FORMATIVE ASSESSMENT$/2$

$[100$ MARKS$]$ Read the sce ario below and answer ALL the questions that follow

Company KGC

Company KGC$,$ is a$,$ Souti ffrican based, medium$-$sized manufacturing firm specializing in heavy

machinery, has long been known for its reluctance to fully embrace risk management practices. This

case study sheds light on how this approach has culminated in a series of operational inefficiencies

and workplace accidents, ultimately leading to substantial financial losses and a tarnished reputation.

Company KGC$\text{'}$s disregard for comprehensive risk management has manifested in a myriad of

operational inefficiencies. Their supply chain lacks proper contingency plans, leaving them vulnerable

to disruptions caused by unforeseen events such as natural disasters or supplier bankruptcy. These

inefficiencies have led to frequent production delays, missed deadlines, and excess inventory,

ultimately driving up operational costs. Additionally, the absence of a robust risk assessment

framework has hindered the identification of potential vulnerabilities in their production processes,

further exacerbating inefficiencies. As a result, Company KGC has struggled to compete in an

increasingly competitive market, losing valuable contracts and market share.

The lack of commitment to risk management at Company KGC extends to its workplace safety

protocols, resulting in a concerning increase in accidents. Inadequate training programs, outdated

equipment, and a lack of safety audits have created a hazardous work environment. Over the past

year alone, there have been several workplace accidents, some of which resulted in severe injuries to

employees. These incidents have not only taken a toll on the well$-$being of their workforce but have

also exposed the company to legal liabilities and reputational damage. Moreover, the constant turnover

of skilled workers due to safety concerns has further hampered productivity and quality control.

The operational inefficiencies and workplace accidents at Company KGC have had dire financial

consequences. Not only have production delays led to lost revenue and increased costs, but the

mounting legal fees and compensation paxouts for injured employees have also significantly eroded

profitability. Moreover, the company's tarnished reputation has made it increasingly challenging to

attract new customers and retain existing ones, resulting in a decline in market share. If Company

KGC continues down this path of neglecting risk management, it may face financial insolvency in the

near future.

In conclusion, Company KGC$\text{'}$s failure to fully subscribe to risk management principles has proven to

be detrimental to its operations, causing operational inefficiencies and workplace accidents that have

translated into significant financial losses. To salvage its position in the market and ensure the safety

and well$-$being of its employees, Company kGG must urgently reconsider its approach to risk

management and invest in comprehensive risk assessment, mitigation, and safety measures. Failure

to do so may lead to the ultimate downfall of this once$-$promising manufacturing firm.

TASK

Company KGC has appointed you as Risk Management consultant. In your role as Risk Management

consultant, advise Company KGC on how you would address the following tasks.

Question $1$

$(50$ Marks$)$

Within the COSO Cube's risk assessment component, examine how Company KGC can evaluate the

likelihood and severity of the risks identified in its operations and workplace safety?

NB: Use the risk register format to present your answer.

Risk ID

Risk Description

RiskType

Likelihood

I

Category

Severity

Risk

Score