Risk And Due Intelligence Blue Scope Essay

Question:

Discuss about the Risk and Due Intelligence Blue Scope Steel.

Answer:

Introduction

Blue Scope is one of the largest steel producers in Australia with operations in Australia, New Zealand, North America and Asia. In 2002, the organization was demerged from BHP Billiton and renamed Blue Scope steel. It has headquarters in Melbourne, Australia and employs over 16,000 employees. It is one of the largest steel operating plants in Australia and has the largest plant in New South Wales. In 2011, the company decided to exit from the export market and reduced its production capacity by fifty percent (Blue Scope, 2017). In order to sustain in the market, the business organizations need to conduct thorough risk analysis of the organization and the business environment and implement appropriate risk mitigation strategies. In the vulnerability assessment, the business organizations identify different risks which it is currently exposed to or might get exposed in near future. There are some common steps in all the vulnerability assessment methods which include identifying the resources and capabilities in a system, assigning importance to the risk in alignment with their probability of occurrence and impact on the organization, identifying the vulnerability or potential threat to each resources and mitigation of serious vulnerabilities. The vulnerability analysis is different from the risk analysis as risk analysis emphasizes on the object being studied whereas the vulnerability analysis emphasizes on the object being studied as well as on the surrounding environment (Zsidisin and Ritchie, 2008).

The vulnerability assessment refers to the process of identifying, quantifying and ranking the vulnerabilities or the risk assessment in a business organization. The vulnerability assessment can be performed on an organizations or system. In the later section of report, precautionary recommendations are made which can mitigate the impact of the exposed risk.

Vulnerability Assessment

The vulnerability analysis is focused towards the mission of the system or the organization and ensuring its survival in the industry. In the vulnerability assessment, the organization can focus on extended set of threats and consequences, resources which can mitigate the risk in the system and identification of the disruption time wherein stability can be created in the system. In the vulnerability analysis, two types of risk can identified, namely, downside risk and the upside risk. The downside risk refers to the pure risk whereas the upside risk refers to the speculative risk. The pure risk is a category of risk in which loss is the only possible outcome. In order to mitigate these risks, the organization can buy insurance. It includes safety hazards. In contrast to pure risk, the speculative risk refers to the category of risks which can have both good as well as bad outcome. Risk associated with share market or successful completion of projects comes in the category of project risk. In the vulnerability assessment, the success factors of the organization as well as the assets to the organization are identified and potential threat to them is identified (Dalezios, 2017).

Success Factors

Blue Scope is one of the largest steel producing organizations in Australia. Although, the organization has exited from the international operations, it has a strong customer base in the country. It has a strong brand image and abundant physical resource as it is backed by BHP Billiton.

The success factors of the Blue Scope can be identified as it public image and consumer confidence, ability to perform the operations accurately, its physical resources, customer loyalty and its human resources (Camilleri, 2016).

Threats:

The threats can be identified as factors which can bring harm to the operations of the organization. A business organization is constantly exposed to a large number of threats which includes natural hazards, manmade hazards, plant failure or failure of supplier or the aggravation by the workers of the organization (White, 2014).

Similarly, Blue Scope is also exposed to a large number of threats of natural and man-made hazards. Any natural hazard such as smoke, fire or explosion can impact negatively on the operations and the profitability of the organization. The organization deals with the manufacturing of steel; therefore, furnaces and fires are a part of the operations of the organization. Therefore, it has high vulnerability to get exposed to the fire hazards and explosion. Other threats include the failure in some sections of plant which can halt the operations of the organization. It is important to keep high maintenance of the steel plant so that no such risk can occur. If the suppliers are not able to supply the raw materials necessary for the operations or fail to do it in adequate quality, it can impact on operations of organization. It is important for the organization to recruit skilled and talented staff because if it failed to do so, it will impact on the operations of the organization (Lewis, et al., 2006).

Vulnerability Assessment:

In the vulnerability assessment, vulnerability refers to the physical entities which can be attacked or harmed by the external forces. In this regard, the vulnerability of the organization can be categorized as physical vulnerability, personal vulnerability or notional vulnerability. In the physical vulnerability, the threat to the physical property of the organization can be identified. The physical property of an organization can be equipment, money or buildings (Allen and Derr, 2015). The equipment can be damaged; buildings can be damaged by fire or other hazard, money or financial assists can be stolen. The personal vulnerability refers to the harm to the human resources of the organization. The employees of the organization can be exposed to several hazards such as injury or vehicle accidents, ill health, chemical exposure and increase in stress due to overtime or lack of work-life balance. In steel manufacturing companies, the people are exposed to several chemical and workplace injury hazard (Rausand, 2013). In addition to it, the organization is also exposed to notional risk which refers to the exposure to the vulnerability which can damage the public image of the organization or change the perception of the organization in front of its stakeholders. The image of the organization can be tarnished by failure of its major plants, confidence loss due to financial loss of the organization or disruption in the business due to the incompetence of supplier.

The physical vulnerability refers to the harm to the physical property of the organization.

Critical success Factors ///

Threats

People

On-time Delivery of Product

Product quality

Equipment Assets

Compliance

Shareholder Satisfaction

Equipment Failure

High Impact

Impact

Medium Impact

Discrimination

High Impact

Impact

Impact

Fire/Explosion

High Impact

High Impact

High Impact

Impact

IT Infrastructure failure

Medium Impact

Medium Impact

Supplier Failure

High Impact

High Impact

High Impact

Changes in Regulation

High Impact

High Impact

High Impact

Lack of Skills

High Impact

Low Impact

Low Impact

High Impact

Precautionary Analysis

In the above section, a large number of vulnerabilities have been identified which can harm the business. Blue Scope is a steel business organization which is also exposed to several different vulnerabilities. It is important that the organization develop vulnerability control or treatment plans so that it can minimize its exposure to different risks. In the below section, several precautions are discussed which can reduce the impact of vulnerabilities identified for the organization (Camilleri, 2016).

Equipment Failure:

The equipment failure refers to the failure of the major equipment of the organization or plant, which can impact on the operations of Blue Scope organization. The business organization should buy equipment and all the components from reputable organizations. Buying the products from high quality vendors will assure their quality and longevity. Moreover, the before installing a new system or equipment in the organization, the company must provide training to all the employees so that they can easily handle the equipment. If the untrained employees will handle the product, it can result in equipment damage (Lewis et al., 2006). Whenever a new system is employed in the organization, it can result in employee grievance as they need to require learning how to operate it. The organization can minimize this dissatisfaction and ease the learning process by keeping the basis of the product operations on the designs of the previous products. The designing of the product can also be enhanced, when an experienced professional handles it (Menoni and Margottini, 2011).


Employee Discrimination:

Employee discrimination is one of the serious issues in the business organizations. Blue Scope is one of leading organization which deals with the steel production. Due to the complexity of operations, a large number of employees are hired from all across the globe. It is important that all the employees work in close harmony with each other. Moreover, in certain situations, the women employees also face gender discrimination. The discrimination impacts negatively on the productivity of the employees and create mental stress for them. In order to combat it, the organization must design stringent policies which can control the employee discrimination. The HR manager should also implement strategies to create a positive organization culture within the organization so that the employee discrimination could be minimized in the organization (Matsukawa and Habeck, 2007).

Fire and other Natural Hazards

A business organization cannot prevent the natural disasters to happen; however, it can remain vigilant in the structure designing so that the impact of these disasters can be minimized. It is important to adhere to the safety standards and measurers in the construction of the building so that the impact of the natural disasters can be minimized (Sadgrove, 2016).

IT Infrastructure Failure

In order to combat the failure of the IT infrastructure, the organization should provide employee training so that the employees can operate basic IT related operations. Moreover, the organization should also hire employees who are dedicated for smooth operations and maintenance of the IT infrastructure of the organization (D'Addario, 2013).

Supplier Failure

In order to address the supplier failure, the organization should try to establish ling-term relationships with the suppliers which are based on the mutual trust.

Threat

Critical Success Factor

Proposed Control or Treatment plan

Equipment Failure

Productivity of the organization

Buy equipment from experienced and reputable suppliers

Provide Training to the employees for proper handling of the equipment

Easy designing of the product

A comprehensive design review process

Experienced Design Professional

Discrimination

Employee Satisfaction

Human Resource manager

Effective HR policies

Strict action against discrimination

Fire/Explosion

Service Capability, flexibility,

Implementation of safety measures

Construction of building and plant according to the safety standards

Effective HR policies

Training employees for safe handling of equipment

IT Infrastructure failure

Customer satisfaction,

Employee productivity

Employee Training for handling IT related task

Hiring employees to maintain the IT infrastructure of the organization

Supplier Failure

On-time Delivery and

Establishing long-term contracts with reliable and experienced contractors (Snedaker,2013)

Reducing the reliance on one supplier by buying from more than one supplier

Changes in Regulation

Compliance, employee and customer satisfaction

The management should remain aware regarding the changes in regulations and laws and implement them to avoid legal actions

Lack of Skills

Productivity and Efficiency

Employee training,

Recruitment of skilled employees (Smith, 2016)

Conclusion

It can be concluded that vulnerability assessment is crucial for the business organizations to maintain sustainable operations in the organization. Blue Scope is leading steel manufacturing organization in Australia which has operations all across the globe. The vulnerability assessment refers to examination of the potential risk faced by the system as well as the surrounding environment. It has been identified that the safety risk and the maintenance of the organization structure are critical risk to the organization. The business organization can implement several strategies and methods to address these vulnerabilities. It includes implementation of HR policies which can reduce the instances of workplace discrimination in the organization. Other than that, the organization must construct its plant and other site according to the safety guidelines. The organization should also focus on establishing long term relationships with its suppliers to increase their reliability and build trustworthy relationships.

References

Allen, G. and Derr, R. (2015). Threat Assessment and Risk Analysis: An Applied Approach. Butterworth-Heinemann.

Blue Scope. (2017). About us. [Online]. Available at: [Accessed on: 8 May 2017].

Camilleri, E. (2016). Project Success: Critical Factors and Behaviours. CRC Press.

D'Addario, F.J. (2013). Influencing Enterprise Risk Mitigation. Elsevier.

Dalezios, N.R. (2017). Environmental Hazards Methodologies for Risk Assessment and Management. IWA Publishing.

Lewis, P., Goodman, S, Fandt, P. and Michlitsch, J. (2006). Management: Challenges for Tomorrow's Leaders. Cengage Learning.

Matsukawa, T. and Habeck, O. (2007). Review of Risk Mitigation Instruments for Infrastructure Financing and Recent Trends and Developments. World Bank Publications.

Menoni, S. and Margottini, C. (2011). Inside Risk: A Strategy for Sustainable Risk Mitigation. Springer Science & Business Media.

Rausand, M. (2013). Risk Assessment: Theory, Methods, and Applications. John Wiley & Sons.

Sadgrove, K. (2016). The Risk Mitigation Handbook: Practical steps for reducing your business risks. Routledge.

Smith, J.BB. (2016). The Art of Integrating Strategic Planning, Process Metrics, Risk Mitigation, and Auditing. ASQ Quality Press.

Snedaker, S. (2013).Business Continuity and Disaster Recovery Planning for IT Professionals. Newnes.

White, J.M. (2014). Security Risk Assessment: Managing Physical and Operational Security. Butterworth-Heinemann.

Zsidisin, G.A. and Ritchie, B.(2008). Supply Chain Risk: A Handbook of Assessment, Management, and Performance. Springer Science & Business Media.

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