CHAPTER 10: RISK ASSESSMENT CASE STUDY Introduction Two young women decided to set up a restaurant business. They had some capital, but not the sufficient amount, and though that 60% would be sufficient to begin with. They carried out a basic feasibility and were happy to do this without a professional consultant, although they had no experience because they were recent Business graduates. They did not have a business plan or clear goals. These entrepreneurs did not create a financial plan and did not understand that 60% of their capital would be spent on rent for the first year. However, they still went ahead and signed a one- year rent contract for premises and hired an interior designer because they were confident of succeeding and proceeded with setting up the business. Business Problem The partners had no idea how to hire staff with the required skills, neither had cooking experience or the knowledge of how to successfully manage a restaurant. They did not have knowledge regarding how to create menus, the type of equipment they would need, which kind of cuisine they would specialise in and their target market. They found themselves going in circles. The property landlord had expected the business to launch within 30 days. 2 months after the contract was signed, the business was still not ready. The entrepreneurs realised that 20,000 KD was not sufficient due to the high salaries for staff, cleaning, equipment and other costs, and therefore withdrew from the rent contract. Fortunately, the interior designer was a friend, so she only charged 10% as only the planning work had been carried out. Question 1. Identify two types of risks associated with this case 2. Assess the level of risk in terms of probability and impact. 3. How could the business partners mitigate their risks and control it