MU1 CWTI Memo
Memorandum
Date: July 8, 2014
To: CEO, Canadian Wood Toys Inc.
From: Scott Culley, CAE
RE: Organizational Risks & Mitigation Methods
As per our discussion last week I’ve prepared this memo that outlines the risks that CWTI faces and methods of mitigation for those risks. The goal of this exercise is to have a starting point for establishing a risk management process within CWTI. Below I’ve identified risks and provided suggested methods of mitigation for each. I’d like to point out that while most of these risks have more than one potential mitigation method, I chose to present the method I believe would be most successful for CWTI.
1.) Risk of fluctuation in foreign exchange rates –USD receivables
Mitigate using control method ie. forward contracts, hedging etc.
2.) Risk of fluctuation in interest rates – USD loan
Mitigate using control method ie. forward contracts, hedging etc.
3.) Risk of supply shortage/delay due to truck breakdowns
Mitigate using diversification ie. Have alternative options of transportation readily available
4.) Risk of losing major customer
Mitigate using diversification ie. Try to gain other customers in need of timber
5.) Risk of losing timber licenses
Mitigate using control technique ie. Establish strong internal controls regarding the requirement to clear and replant and ensure to measure controls.
6.) Risk of non-compliance with national stock exchange requirements
Mitigate using control technique ie. Establish strong internal controls regarding compliance requirements for stock exchange.
7.) Risk of inventory shrinkage due to theft, damage
Mitigate using sharing/transferring technique ie. Purchase insurance for buildup of inventory
8.) Risk of supply delay if sawmill equipment goes down, staff turnover/lack of skilled staff
Mitigate using diversification technique ie. Have alternative options of production in the event either of these occur
9.) Risk of delay/damage/lost shipment to overseas market
Date: July 8, 2014
To: CEO, Canadian Wood Toys Inc.
From: Scott Culley, CAE
RE: Organizational Risks & Mitigation Methods
As per our discussion last week I’ve prepared this memo that outlines the risks that CWTI faces and methods of mitigation for those risks. The goal of this exercise is to have a starting point for establishing a risk management process within CWTI. Below I’ve identified risks and provided suggested methods of mitigation for each. I’d like to point out that while most of these risks have more than one potential mitigation method, I chose to present the method I believe would be most successful for CWTI.
1.) Risk of fluctuation in foreign exchange rates –USD receivables
Mitigate using control method ie. forward contracts, hedging etc.
2.) Risk of fluctuation in interest rates – USD loan
Mitigate using control method ie. forward contracts, hedging etc.
3.) Risk of supply shortage/delay due to truck breakdowns
Mitigate using diversification ie. Have alternative options of transportation readily available
4.) Risk of losing major customer
Mitigate using diversification ie. Try to gain other customers in need of timber
5.) Risk of losing timber licenses
Mitigate using control technique ie. Establish strong internal controls regarding the requirement to clear and replant and ensure to measure controls.
6.) Risk of non-compliance with national stock exchange requirements
Mitigate using control technique ie. Establish strong internal controls regarding compliance requirements for stock exchange.
7.) Risk of inventory shrinkage due to theft, damage
Mitigate using sharing/transferring technique ie. Purchase insurance for buildup of inventory
8.) Risk of supply delay if sawmill equipment goes down, staff turnover/lack of skilled staff
Mitigate using diversification technique ie. Have alternative options of production in the event either of these occur
9.) Risk of delay/damage/lost shipment to overseas market