enterprise risk management ist625 syracuse university

ERM -Dinosaur BBQ

Group 2Jash Mehta Sukhmeet Mata

Titus AndradeTwinkle DomadiaWill BianchiniXue Yang

Goals • Provide Overview of Company• Identify the organizational structure• Provide overview of Risk Identification techniques used• Present a list of all uncovered risks associated with

Dinosaur Catering• Rank the Identified Risks and Identify top 5 Risks• Provide Management strategies for top 5 Risks• Provide Contingency plans and disaster recovery plans

for top 5 Risks

Company BackgroundInception: 1980’s when its three founders forged half a 55 gallon drum into a concession grill and toured the east coast.

History: After 5 years of traveling and cooking, founder John Stage opened up a brick and mortar location in his hometown of Syracuse N.Y.

Expansion: Within a few years of opening, Dinosaur BBQ expanded its takeout services to include a full restaurant and bar. In the past 25 years the Dinosaur BBQ has attract a large customer base and is currently one of the highest volume restaurants in Syracuse.

Present: Dinosaur has established a presence with its in house and store bought sauces and prepackaged meals. Dinosaur also offers catering services in which the company will bring the restaurant to you, smoker and all.

The restaurant's catering services represent a large portion of the restaurant's total sales.

Catering Structure→ Restaurant General Manager

→ Catering Manager * -- Kitchen Manager ←

→ Pit Boss*

→ Catering Staff*

* Employee at this position was interviewed

Risk Culture

Managers -Anxious

Marketing and Reputation -Balanced

Health and Safety -Anxious

Employee's -Careless

Business operations -Anxious

Current Risk Culture•Ad Hoc

Situations are generally dealt as they appear•Fragmented

Employee segments deal with risks differently

•Narrowly Focused

Comprehensive approaches are lacking

Risk Identification Methods

• Industry AnalysisResearch common risks associated within the food industry

• InterviewsElicit information from current employees at multiple levels within Dinosaurs organization

• SWOT AnalysisIdentify strengths, weaknesses, opportunities and threats associated with Dinosaurs Catering Business

• BrainstormingIdentify logical risks associated with research information

Industry AnalysisBelonging to the Food and Restaurant Industry there are traditional risks involved:

Operational RiskReputational RiskEconomic RiskMarket Risk

Interviewing and Site Visits● March 23, 2016 – Interview with Catering lead/

PitBoss at Hinds Hall (2 hours- Entire Group)

● March 29, 2016– Interview scheduled with Catering Manager Emily Whalen at Dinosaur Office Headquarters → (11:00 am-12 noon)- Group members - Will Bianchini, Sukhmeet Singh, Jash Mehta)

Catering Lead/ PitBoss• Day to Day Functioning and Business

Processes• Food Safety Risks / Regulations• Reputation Risks• Business Continuity Risks• Customer Satisfaction (Allergies)• Pricing• Resources and Staffing• Supply Chain• Thefts & Damages• Location

Catering Manager• Injury - Insurance• Pricing - Inventory- Product• General Business• Operational• Reputation - Noro virus• Challenges : Island Catering [We Work]

SWOTSTRENGTH- Market Share- Track Record/ Reputation- Adaptability- Entertainment- Range of Catering- Diverse Customer Base

WEAKNESS- Training- Aging Equipment- Employee Reliability- Employee Retention- Knowledge Concentration

OPPORTUNITIES- Better Equipment- Name Recognition- Improve Training- Mobile Info Access- Volume(Sales)- New Markets- Scale- More food options

THREATS- Law suits- Commodity price fluctuation- Injury- Food borne illness- Diet Fads- Weather- Regulation- Competitor- Accidents- Supplier Change (Supply

Chain)- Property Damage- Employee Turnover /

Retention

RISKS IDENTIFIEDRisks Source

A Food Safety Risk Employee- InterviewB Equipment failure-safety Employee- Interview C Equipment failure- business Employee- Interview

Manager-Interview SWOT-Weakness

D Weather- variable cooking times Employee- Interview SWOT- THREAT

E Food safety risk- food allergies/dietary restrictions

Employee- Interview

F Commodity price fluctuation Employee- Interview Manager- InterviewSWOT-Weakness

G Understaffing Employee- Interview Manager- Interview

H On site staff illness Employee- InterviewI Supplier food quality Employee- Interview

[supply chain]Manager-Interview

J Restaurant food quality- spoilage Employee- InterviewK Employee Reliability Employee- Interview

SWOT- Weakness

Risks SourceL Customer theft Employee- InterviewM Order fulfillment- over allocation Employee- InterviewN Order fulfillment- under allocation Employee- InterviewO Catering Location risk-van and

smoker getting stuckEmployee- InterviewManager- Interview

P Fire risk Employee- InterviewQ Skill gaps Employee- InterviewR Employee/Customer Injury Manager- Interview

SWOT-ThreatS Vehicle Accident Manager- Interview

SWOT-THREAT

MORE RISKS IDENTIFIED

MORE RISKS IDENTIFIEDRisks Risk source

T Inventory control (AVT Measurement Strategy)

Manager- Interview

U Marketing/advertising Manager- InterviewV Reputation Manager- Interview

SWOT-StrengthW Financial Manager- InterviewX Seasonal Sales Manager- InterviewY Competition(Market Share) Manager- Interview

SWOT- Strength/ThreatsZ Health Code [regulations] Industry Analysis

Manager- Interview SWOT-THREAT

AA Event Scheduling Manager- InterviewAB Contract Fulfillment Manager- InterviewAC Employee Scheduling Manager- InterviewAD Customer/foodborne illness Manager- Interview

SWOT-THREATAE Training SWOT-WeaknessAF Employee Turnover SWOT-WeaknessAG Law suit SWOT- THREATAH Sales SWOT- StrengthAI Knowledge Concentration SWOT- WeaknessAJ Supply Chain SWOT-THREAT

MEASUREMENT TECHNIQUES

•Risk MapQualitative

Risk measureme

nt

•Probability Impact analysis

Quantitative Risk

measurement

Risk map – Maps the impact and frequency levels of identified risks

Y-Values

R

C

B

D

E

F

H G

I J

A

L

MN

O

P

QK

S

T

X

VW

U

Y

ZAA AB

ACAF

AG

AHAI

High

Low High

Impact

Frequency

AD

AE

AJ

PROBABILITY IMPACT – HEAT MAPPriority Risk Probability

(P) Impact (I) P.I2

1Inventory control (AVT

Measurement Strategy) 4 5 100 Probability:2 Commodity price fluctuation 5 4 80 5 - Highly Likely

3Food safety risk- food

allergies/dietary restrictions 3 5 75 4 - Likely3 Reputation 3 5 75 3 - Moderate3 Financial 3 5 75 2 - Unlikely6 Equipment failure-safety 2 5 50 1 - Rare6 Fire risk 2 5 50 Impact:

6 Customer/foodborne illness 2 5 505 - Very High

Impact6 Law suit 2 5 50 4 - High

10Restaurant food quality-

spoilage 3 4 48 3 - Moderate10 Competition(Market Share) 3 4 48 2 - Low12 Equipment failure- business 2 4 32 1 - Very Low12 Supplier food quality 2 4 32

12Order fulfillment- over

allocation 2 4 32

12Order fulfillment- under

allocation 2 4 3212 Supply Chain 2 4 3217 Seasonal Sales 3 3 2718 Understaffing 2 3 1818 Skill gaps 2 3 1818 Employee/Customer Injury 2 3 1818 Health Code [regulations] 2 3 1818 Employee Scheduling 2 3 1818 Training 2 3 1818 Employee Turnover 2 3 1818 Sales 2 3 1818 Knowledge Concentration 2 3 18

PROBABILITY IMPACT – HEAT MAP (CONTINUED)

Priority Risk Probability (P)

Impact (I) P.I2 Probability:

27Weather- variable cooking times 1 3

95 - Highly Likely

27 On site staff illness 1 3 9 4 - Likely27 Customer theft 1 3 9 3 - Moderate

27

Catering Location risk-van and smoker getting stuck

1 39

2 - Unlikely

27 Vehicle Accident 1 3 9 1 - Rare32 Event Scheduling 2 2 8 Impact: 32 Contract Fulfillment 2 2 8 5 - Very High Impact34 Food Safety Risk 4 1 4 4 - High 34 Employee Reliability 1 2 4 3 - Moderate

34Marketing/advertising 1 2 4 2 - Low

1 - Very Low

Prioritizing Risks Using Cost-Benefit Analysis (Risks 6-9)

Fire Risk

Safety Equipment Failure

2 13 4

Loss

Probability

High

Low High

Customer – Foodborne IllnessLaw Suit

Prioritizing Risks Using Cost-Benefit Analysis (Risks 10 - 11)

Fire Risk

Competition

2 13 4

Loss

Probability

High

Low High

Restaurant food quality spoilage


Supply Chain

Supplier Food Quality

Food Over Allocation

2 13 4

Loss

Probability

High

Low High

Business Equipment Failure

Food Under Allocation


Skill Gaps

Understaffing

Training

Employee Scheduling

Employee TurnoverKnowledge concentration

Sales

2 13 4

Loss

Probability

High

Low High

Health Code

Employee/Customer Injury


Weather

On Site Staff Illness

Vehicle Accident

2 13 4

Loss

Probability

High

Low High

Catering Location Risk – van and smoke getting stuck

Customer Theft


Fire Risk

Event Scheduling

2 13 4

Loss

Probability

High

Low High

Contract fulfilment


Marketing

Employee Reliability

2 13 4

Loss

Probability

High

Low High

Food Safety

SORTING THE RISKS AFTER PROBABILITY-LOSS ANALYSIS

Priority Risk Probability (P) Impact (I) P.I2

1Inventory control (AVT

Measurement Strategy) 4 5 100 Probability:

2 Commodity price fluctuation 5 4 80 5 - Highly Likely

3Food safety risk- food

allergies/dietary restrictions 3 5 75 4 - Likely3 Reputation 3 5 75 3 - Moderate3 Financial 3 5 75 2 - Unlikely6 Customer/foodborne illness 2 5 50 1 - Rare7 Law suit 2 5 50 Impact:

8 Fire Risk 2 5 505 - Very High

Impact9 Equipment Failure - Safety 2 5 50 4 - High

10 Competition(market share) 3 4 48 3 - Moderate

11Restaurant food quality-

spoilage 3 4 48 2 - Low

12Order fulfillment- under

allocation 2 4 32 1 - Very Low13 Supply chain 2 4 3214 Business Equipment Failure 2 4 3215 Supplier food quality 2 4 32

16Order fulfillment – over

allocation 2 4 3217 Seasonal Sales 3 3 2718 Training 2 3 1819 Employee/Customer Injury 2 3 1820 Employee Scheduling 2 3 1821 Skill Gaps 2 3 1822 Understaffing 2 3 1823 Sales 2 3 1824 Employee Turnover 2 3 1825 Knowledge Concentration 2 3 1826 Health Code 2 3 18

PROBABILITY IMPACT – HEAT MAP (CONTINUED)

Priority Risk Probability (P)

Impact (I) P.I2 Probability:

27

Catering Location risk-van and smoker getting stuck

1 39

5 - Highly Likely

28 On site staff illness 1 3 9 4 - Likely29 Weather 1 3 9 3 - Moderate30 Vehicle Accident 1 3 9 2 - Unlikely31 Customer Theft 1 3 9 1 - Rare32 Contract Fulfillment 2 2 8 Impact: 33 Event Scheduling 2 2 8 5 - Very High Impact34 Food Safety Risk 4 1 4 4 - High

35Employee Reliability 1 2 4 3 - Moderate

36Marketing/advertising 1 2 4 2 - Low

1 - Very Low

TOP 5 RISKS BASED ON PROBABILITY AND IMPACT ANALYSIS

1.Inventory control (AVT Measurement Strategy)- P.I2 value : 100

2.Commodity price fluctuation - P.I2 value : 80

3.Food safety risk- food allergies/dietary restrictions - P.I2 value : 75

4.Reputation - P.I2 value : 75

5.Financial - P.I2 value : 75

P.I2 value: 75 for all 3, hence we use Cost Benefit Analysis to further prioritize

them

COST BENEFIT ANALYSIS

Reputation

Financial

2 13 4

Bene

fits

Cost

High

Low

High

Food safety risk- food allergies/dietary restrictions

FINAL TOP 5 RISKS

1• Inventory control (AVT Measurement Strategy)

2 • Commodity price fluctuation

3• Reputation

4• Financial

5• Food safety risk- food allergies/dietary

restrictions

Top 5 Risks & IndicatorsRisks IndicatorsInventory Control Holidays, Good Weather,

Low/High InventoryCommodity Price Fluctuation Season, Inflation

Reputation Food-Borne Illness, Hygiene, Unsatisfied Satisfied Customer

Financial Low Sales, Law suit

Food Safety Risk Flu season, Untrained staff, unhygienic kitchen condition

MANAGEMENT STRATEGYRisk 1 - Inventory Control• Analyze sales comprehensively to elaborate supply and

demand plan according to holidays & good weather etc.

• Apply software inventory management platform to monitor low/high inventory

• Set up strict policies and procedures to prevent internal waste and stealing

• Keep track of supplier’s performance to ensure the inventory’s on-time arrival and its completeness

• Better arrange the warehouse, such as refrigerator locations, to save time, minimize the chance of stock-outs and increase operational efficiency

Risk 1 - Inventory Control CONTINGENCY PLANNING• Always maintain inventory above the its safety level

• Coordinate with suppliers to obtain urgent products in short time

• Promote and advertise products at excess inventory level rather than the ones at low level

DISASTER RECOVERY• Track stock inventory levels constantly and reduce

response time to inventory replenish• Set up inventory limit and alert to trigger replenish• Search for suppliers who are able to deliver products

rapidly and efficiently

MANAGEMENT STRATEGYRisk 2-Commodity Price Fluctuation

• Stock up on the essentials seasonal goods• Create list of alternate distributors in the area and

maintain good relationship with them• Plan ahead of time• Always ask for cash discount• Bulk Orders = better prices

Risk 2-Commodity Price Fluctuation (Supply Chain) CONTINGENCY PLANNING• Contact alternate distributor to obtain required

products• Drive to the distributor to pick up shipment• Run specials on products that you have in excess

stock

DISASTER RECOVERY•Drive to the distributor to pick your own shipment•Contact alternate distributor to pick up shipment

MANAGEMENT STRATEGYRisk 3 - Reputation

• Control food quality and liquor liability strictly by testing them

• Provide attentive service and welcoming ambience• Review food supplier’s qualification and evaluate their

products quality in order to reinforce the collaboration or terminate it

• Stay as transparent as possible with stakeholders and customers and create natural reviews from them, and maximize positive ones and convert negative ones to positive

• Establish conversation platform to receive customer’s feedback, follow-ups and improve products and services accordingly

• Join insurance program

Risk 3 – ReputationCONTINGENCY PLANNING

• Hire crisis public assistant company to handle the issue and reduce reputation jeopardizing impact

• Address the problems or issues and make the management procedures public with the attitude to be supervised and criticized

DISASTER RECOVERY• Invite regulatory agency to test and give feedbacks on

revised status• Carry on charity projects to give back to the society

and build up reputation• Use social media to advertise and convey new

message to customers

MANAGEMENT STRATEGYRisk 4 - Financial

• Promotional offers to escalate sales• Strong legal team to protect the firm against law suits• Conduct internal audit to analyze financial statement,

balance and cash flow reports• Prioritize the debt clearing process• Review monthly, seasonal and yearly financial reports

to keep track of the financial situation• Reduce the cost and increase the revenue in order to

maximize the profit• Implement technology such as system which could

address and analyze shortfalls, increase revenues and cut spending

Risk 4 - FinancialCONTINGENCY PLANNING• Short term financing• Micro credit organizations• Social lending sitesDISASTER RECOVERY

• Partnerships• Savings and Fixed Deposits

MANAGEMENT STRATEGYRisk 5- Food safety risk

• Being extra vigilant during the flu seasons• Food quality control• Review food supplier’s qualification• Kitchen Cleaning• Appropriate Food storage appliances• Maintaining food temperatures• Proper waste disposal• Declaration of common allergic foods such as

peanuts, soy etc.

Risk 5- Food safety riskCONTINGENCY PLANNING

• Contact your local health department.• Conduct your own investigation, even if the health

department is conducting its own, to determine the source of the illness

• Contact your supplier if necessaryDISASTER RECOVERY

• Emergency Response Teams• Hire a food safety consultant

Future Risk Culture•Integrated

Risk management part of the job at every level

•Continuous Process and Management constantly being

improved and implemented

•Broadly focused All risks considered across business segments

enterprise risk management ist625 syracuse university

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