CONTENTS: 1. 2. 3. 4. 5. 6. 7. 8. 9.

PREFACE COMPANY PROFILE WHAT IS RISK? MAJOR RISKS INVOLVED RISK MANAGEMENT PURPOSE OF RISK MANAGEMENT NEED FOR A RISK MANAGER RECOMMENDATIONS & POTENTIAL OUTCOMES DUTIES AS A RISK MANAGER 2 2 4 4 6 6 8 9 10

Risk Management in Engineering (49006)

Mandip Desai (10970743)

PREFACE
I am highly honoured to be given an opportnity to address the respected Board of Directors. As a newly appointed Risk Manager in Adani Enterprise Ltd., I would like to thank the company for giving me a chance to prove myself and stress the importance of having a Risk Manager in a company. I am fully aware of my duties and responsibilities and I am sure I will give my full attention to make sure I perform the tasks that I am assigned to do. To get a head start, I had taken the liberty of inspecting the site to see the potential risks present on the construction site and to design steps to avoid them. As it is a multi national company, the threats posed by the risks should be dealt with as soon as possible otherwise it can jeopardize the business and could lead to image loss and financial loss. In this report, I have included the potential risks which, according to me, could pose a threat in the long run. Also, I have given the positives for having a Risk Manager in a company.

COMPANY PROFILE
Adani Enterprise Limited is one of the budding infrastructe company that is gaining a quick recognition in the world. It is a multi diversifying company, having a share in almost all of the major business types in the country. It is owned by Gautam Adani and it was established by him in the year 1988. The company has grown over the years from just being an export company to being a company having its hands in Edible Oil, Logistics, Power Generation, Coal, Oil and Gas Exploration, Gas distribution, Real Estate, Ports, Special Economic Zones and IT enabled services.Starting the company with a capital of just 5 lac rupees, the company touched the revenue of 180 billion Indian Rupees. Adani was awarded with the honorary Dun & Bradstreet Rolta Corporate Award in 2008 for their exceptional trading house skills. The company has a reputation for developing, producing and constructing quality and one of its kinds plants which excel in the various fields they deal in. All the processes and equipments used by the company are the latest in the market.

Risk Management in Engineering (49006)

Mandip Desai (10970743)

The company consists of more than 8000 employees working in different departments on different projects. It is owned by Gautam Adani and he is the Chairman of the company. The various important departments in the company are Operations, Sales, Finance, Human Resources, Marketing et al. with a department head assigned to them. Each of the departments have their separate duties to perform, but all of them have to be in sync to ensure the company maintains its reputation and keeps making profits. The Operations department had to ensure that all the equipments are running in proper condition, logistics are co-ordinated to make sure there are no late deliveries. The finance department mainly take care of the revenue that is generated, and also ways to increase the generation of revenue.Human Resources department are concerned with the recruitment of employees to ensure that qualified staff is selected. Marketing mainly deals with showcasing the image of the company to the world and also sell the projects that are constructed by the company.

Risk Management in Engineering (49006)

Mandip Desai (10970743)

WHAT IS RISK?
Risk is defined as the combination of probability of an event and its consequences (ISO/IEC Guide 73). Risks represents the consequences like the two sides of a coin. There are opportunies arising and also there are threats which could affect the smooth operation. Although, in these times, it is a common culture to associate risks to threats because as they say that it is always to be safe than worry. In todays constantly competitive and risky environment, it has become a priority for the management to manage and control risks by following specific measures. Being an Multi National and an Internation organization with its operations in almost all the major sectors, the exposure to risks is very high. These risks include opertaional, financial, Security, Resources, Technology and Risk to human life. Although it is difficult to predict the risks and be prepared for that specific risk, it is better to be having certain specific measures in order and certain procedures which are followed, which would be used in case there is any danger, thus not posing any threat to the on going construction on the site. This would help in achieving the project completion period even if risks are encountered. Thus, a back up of the most important resources should always be present to make sure the work is not affected if a risk is encountered.

MAJOR RISKS INVOLVED IN ADANI:

Various types of risks listed below tend to affect each and every department of the Company as well as with the projects the Company is engaged with. Operational Risks There are a variety of threats that can affect the smooth operations related to the key materials required on the site. The material like cement, bricks, mortar etc are all transported via trucks and tankers. Also, there are risks related to the faluty construction of the slab or the floor ceiling. If the cement concrete quality is inferior, it could affect the quality of the building constructed, which could result in to an accident later on. This could affect the credibilty of the company and could hamper its chances of progressing in the global market.

Risk Management in Engineering (49006)

Mandip Desai (10970743)

Financial Risks The prices of the materials which are used on the construction process were not constant. Thus, it resulted into a constant conflicting budget. Also, if some of the materials are not upto the quality standards, they had to be replaced as the quality of the construction cannot be compromised. The cash flow was also an integral part to ensure the smooth functioning of the project. Human Resources The labors and the employees which work on the construction site were selected through a proper process, although there were no set benchmarks for the same. Thus, it resulted in having employees which were kind of a liabilty to the company. This seriously affects the producttivity of the whole process and could jolt down a project if proper action is not taken at the right time. Reputational Risks These are pretty important to the company in the long run in maintaining their image as an ARated company. They could result in increasing the chances of the company to incur revenue losses or maybe even litigation. These risks generally are a side effect of the operational and financial failures. Constantly underperforming in the above two departments could result in the company losing its image as a reputed company. This is, however, more often due to the contractors or the middle parties with which the company is involved. Technology Risks The technical department is the life line of Adani and their efforts in keeping all the technical risks to a minimal are highly appreciated. However, there is always a poosibility that during the building construction, the column or the slab or the roof could fall, due to miscalculations or not taking into effect the external and natural factors while designing the building. Also, irregular maintainence and inadequate quality control could result in drastic failures. Catastrophical Risks Our construction site is based in Ahmedabad, India, one of the fastest developing cities in the world. But, Ahmedabad is on the earthquake zone and the shocks are felt quite a number of times during the year. Thus, the building has to be designed considering the effect of
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Risk Management in Engineering (49006)

Mandip Desai (10970743)

earthquakes in mind to avoid any catastrophical damage. Also, the city, recently, has also been the target for quite a number of terrorist attacks. This has to be taken in to consideration as well. Environmental risks The pollution caused by letting out the waste products could hamper the environmental balance. Also, the constant running of the machines could be a source of causing Noise Pollution. Human Risks As a part of the construction process is carried out by humans and also the some of the designing, there is a possibility that there might be some error in human judgement. Also, while operating the machinery, there are chances that it might falter and could result in to fatalities.

RISK MANAGEMENT
Basically it is defined as the procedure to identify and analyse the risks that are present in a given situation. The next step would be to prioritize the risks and devise a back up plan. Thus, it is plan that is formulated just in case something goes wrong, so the management is not caught unaware. It is done basically in four steps, namely, 1. Risk Identification 2.Risk Analysis 3. Risk Evaluation 4. Risk Control. Thus, it helps the company in conserving the companys assets and protects the project from any uncalled event, which could eventually result into losses. It is an integral part of any organization.

PURPOSE OF RISK MANAGEMENT

Risk Management when practised in an organization explicitly addresses uncertainty and highlights opportunities for the organization to enhance project management. The management should also ensure that all risk handling activities are organized because they are required across the life of the project for mitigating unfavourable impacts on achieving objectives. Risk Management addresses technical as well as business issues. The objective of risk management is directed towards reducing risks rather than recovery from hazards. And the objective should be definite as far as possible and is governed by principles expressed in terms of cost to a company of risks during a given period.
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Risk Management in Engineering (49006)

Mandip Desai (10970743)

Risk Management comprises the following stages Risk Identification This is the first and a very important stage. It includes indentifying the risks at their source, what impact will it have and list them out even if they feel far-fetched or implausible. It is important to identify even the evident risks which seems too improbable to occur. These risks should be prioritized and documented. Various risk identification tools are available which can be adopted by the company. Risk Analysis After the risks are identified, the causes, sources, effects and the probability of the risks should be researched. This would help in understand the risk. It is generally carried out in two steps; 1. Qualitative 2. Quantitative. Qualitative deals with discovering the impacts of the risks while Quantitative involves the implementation of the risk analysis techniques. Risk Evaluation It comes into effect once the risk analysis is achieved .It involves comparing the levels of different risks with the already established company standards. Thus, the risks can be filtered out and the illogical risks can be put lower down in the priority order. Risk Control This is the most crucial stage in Risk Management. It desgins the action plans that are to be taken to reduce the threats. It includes avoiding the risks to eliminating their source, to reducing their likelihood to occur and have a back up of resources wherever possible. Also, the risks should be monitored on a regular basis to ensure they are under control. Thus, with all the documented procedures, it helps the company to manage and tackle the risks more effectively.

Risk Management in Engineering (49006)

Mandip Desai (10970743)

NEED FOR A RISK MANAGER

Although Adani has a Risk Policy in place, it wasnt being updated regularly. Also, Risk Management was also not practised as a separate entity. The companys look out was more like, the risks would be managed when it will occur. Apparently, each and every Organization is determined to maintain its reputation and avoid factors like on-site accidents that could hinder its financial status. Based on my research on Risk Analysis in our Company, I report the following. 1) In 2008, there was prevalent recession all over the world. Thus, it affected the minor contractors more than the bigger ones. This led to the delivery of unacceptable quality of material, un-timely delivery and problems with the payments. If this escalated, it would have resulted in to tarnishing the reputation of the company. However, timely measures were taken which avoided any such incident. 2) Also, one of the projects that were to suppose to go public at a proposed date got delayed due to various human and natural factors, which resulted in a major disappointment among the public and company board too. These are two major events that Adani faced in the past ten years.

RECOMMENDATIONS AND POTENTIAL OUTCOMES:

First and foremost, the Company has to make amendments to the existing Risk Management Policy. With the replacement of old Australian New Zealand Standard for Risk Management by an international based standard-AS/NZS ISO 31000:2009, the Company should strictly abide with the procedures in the new standards and modify their policy. The new standards are considered one of the bests in the present scenario and it helps a lot in designing a risk management policy complying with the organizational framework.

Risk Management in Engineering (49006)

Mandip Desai (10970743)

LIST OF DUTIES AS A RISK MANAGER:

Picking out experts in each department who can help in identifying the risks and can help with their technical know how as well. Maintain a written record of all the observations. Qualitative and Quantitative Risk Analysis should be carried out at regular intervals. Regular maintenance and quality checks in every department and every construction sites. Introducing a proper inventory control process to help maintain the records of the inflow of materials like cement, sand, bricks et al. Ensure safety uniforms and helmets are worn at all times on site avoid any casualty. Introducing OH&S so that the safety of the unskilled and skilled labor alike is ensured. Adopting procedures to carry out checks on slabs and beams during construction to ensure that they are casted according to the plan. Introduce training and development program for the employees so that they are in touch with the latest developments and techniques around the world. Conduct an audit for Risk as well during the Companys audit to ensure proper functioning of the risk procedures in place.

Thus, adopting Risk Management in the company would ensure that the end quality of the construction would be top class at par with the companys reputation. This would help in gaining positive reviews around the world and gaining recognition as well. Also, the risks are dealt with proactively rather than reactively. As a Risk Manager, I would totally take the blame if any of the procedures are not followed or wrongly followed and some situation is created due to that.

Risk Management in Engineering (49006)

Mandip Desai (10970743)

REFERENCES
Adani Group Website 2011, The Organization, visited on 12.09.2011. http://www.adanigroup.com/theorganization.html Bryan L. Williams, Sylvia Brown, Michael Greenberg ,Mokbul A. Kahn ,Risk Analysis,Risk Perception in Context Volume.19,no.6,pp104-113 Jack V. Michaels (1996): Technical Risk Management, New Jersey, Prentice Hall PTR Risk Management Guidelines companion to AS/NZS ISO 31000:2009 Handbook Work Place Safety Advice, 2010, Construction Site Safety, visited on 12.09.2011 http://www.workplacesafetyadvice.co.uk/construction-site-safety.html

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