Assume you are a risk manager who has recently been appointed by a large US-owned but EU-based

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Assume you are a risk manager who has recently been appointed by a large US-owned but EU-based engineering and general construction company called Bubbles PLC. The company has a number of offices around the world including a number in Europe and the US and relatively new offices in India and several locations in South East Asia. Bubbles PLC is structured around a number of main functional or business divisions including Infrastructure Development, Professional Services, Environmental Services and Facilities Management. Bubbles PLC operates a number of subsidiary companies that offer a range of services ranging from roads term maintenance contracts for Local Authorities as in the case of Moose Ltd to professional design services, as in the case of Blowers Professional Services. The company has an annual turnover of around K400m and is generally operating at a reasonable level, although growth has been slightly slower than expected over the past 2 years. As part of a long-term strategic review, the company CEO, Sir Tristram Gawain, has decided that the company needs to review its strategic risk management systems to bring them up to the highest operational standards so Bubbles PLC can compete at the most effective levels possible. It is expected that the review will require the development of a comprehensive enterprise wide risk management system (EWRMS) to cover the whole Bubbles PLC group of companies. It is expected this EWRMS will have a risk interdependency capability allowing the risk managers to model the impact of different decisions and strategies on the overall risk profile facing the organisation. It is likely that the Bubbles PLC risk profile will be represented as a risk interdependency field (RIF) that will be mathematically modelled. The new EWRMS and RIF approaches are being adopted during a period of considerable change for Bubbles PLC. As part of a former strategic plan, Bubbles PLC has recently acquired a number of smaller specialist companies in a range of different disciplines and geographical locations. As part of this strategy, Bubbles PLC is now actively considering making an offer to buy control of a specialist transport company called Deltic Ltd. Deltic Ltd is a specialised railway train operating company that currently holds a number of term service level agreement contracts for railway services in the UK, Sweden and Denmark. Deltic Ltd is currently mid-way through various franchise agreements for providing train services in these countries. Deltic Ltd is highly reliant on these franchises and it is imperative that the company performs well during the current franchises and is able to successfully bid for new franchises when the current agreements expire over the next few years. The long-term success of Deltic Ltd depends on there being a continued promotion of rail travel in the EU generally and on Deltic Ltd being successful in continuing to win service level agreement contracts from EU governments. As strategic risk manager for Bubbles PLC, one of your first responsibilities will be to design a suitable risk management system for the organization as a whole. This will subsequently be upgraded to a full EWRMS over the next year or so after the basic risk management system is in place.

a) Summaries the primary elements and stages that risk managers are likely to address in any scenario planning exercise.

b) Conduct a sample scenario planning exercise for the strategy venture from the point of Bubbles PLC in evaluating the likely success of the proposed acquisition of Deltic Ltd. You should stress the likely primary success and failure drivers that are likely to determine the commercial and political success or otherwise of the potential acquisition..

c) Discuss the concept of risk interdependency in the context of the risk profile facing Bubbles PLC in acquiring Deltic Ltd and explain how some of the likely risk interdependencies in this case could be considered in terms of a Risk Interdependency Field (RIF)

d) Discuss the concept of risk transfer as a risk treatment option and develop examples of two alternative possible risk transfer mechanisms that Bubbles PLC could consider for transferring strategic, operational, change and unforeseeable risks.