Written Activity 1
a. Every organization faces risks at some point or the other. There is a wide range of it which might relate to financial or management. Some of these might open the organization from low to higher risk depending upon the nature of the activity. Hence, the organization might accept or reject it. Therefore a elaborative range of risk assesement criteria should be there to be able to face it by the organization. Toyota has to face currency and interest rate fluctuations. This in result leads to affecting his cost of production and its profit margin. High prices of raw materials and also affects it. The tanking of the economy and the financial market affects it as it imposes difficulty for it to raise capital for its production. A tycoon like Toyota depends on its shareholders and their trust. With all such financial impediments, his market value too gets hampered.
b. As per the Australian standards: AS/NZS ISO 31000:2009 Risk Management-Principles-Guidelines, Toyota Tsusho defines risk as laid down in Risk Management Basis Policy (Mentor Education, n.d), defines it as an occurrence of an event that could cause potential unexpected losses in business, and cause damage to Toyota’s assets and trust. To mitigate that, company has established ERM, Crisis Management and BCM department, whose major function is to cater to all the risks on the company. For that, the company scrutinizes the work of each department and to strengthen the risks management system. Apart from this, Toyota appointed a Global Chief Risk Management Officer (CRO), the head of global risk management, who checks on the risks at daily basis. Regional CROs are appointed under Global CRO to see individual regions and at its management structure (Toyota, 2019).
c. The need of keeping the staff and other human personnel informed about the risk management strategies is important. For Toyota, the Board of Directors, at every corporatre governance meeting discusses the quarterly risks faced by the whole company and their preventive measures. This meeting is attended by Global CRO with regional CROs too, all chief offices and company presidents (Toyota, 2019). The meet inspects the reports submitted by each region, and suggests any improvements or reinforcements that could be done. This also includes the report of Global CRO indicating the serious risks. All of such reports are compiled and a final report is made on the status of initiatives taken against such risks.
d. The risk structure of Toyota basically focuses on the information security and Business Continuity Management (BCM). So those risks that could affect the business operations are listed in form 20-F of the company (Toyota, 2019). These risks can influence the decisions of its investors. It is categorized into three categories. First being business and industry risks; financial market and economic risks and political, regulatory, legal and other risks.
2. For, Toyota, the managers of different departments have to be involved in risk management strategy given above and should have the knowledge of the work done and the mitigation measures taken by their risk management team. The appointment of regional CROs should be under the recommendation of such managers and they should have a detailed report of their tasks. The business involved here can be of the automobile sector since Toyota is an automobile company. Any changes in the regulations or the economic policy shall affect the whole automobile industry and not just Toyota itself.
Insurance act, 1873- Toyota Car Insurance is one such insurance company that it opened to cover the car damages done by fire, vandalism, theft, etc. in compliance with this act (Finder, 2020)
b. Toyota being established as per Insurance act, Corporations act and gives its taxes under the Australian Income Tax Assessment, this shows that it has accepted the required legal statutes under which it should function
c. For relevant risks-
The low risks that Toyota faces could be that with its competitors. Having focus and faith in their own product line, then the threats of new entrants and the work of their competitors is minimal.
Areas like environmental risks, changes in governmental policies etc poses high risks for Toyota.
d. Seeing the economic environment of FY2016, so the US economy of Toyota has seen recovery due to steady consumption. As a result the net revenues increased by 1168.5 billion yen, in FY2016 compared to FY 2015 (Risk management system, 2020).
e. The financial risks that Toyota sees are of changes in the currency and interest rates. External activities like natural calamities, poses a huge loss of such business.
f. For the compliance issues, the employer and the employees have to be told about their responsibilities and that is quite a challenge for the administration. .
g. For compliance issues, Toyota’s code of conduct gives detailed guidelines for their personnel. A booklet containing the guidelines is distributed to the employees when they are recruited.
h. Risk mitigation strategies involve intimidation of strategy to the entire staff and members. The company should conduct meeting where they should evaluate the risks and the measures taken to address them.
For Toyota, the industrial risks, business risks, internal risks are tolerable. The ones like environmental, external risks are not.
4. To review the above mentioned things, we can conclude that Toyota is very foresighted when it comes to formulating risk management strategies. The financial books of the company shows that even despite of so many hurdles in its functioning and the risks involves, it still manages to be one of the automobile leaders in the industry.
5. The exposure to external risks of natural calamities, new regulatory changes in the markets imposes major threat to Toyota. Nevertheless, it fight against all the odds.
a. Risk acceptance and rejection criteria-
The change is currency rate and interest rate poses major threat and can disturb the whole production of Toyota. But still it is bearable as evident from its financial books
For financial risks, Toyota has a team of skilled people who can help in solving the issues. Like Nobuyori Kodaira is the chief risk officer and a member of BOD in 2016.
b. Low financial risk can be change in price of raw materials to tanking of the economy being the highest risk.
c. Strategies involve keep a reserve that could help in time of adversities like financial crisis.
7. The risk acceptance strategy is necessary since risks cannot be toed off and there is no alternate left to except to face it. So the company involved the task of dividing the work among different teams and then taking a report of such different teams. The report of such teams are to be scrutinized by the top management at the governance meeting and then the suggestions are given.
9. The access of the legislations, regulations, codes of practice, Australian standards regarding the assessment strategy were taken into consideration and the conclusion drawn were that the Toyota is redressing the risks measures quite amicably as per the requires standards.
Writing Activity 2
a. Management of the implementation strategy: Resource acquisition and allocation strategies must be implemented by the management if the company in order to successfully identify the requirement of all types of resources. WBS is a tool which is generally used by management to assess the requirements of resources in implementing the policy in the organization.
b. Monitoring methods: Regular and adequate monitoring of the risk management strategy is essential in order to check its integration into the organization according to the planned scenario. Regular conduct of meetings will be helpful in accomplishing feedback, effective communication process and proper evaluation of strategy (Mentor education n.d.). Every team meeting must have an agenda that will further help in effective review and assessment of the risk management strategy. Agenda items must consist of challenge review, accurate reasons for deviations, implementation and integration issues, etc. (Mentor education n.d.). Other method of monitoring the strategy is concerned with collection of feedback. Feedback can be received in several ways like direct discussion, focus groups, meetings, etc.
c. Evaluation methods: The evaluation process comprises of performance of different steps like review of planned outcomes, adequate information collection and then measuring success of the strategy. With the help of this, improvement measures can be indentified in order to achieve goals and objectives regarding the risk management strategy.
2. Work breakdown structure (Mentor education n.d.) includes:
Project management requirements
Assessing Project Risk
Performance Management and tracking
Project financial management
Budgets and financial management
Project schedule and timeline
Continual improvement management for the project life cycle
3. Toyota Motor Company is one of the leading automobile manufacturers and carries out its operations in 5 distinct continents and has already sold approximately 8 million of its makes and models. The types of resources required by this company can be categorized as:
Physical resources: Toyota Motor Company has more than 50 manufacturing companies in approximately 26 countries and regions. It has over 170 distributors in 170 countries. With the presence of plants all over the world, the company is synergizing the overall demand of automobiles and low costs.
Financial resources: Toyota is among the largest profitable manufacturer of automobile carrying out its operations all over the world. It has made sales of 2214946 million of yen and net profit of 159778 million of yen (Toyota Annual report 2019). The high amount of cash and cash equivalents helps the company in achieving higher liquidity in its operations.
Human resources: Toyota is being employing more than 4 lakhs people worldwide. Sales departments accounts for the largest part among its employees. This helps in maintain large network of customers.
Technological resources: Toyota is continuously bringing new technology and innovative products in the market and always implements new processes of doing work. This is the reason behind its staying ahead of the market competition.
Reputational resources: Toyota has developed reputation by building trust among the public. It comes up with the best products even before the customers are not completely aware about their problems with the products.
4. Action Plan
6. Monitor and proper evaluation of risk management strategy is important in order to accomplish long term success of the planned initiatives and actions. This will help in maintaining accountability to communities and other key stakeholders of the company. It is significant to undertake proper information and data to make well qualified decisions. Planned results and profits will be compared with the actual results in order to identify the deviations. Significant measures will be taken to address those issues to maintain sustainability and profitability of the organization. Cost and productivity will be measured as a inputs or outputs percentages. Quality measures will be adopted in order to maintain effectiveness and adequate improvement in reliability, responsiveness, compliance, competence and accuracy (Mentor education n.d.).
Appropriate recording and reporting system will be established for different areas of operations to make sure that internal control policies and effective governance have the ability to be implemented. Required support to the staff members and other team members will be provided throughout the establishment and implementation of risk management strategy. This is important to encourage and motivate them throughout the process to achieve desired results from the implementation of strategy. The issues, conflicts and other types of problems must be resolved effectively and efficiently as and when they arrive. Outcome measures can also be used to check whether the company has reached its targets set for different departments and to measure the impact and the benefits received due to the implementation of the strategy.
Written activity 3
1. It shall be based on level of risk meaning the how bad can the risk affect the company. Second is the magnitude which means the extent to which the financial risk gets imposed on the organization. Third is the volatility which means relation of the financial risk to the level of uncertainty and the any chances of it to change and that too by how much.
2. The eleven principles of risk management (Mentor education n.d.) are-
Create and protect value
Risk management should be integrated throughout the organization structure and system.
Risk management should be a part of decision making process
Address uncertainty implicitly.
Be structured systematic and timely
Be based on best information available
Be tailored and created for specific organization.
Take into account a range of organizational factors like culture and needs;
Be inclusive and transparent
Be responsive to changes
3. Actuarial analysis means when statistics are analyzed to see the exposure of risk or probability of the risk an organization is exposed too (Mentor education n.d.)
4. The four sources of information(Mentor education n.d.) includes-
Actuaries- analysts that uses statistics to analyze risk or probability of range of risk to which one is exposed particularly in insurance,
Brokers- provide range of risk information related to loan or sale
Intermediaries- third parties that include stakeholders, third party advisors etc.
Reinsurers- provide information related to insurance statistics and the risks relating to reinsuring items.
a. Insurance contracts-
Insurance act 1973
Insurance contract act 1984
Corporations act 2001
c. Consumer protection-.
d. Corporations law- covers aspects like
6. Mitigating capabilities (Mentor education n.d.) means capabilities of the company to reduce the impact of risk and manage it that the company is exposed too. Like changes in regulatory measures by the government so a company hires lawyers and accountants specialized in such fields to take care of it.
7. Organizational factors(Mentor education n.d.)-
Vision- its vision, mission, its goals and objectives
Control systems- include monitoring process and ways the individuals work.
Organizational structure- the way information flows through the organsations in form of a hierarchy.
Power structure- types of decision making process and how it impact who makes the decisions etc
Rituals and routines- habitual behavior that includes management and tool box meetings.
8. It varies according to (Mentor education n.d.)-
Potential impact on the company.
Value and type of product or portfolio
9. Governance structures (Mentor education n.d.) are rules guidelines etc that a company uses to ensure that the activities can be controlled. It includes-
Development and coordination of terms and conditions.
10. They are (Mentor education n.d.)-
Strict risk assessment procedure
Obtaining legal advice’
Parameters of risk acceptance
Variables that are acceptable
11. They are (Mentor education n.d.)-
Purpose of risk assessment strategy
Guidelines of the strategy’
Related action plans
12. They are (Mentor education n.d.)-
13. Work breakdown structure (Mentor education n.d.) defines full scope of the work required to deliver the policy. It shows how wach of the work elements relates to the policy goals. It is used to determine-
14. They are (Mentor education n.d.)-
Human- like skills, experiences
Financial- shares, cash etc
Technological- processes or systems or physical technological items
Physical- like equipment, supplies etc
Reputation- perception of the organistion can be measured by market and public relations
15. It should include (Mentor education n.d.)-
16. They are (Mentor education n.d.)-
Establish communication objectives
Define the audiences
Choose the method for each audience
Plan the message for the audience
Place findings in a template
17. It is necessary to see that whether it has been incorporated in the company as planned. It is also necessary to recommend improvements where appropriate (Mentor education n.d.)
18. It is necessary to ensure that if any changes are required so that can be done to ensure its success (Mentor education n.d.).
19. It includes (Mentor education n.d.)-
20. Performance target can be measured by (Mentor education n.d.)-
Compliance with the legislation
Risk mitigation figures
Percentage of risk undertaken
Annual Report. 2019. Toyota Annual report. [Online].
Mentor Education. n.d. (Leaner guide Element 1). FNSRSK602 Determine and manage risk exposure strategies. [Online]. Available at:…………….. [Accessed on: 28 May 2020]
Mentor Education. n.d. (Leaner guide Element 2). FNSRSK602 Determine and manage risk exposure strategies. [Online]. Available at:…………….. [Accessed on: 28 May 2020]
Mentor Education. n.d. (Leaner guide Element 3). FNSRSK602 Determine and manage risk exposure strategies. [Online]. Available at:…………….. [Accessed on: 28 May 2020]
Mentor Education. n.d. (Leaner guide Element 4). FNSRSK602 Determine and manage risk exposure strategies. [Online]. Available at:…………….. [Accessed on: 28 May 2020]
Mentor Education. n.d. (Leaner guide Element 5). FNSRSK602 Determine and manage risk exposure strategies. [Online]. Available at:………………[Accessed on: 28 May 2020].
Mentor Education. n.d. (Leaner guide Element 6). FNSRSK602 Determine and manage risk exposure strategies. [Online]. Available at:………………[Accessed on: 28 May 2020].
Risk management system, 2020. Toyota Tsusho Corporation. [Online].
Toyota, (2019). Annual sustainable management report, 2019. [Online].
Finder, (2020). Toyota Car Insurance. [Online].
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