Case studies | Plain Risk

Use the concepts to examine a situation and explain your judgement.

These fictional cases illustrate the approach. Each includes questions and an analysis to compare with your own account.

Case 01 · Describing risk and examining controls

A cooling failure overnight

A café stores its chilled ingredients in one cold room. Its staff check the temperature at opening and closing. A cooling fault develops after the café closes. The owner is considering an alarm that sends an alert to a staff member’s phone.

Questions

How would you describe the risk?
What do the existing checks achieve?
What would the proposed alarm need to do to help limit the loss?
What remains uncertain?

Read the analysis

A risk description

The café could lose chilled stock if a cooling failure overnight goes undetected until opening.

The control’s purpose

The opening and closing checks can identify a temperature problem at those times. The proposed alarm aims to detect a problem between checks and notify someone who can act.

Conditions and evidence

Limiting the loss depends on detection, delivery of the alert and a timely response. Testing the alert supports a claim about notification. The ability to respond also needs to be examined.

What remains uncertain

The case gives no grounds for estimating the chance of a fault, the value of stock affected or the time available before stock is lost. These are questions for investigation.

Case 02 · Appetite, capacity and authority

A trial menu item

A café owner proposes a four-week trial of a new menu item. The business is willing to accept a loss of up to $1,000 on the trial, provided it can continue to pay suppliers and maintain normal service. The café manager is asked to organise the trial within the approved budget. Two weeks later, the expected loss rises to $1,400.

Questions

What willingness and limits does the appetite statement express?
What would show that the business can bear the loss?
What authority has the manager been given?
What needs to happen when the expected loss changes?

Read the analysis

Appetite and tolerance

The willingness to trial the product expresses appetite. The four-week period, $1,000 loss limit, and requirements to maintain supplier payments and normal service state the tolerance for this trial.

Capacity

The ability to bear the loss depends on available resources and other commitments. The owner’s willingness alone leaves this question open.

Authority

The manager is authorised to organise the trial within the approved budget. The case gives no authority to approve a higher loss.

A changed assessment

The expected loss now exceeds the stated limit. The manager needs to bring the changed assessment to the owner for a decision about modifying or ending the trial, or revising the approval. Any revised approval requires a fresh look at capacity and the other conditions.

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