resolved. Along with this, KMRD approach of risk management objective can be accomplished in desired manner. It allows to identify risk effectively so that risk regarding costing can be advanced effectively. However, this process is mainly dependent over three key steps such as discipline and accountability, coverage and risk control and communication. By having improved focus on such aspect the issue can be resolved effectively.
2.3 Risk management process
Risk management process on the other hand is also the important aspect which require attention of all related departments and inclusion of highly skilled personnel. The risk management process in Alliance healthcare has been explained as follows-
At this stage at first reporting is done by discovered risk. It can be related to quality of medicine produced by Alliance healthcare. However, it is the ongoing process where respective department disseminate the information related to risk. For example, risk can be related to over production and less financial resources for further production.
Decision is taken with inclusion of production department and all respective managers along with management. Here, potential solution is taken out on the basis of discussion and finding the cause of the problem. It can be related to poor research and development activities which lead to loss of business.
This is another step under which risk is treated by corporation on the basis of certain regulation or rules which are prepared by team. This facilitates to propose appropriate solution and enable all related members to take care that such kind of risk are minimized to a great extent
Residual risk reporting
This is another aspect under which residual risk report is prepared and also provided the same to care quality commission for inspection of business and ensuring its ethical conduct in the marketplace. This increases chance of effective management d business operation as respective party provide new guidelines and regulation for minimization of risk.
At this stage continuous monitoring or risk is done with the help of formal and internal audit. It aids to keep report related to all business activities and accordingly take corrective measure for solution of risk related to quality of services or over production related aspects. However, report of audit bring forth outcome that where Alliance healthcare need to focus for its better production or operation (Valkokari and Helender, 2007).
It is the last step of risk management under which modification is done on the basis of review of audit report and other related aspect. This assists corporation to effectively manner all operation activities and ensure optimum utilization of limited resources.
3.1 Analysis of the main drivers of business risk
In the context of the Alliance health care organization , there are various kinds of risk drivers which are as follow-
Information risk in the business enterprise is related to the personal information about the company, employees, profitability etc. IT security risk is the potential harm to process or related information resulting from some purposeful or accidental event that negatively influence the process or the relate to the information.
Operation risk in the business enterprise is the prospect of loss resulting from inadequate or failure procedure, system and policies (Berkowitz, 2001). The entire process of business is largely depends upon the operation so if any failure occurs then it will largely impact on the activities and function of business.
Financial risk in the business enterprise is just related to the finance like liquidity, foreign exchange rates etc. In the context of Alliance health acre, finance risk is the possibility that shareholder will lose money when they invest in a corporation that has debt, if the firm's cash flow proves inadequate to meet its financial obligation (Connelly, 2014).
This is the major driver of the risk associated with the business. It includes the market condition, changes in the society, high level of recession and inflation etc (Chitakornkijsil, 2010). In a general word it can be said that strategic risk might arise from making poor business decision, from the substandard execution of decision, from inadequate resource allocation etc.
3.2 Appraise the impact of different types of risk for business organization
As per the above discussion it has been ascertained that there are various kinds of risk associated with the business enterprise such as information risk, operation, finance risk etc. These all risk can largely affect the business activities and function if it not properly managed by the management. Finance risk can highly affect business because it is related to finance. If finance manager in the organization does not properly use the strategy to mange finance risk then it directly affect the profitability of business (Banks, 2013). On the other hand, operation risk is related to the system, policies and structure of the organization so if operation manager does not manage the entire process of operation in business then it will direct affect the business operation. One another risk associated with business is information risk. In this manner, company required to manage or maintain its private and personal information related to the profitability, strategies, growth etc. If this kind of information hack by the rivals then this will negatively impact on the business. By use of hacking rivals can access the personal data about company regarding their profit, customers, segmentation, strategy etc. So that it is very important for the business to keep secure its personal data or information.
3.3 Assessment which business area are high risk
It has been noticed that business firm is facing high risk in context to financial resources. By having an effective application of tools such risk can be overcome. If company is facing issue regarding finance then application of activities might be affected. For example, company is looking of business expansion which need to be referred effectively but company is not having appropriate allocation of funds. In such conditions the strategy need to be changed which might affect business (Mehta, 2010). Work place standard risk is also high which might create diverse issues. It has been noticed that employees are not skilled and they does not have proper knowledge about health care standards. If employees are not skilled then work quality will be impacted and success of health care sector is dependent over service standards. It will impact the brand image in negative manner which will also influence the legal terms of business in appropriate manner. In addition to this, company can also face various issues due to improper consideration on operational activities. It means management need to consider it in appropriate manner so that goals and objectives can be accomplished effectively.
3.4 Analysis of the risk management strategies
Risk management is a process of planning,. Organizing and controlling the organizations activities to minimize the possibility that the organization, and member or customers of the corporation. In the cited organization, in order to manage the risk it can use various kinds of the strategies (Bainbridge, 2009). A risk management strategy provides a structured and coherent approach to identifying, assessing and managing risk. It builds in a process for regularly updating and reviewing the assessment based on new developments or action taken. Following are some important risk management strategies which can adopted by the cited venture-
Avoid the risk
Sometimes a risk will be so serious that if company simply to eliminate it than it will great for reduce the high risk situation. The advantage of this strategy is that it is the most effective way of dealing with a risk (Connelly, 2014). By stopping the activities that is causing the potential problems company can easily eliminate the chances of incurring losses.
Heath and safety policies
In this strategy, corporation can shift and transfer the responsibility or burden to another party through legislation, contract, insurance and other means. In this context, corporation follow some health related policies and legislation so as employees and patients can able to reduce their risk at workplace (Duckert, 2010).
Protection of physical assets
If organization does not want to abandon the activities altogether, a common approach is to reduce the risk associated with it. With assistance of this strategy,corporation protect its physical assets. In this manner, company should protect its physical assets such as machinery, infrastructure , human resource, process etc.
This is more beneficial strategy in order to manage the risk at the workplace. In this company carries the creation of plans through which commodities reduce vulnerability to hazard and cope with disasters. It can be defined as the organization and management of resources and responsibilities for dealing with all humanitarian aspects of emergencies (Fraser and Simkins, 2010).
4.1 Analyzing the vulnerability of businesses to break the continuity
There are different factors which can break the continuity of business such as size of business environment, operating environment and physical environment. All these factors affect operation of corporation to a great extent. For example, in case of failure of any machinery of equipment, production process will be broken down. This is because Alliance Healthcare will not be able to cope up with changing scenario and higher flow of production. For example, size of selected corporation is large then it is prone to risk related to low profitability and loss of assets as it needs to access cost effective sources of finance (Leszcynska, 2012). Owing to this, in case business access costly source of finance then it will not be able to meet its short term obligation and accordingly production activities will get suffered a lot. Furthermore, changes in internal environment such as physical structure might also affect overall performance of business because of changing roles and responsibilities of workforce. In this manner, workforce can resist to implement the change. In addition to this, changing roles and responsibilities of workforce create issue in managing their work. Owing to this, it is important for management to resolve all potential issues which are being faced by workforce. This is because different factors which break the continuity of operation of business tend to have impact on profit, loss of assets etc. Hence, all these factors must be considered by Alliance Health care to manage its business activities in an effectual manner.
4.2 Critically evaluate approaches to crisis management and business continuity planning
There are several kind of approaches can be used by management of Alliance healthcare for crisis management as well as business continuity planning. Here, the first one is impact analysis under which management can assess the impact of physical environment or change in the same on personnel as well as other operational activities. This proves to be effective to cater their need and make them able to contribute towards growth and success of Alliance healthcare in the marketplace. Furthermore, recovery solution design can be used by corporation under which stakeholder management can be done (Mehta, 2010). Here, shareholders, customers are incorporated in the decision making process so that accordingly all business activities can be complete in an effectual manner. Furthermore, crisis assessment must be done prior to occurrence of any kind of negative event. Here, management come to know about possible remedy and the same will be applied for better management of all business activities. It facilitates to reduce the risk and management crisis in an effectual manner (Connelly, 2014). Furthermore, skilled and competent personnel an be selected in each department such as IT, production and Marketing so they can provide report on time to time along with indication of any unendurable event which might happen in firm. This aids to ensure continuity of Alliance healthcare and accordingly crisis can also be managed.
Risk management is very important aspect for every business organization. It is a process of effective planning, controlling, organizing the business activities and function. From this project report it has been ascertained that Alliance health care organization requires to adopt a systematic process of risk management under which management should consider on each and every aspect of reduce the harmful risk. By use the various kinds of strategies such as protect physical assets, reduce the risk, disaster management, cited venture can overcome the probability of risk. It has also concluded that there are various kinds of risk drivers such as operational risk, information risk, strategic risk. These all driver can largely impact business function and activities. So that by use of effective management, company can overcome the negative impact of certain risk.
- Awadallah, S., Milanovic, J. and Jarman, P., 2015. The Influence of Modeling Transformer Age Related Failures on System Reliability.IEEE Trans. Power Syst.
- Bainbridge, S. M., 2009. Caremark and enterprise risk management.UCLA School of Law, Law-Econ Research Paper.
- Banks, E., 2013. Enterprise Risk Management.Alternative Risk Transfer: Integrated Risk Management through Insurance, Reinsurance, and the Capital Markets,
- Berkowitz, S., 2001. Enterprise risk management and the healthcare risk manager.Journal of Healthcare Risk Mgmt.
- Brent, J. R., 2007. Applied Cost-benefit Analysis. Edward Elgar Publishing.
- Caliskan, O. A., 2014. How accounting and accountants may contribute in sustainability. Social Responsibility Journal.
- Connelly, N., 2014. Sharing in the Caring: Enterprise Risk Management, Disney style.Journal of Healthcare Risk Management
- Duckert, H. G., 2010. Practical Enterprise Risk Management: A Business Process Approach. John Wiley & Sons