D3

Sparkle products Risk Management Policy and Procedure

1. Purpose

To provide information and guidance on Risk Management.

2. Scope

This Policy applies to all Sparkle Products employees. The policy extends to all current and future activities, and new opportunities.

3. Recognition of the need for risk management

Sparkle Products recognises the need for risk management to feature as a consideration in strategic and operational planning, day-to-day management and decision making at all levels in the organisation.

4. Risk Management Principles

The following principles form the foundation of the Sparkle Products Risk Management Policy and Procedures.

· A commitment to implement risk management effectively:

Sparkle Products is committed to managing and minimising risk by identifying, analysing, evaluating and treating exposures that may impact on the Sparkle Products achieving its objectives and/or the continued efficiency and effectiveness of its operations. Sparkle Products will incorporate risk management into its planning and decision-making processes. Risk management must also be included as a consideration in operational planning as a delegated line management responsibility. Sparkle Products staff must implement risk management according to relevant legislative requirements and appropriate risk management standards.

· A commitment to training and knowledge development in risk management:

Sparkle Products is committed to ensuring that all staff, particularly those with management, advisory and decision-making responsibilities, obtain a sound understanding of the principles of risk management and the requisite skills to implement risk management effectively.

· A commitment to monitor performance and review progress in risk management:

Sparkle Products will regularly monitor and review the progress being made in developing an appropriate culture of risk management and the effective implementation of risk management strategies throughout the organisation as a basis for continuous improvement.

5. Responsibility for Risk Management

Risk must first and foremost be managed at the corporate level as part of the Sparkle Products good governance and corporate management processes. Risk management is considered an integral part of all management and decision-making functions within Sparkle Products. The responsibility for the identification of risk and the implementation of control strategies and follow up remains a delegated line management responsibility. All stakeholders have a significant role in the management of risk. This role may range from initially identifying and reporting risks associated with their own jobs to participation in the risk management process.

6. Objectives of and Rationale for Risk Management

a) Sparkle Products in its need for risk management, aims to:

· integrate risk management into the management culture of the Sparkle Products; and

· foster an environment where staff assume responsibility for managing risks.

b) To secure its commitment to implement risk management effectively, Sparkle Products aims to:

· implement risk management across all aspects of Sparkle Products in accordance with best practice guidelines.

c) To secure its commitment to training and knowledge development in risk management, Sparkle Products aims to:

· ensure that performance in risk management is a consideration in the Sparkle Products 's performance management systems; and

· ensure that staff and other stakeholders have access to appropriate information, training and other development opportunities in risk management.

d) To secure its commitment to monitoring performance and reviewing progress, Sparkle Products aims to:

· ensure that appropriate monitoring, review and reporting processes are in place in risk management.

e) The objectives of risk management are to:

· provide a structured basis for strategic, tactical and operational planning across Sparkle Products;

· enhance Sparkle Products’ governance and corporate management processes;

· enable Sparkle Products to effectively discharge its statutory and legislative financial management responsibilities;

· provide a practical framework for managers to assess risks inherent in the decisions they take;

· assist and motivate decision makers, at all levels, to make good and proactive management decisions that do not expose Sparkle Products to unacceptable levels of risk of unfavourable events occurring which adversely impact on the attainment of organisational goals; encourage and commit decision makers to identify sound business opportunities that will benefit Sparkle Products without exposing the company to unacceptable levels of risk;

· minimise the risks of not identifying sound business opportunities;

· protect Sparkle Products from unacceptable costs or losses associated with its operations;

· safeguarding of Sparkle Products 's resources - its people, finance, property and reputation;

· assist Sparkle Products in achieving its strategic objectives; and

· create an environment where all staff assume responsibility for risk management

7. Procedures

Whole of Organisation Risk Management Process

Risk must first and foremost be managed at the corporate level as part of Sparkle Products’ good governance and corporate management processes. This process coordinated and facilitated by the CEO will involve the following key steps:

· an annual risk identification exercise undertaken by the CEO which involves assessment of the consequence and likelihood of risk, the development and/or review of individual risk management plans for the risks identified which exceed the Sparkle Products 's defined acceptable risks;

· wherever practicable the inclusion of a Risk Management Assessment for all business activities;

· the incorporation of risk management into strategic planning, and operational and resource management planning processes;

· ensure risk management processes are incorporated into the quality assurance and improvement systems of Sparkle Products;

· clearly define and document escalation procedures for risk management;

· ensure a consistency in approach of responses to the same risk by different sections of Sparkle Products;

· document all risks with a potentially high impact, as assessed based on their likely occurrence or impact; and

· test documented risk management procedures at appropriate intervals.

Risk Management as a Delegated Line Management Responsibility

Risk management is a delegated line management responsibility. It is the responsibility of all line managers to continually monitor their areas of responsibility to ensure that risks are identified and managed. Line managers should ensure that a contribution is made to Sparkle Products risk management process, on behalf of their areas of responsibility, that identifies risks at all levels.

The sharing of documented responses to risks and knowledge of risk management principles and procedures will be fostered between line managers to ensure consistency across the Sparkle Products.

On an annual basis, line managers should review all activities to ensure that any unacceptable risk exposures are identified and managed at an appropriate level. All operational sections will be required to report on risk management as part of the Sparkle Products’ annual operational and resource management process.

Individual

Each employee or other stakeholder throughout Sparkle Products has a role in the risk management process and is responsible for actively participating in the risk management process as appropriate to their position within the company.

Management of Risks Associated with New Opportunities

In addition to the risks that already exist, Sparkle Products is continually exposed to new risks particularly from the introduction of new activities. The new risks should be incorporated into the initial planning and assessment processes conducted prior to undertaking the activity and, subsequently, into the annual risk management assessment at the appropriate level(s) of activity and management. A risk management plan must be developed.

Principles to be applied

The principles of risk management shall be applied to all areas of risk exposure, insurable and non-insurable, and shall include, but not be limited to the following areas:

Insurable Risks

Non-Insurable Risks

· Insurable workplace health and safety risks · Insurable fraud and corruption prevention activities · Unauthorised use of resources which represent an insurable risk · Reputation and image as an insurable risk · Fire prevention measures and security precautions · Property loss and damage · Computer security · Professional negligence · Other liability exposures · Legal liability

· Non-insurable workplace health and safety risks · Non-insurable fraud and corruption prevention activities · Unauthorised use of resources which represent a non-insurable risk · Reputation and image as a non-insurable risk · Crisis contingency planning and disaster recovery · Accounting controls that are not cost effective · Loss of key staff and intellectual property · Management system inadequacies and poor work quality · Failure or disruption of a major income source or investment

Review

The CEO will regularly monitor and review the progress being made in developing an appropriate culture of risk management and the effective implementation of risk management strategies throughout the organisation.

Guidance on Acceptable Risk

Through its monitoring, review and reporting functions, the CEO will ensure that Sparkle Products maintains a consistent approach to its assessment of acceptable risk.

Documentation

Each stage of the risk management process shall be appropriately documented. The extent of documentation required is dependent on the nature of the risk. Documentation will be controlled to inform part of an auditable quality management process.

Compliance

A representation and compliance statement should be provided by each manager as formal acknowledgement of their responsibility to comply with risk management policies and procedures. Each employee should have included in his/her Position Description a responsibility for risk management, and Annual Performance Appraisals should include an appropriate assessment thereof.

Staff Development

Management shall ensure that staff have available to them appropriate information and training opportunities in risk management as appropriate to their position and role within Sparkle Products.

BSBRSK501 Risk Management Policy and Procedure - Case Study -Student support material Page 1