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Pizza Business’ Risk and Management Structure Report

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Updated: Oct 27th, 2020

Risk Identification and Management

Introduction

Business risk is any occurrence that can hurt a business, with the impacts occasionally hard enough that the business finds it difficult to fund its normal operations (Cagno et al, 2007). Consequently, entrepreneurs must use effective management strategies to mitigate the impacts of risks that may affect their business performances. Using a pizza business enterprise as an example, this report identifies common risks that affect businesses and possible management approaches for the mitigation of the identified risks.

Risk Identification and Mitigation

Table 1 given below shows a summary of the risks identified in the planned pizza business, the possibility of the risks occurring, and the overall impact they may have on the business.

Table 1: Identified risks and their mitigation measures.

Risk Likelihood Impact Score(I*L) Mitigation
Strategic
Registration 2 3 6 Hire a lawyer to offer legal advice.
Fire Safety 3 3 9
  • Install a fire safety system.
  • Train employees on fire safety.
  • Take a fire insurance cover.
Operational
Food Safety 1 2 2 High level of hygiene and skilled worker force.
Delivery and Maintenance 2 2 4
  • Well trained drivers.
  • Insured vans.
  • Regular vehicle maintenance.
Financial
Capital and Cash Flow 2 2 4
  • Employ an accountant.
  • Consider weekly financial reporting.
Procurement 1 2 2 Have several and reliable suppliers.
Employees 3 1 3
  • Have employees permanently.
  • Provide a favorable working environment.
Regulatory 1 3 3
  • Hire a lawyer.
  • Have a consultant
  • Adhere to regulation.
Governance 1 2 2 Have a shareholding arrangement where the general manager is given some shares as additional consideration.

As can be seen from the table above, fire safety has the highest risk. This is particularly because pizza preparation involves the use of fire, which may result in fire accidents. To mitigate the risk, the entrepreneur should install fire safety systems, such as fire extinguishers. It may also involve taking an insurance cover to indemnify the business in case of fire. The employees must similarly be trained on how to handle pizza preparation to avoid burns (Bolvin et al, 2005).

Structure and Management

Organizational Structure

A proper organizational structure needs to be in a place where a business enterprise is to delineate policies, lines of communication, responsibilities, and authority (Committee for European Banking Supervisors, 2005). The structure additionally determines the method through which information flows, and how authority is exercised. As the case organization is relatively small, it should use a flat business structure, which requires less supervision and reduces management costs by eliminating middle-management salaries and allowances (Ostroff, 1999). Moreover, the smaller size of the organization warrants a smaller number of employees, possibly a driver, two chefs, a waiter, a deliveryman, a cashier, and an accountant. The shareholders should be a part of management and should use their skills and expertise to help in managing the business. The table given below is a possible organizational structure of a business.

 Organisational Structure.
Figure 1 Organisational Structure. Source: Ostroff, 1999.

As the business grows and more branches are opened, this structure may change from flat to hierarchical. This happens because the business will employ more workers and promote senior employees as a motivational tool (Montana and Charnov, 1993).

Key Personnel and Management

The key personnel in the management of the pizza business are shareholders. Such a decision is taken to reduce expenditure on labor and to give shareholders a chance to display their talent and expertise. Raid, as the Managing Director, has a Master’s Degree in Business Administration and has worked in a renowned fast-food company for over six years. Andy has a Bachelor’s Degree in Marketing and has worked as a marketer for about two years. Willow has a Degree in Accounting and has seven months of experience in a fast food finance department. Beliz has a diploma in Food Production and has worked as a supervisor in a food store for three years. Finally, Quinuo and Michelle both have a Degree in Economics and have only worked as interns with a local bank.

Conclusion

Given a careful integration of risk identification, risk mitigation, and effective management structure, the proposed pizza business is likely to succeed. The identified processes, however, require the stakeholders and the organizational employees to commit themselves to the goals and objectives of the business.

References List

Bolvin C., Farret, R., Salvi, O. 2007. Convergence towards integrated risk management: results from the European SHAPE-RISK project and other initiatives. Proc. ESREL (44)1683 – 1687.

Cagno, E., Caron, F., Mancini, M. 2007. A multi-dimensional analysis of major risks in complex projects. Risk Management: (45) 1–18.

Committee for European Banking Supervisors. 2005. Consultation Paper on the Supervisory Review Process under Pillar II of the Revised Basel Accord. Basel II Publication.

Montana, P. and Charnov, B. 1993. Management: A Streamlined Course for Students and Business People. Barron’s Business Review Series, pp. 155-169

Ostroff, F. 1999. The Horizontal Organization. New York: Oxford University Press.

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