MBA_8A1_Yin Hui_BUS7AO_A1

Table of Contents

TOC o “1-3” h z u 1. Introduction PAGEREF _Toc86414272 h 22. Occurrence of Risks in Relation to Economic and Legal Implications PAGEREF _Toc86414273 h 22.1 Definition of Risk PAGEREF _Toc86414274 h 22.2 Difference between Risk and Uncertainties PAGEREF _Toc86414275 h 22.3 Origins and Nature of Risks PAGEREF _Toc86414276 h 22.5 Identification of Risks in the Context of Economic and Legal Implications PAGEREF _Toc86414277 h 32.5.1 Compliance Risk PAGEREF _Toc86414278 h 32.5.2 Hazard Risks PAGEREF _Toc86414279 h 42.5.3 Control Risk PAGEREF _Toc86414280 h 42.5.4 Opportunity Risk PAGEREF _Toc86414281 h 53. Risk Management Plan PAGEREF _Toc86414282 h 53.1 Control Measures PAGEREF _Toc86414283 h 63.2 Corrective Measures PAGEREF _Toc86414284 h 73.3 Record Keeping and Review Frequencies PAGEREF _Toc86414285 h 84. Conclusion PAGEREF _Toc86414286 h 8References PAGEREF _Toc86414287 h 9

1. IntroductionChina Communications Construction Company Limited (CCCC)principally engaged in the design and construction of transportation infrastructure, dredging and heavy machinery manufacturing business. The company operates in China，a fairly stable economy that uses a mixed controlled and open approach to regulation. This is a report covering a deep insight of the China Communication and Construction Company to uncover the major and minor risks that are associated with the company in its operations within China.

2. Occurrence of Risks in Relation to Economic and Legal Implications2.1 Definition of RiskRisk refers to the likelihood that someone or something will suffer harm or loss from a particular event or occurrence (Kuznetsova, 2019). It may also come out as the probability that a certain situation will lead to damage. According to Shad et al. (2019), a risk can is bound by measurable probabilities that are used in speculation or basic calculation and determination the possible likelihood of the event occurring and the amount of harm or loss that can be expected in case it happened.

2.2 Difference between Risk and UncertaintiesThe major and distinctive difference between a risk and uncertainty is within their possible outcomes and the possible occurrence of these outcomes. A risk represents a situation in which both the outcomes to the situation and the possibility of these occurrences are known to the investigator and they can be measured to ensure effective decision making (Kundzewicz et al., 2018). Whereas for the uncertainty, both the outcomes of the situation and their possibility of occurrence are not known and cannot be obtained by the investigator.

2.3 Origins and Nature of RisksThe nature of risk is interpreted according to the expected harm from the risks (Adeleke et al., 2018). Pascal well illustrates the nature of risk, he offers a positive expected value, laid the foundation of modern risk management, refer to traffic construction companies in China compared with the research on risk, the risk in the following aspects: the nature of market, legal aspects, material and financial aspects. Hopkin (2017) put these four aspects into four major categories to represent the whole nature of risks. These categories include; compliance risks, control risks, opportunity risks and hazard risks.

2.4 Business and Societal Setting

The China Communication and Construction Company is a multinational publicly traded company with its headquarters situated in Beijing, China. The company has the majority owner as the State to which the company anchors. The company is set in the Engineering and Construction industry offering major design and construction services all over the world. Standing at an approximate revenue of 70 billion dollars (China Communications Construction Company n.d.), the company possesses the capacity to offer construction activities such as Highways and Bridges design and construction, Port Construction, Airports design and construction, Railway construction, Oil mining platforms design and construction among many other developmental and high end infrastructural design and construction (Huang et al., 2020).

The multinational basis of the China Communication and Construction Company makes the company interact and impact a number of societies with different diversified composition of people. The basic society associated with the company is Chinese with a majority of the population consisting of the Chinese ethnicity however this changes when the company is contracted to work in other nations. With different nations the company interacts with different population of people with different languages and different practices. China Communication and Construction Company is exposed to as many cultural backgrounds and societal belief as the number of nation the world due to its worldwide operation nature.

2.5 Identification of Risks in the Context of Economic and Legal ImplicationsAccording to Polinkevych et al. (2021), four major aspects within which the nature of risk could be analyzed are brought out. This happens to be the major aspects within which the risk concept can be linked with the economic and the legal perspective. The China Communications and Construction Company also fall within these analytical suggestions of risk impact to the company and the link of the risk aspects to the economic and the legal parameters.2.5.1 Compliance RiskAt present, CCCC has carried out substantial business in 135 countries and regions (CCCCLTD, 2021). Different political, economic and cultural environments in different countries make CCCC face various compliance risks.

A Chinese enterprise once completed 90% of an overseas construction project with both quality and quantity guaranteed, but was identified by the World Bank as having violated the rules and terminated the project process, resulting in a loss of hundreds of millions of yuan, and was unable to participate in any Projects funded by the World Bank for eight years (Gong Lefan,2021). As a result, those who violate the rules may face not only huge fines but also be blacklisted and restricted from overseas operations. According to the World Bank’s statistics on sanctions cases from 2007 to 2017, fraud was the most common at 81%, followed by corruption at 20%, conspiracy at 10%, obstruction of investigation at 5%, and coercion at 1% (Nan Jinlin&Yuan Wenqi,2020). Due to the lack of understanding of the local political and economic system, the operation results in violations, and may be identified as fraud.

2.5.2 Hazard RisksAs a large infrastructure company, CCCC faces risks of earthquake, flood and other hazards.

On July 20, 2021, Zhengzhou, China, suffered a rare heavy rain. The construction enterprise Jianye Group suffered heavy losses in a large number of projects under construction, resulting in direct economic losses of 550 million yuan (Xu Qian, 2021). This risk category is related to the loss of physical property (Aziz, 2020). It is said that the risk of flooding in China will increase within a decade, The final increase range was determined to be from 4.04% to 12.34%, indicating that the higher chance of flooding in China means that the company will slightly predict the occurrence of floods often not only because of the percentage increase in the probability of occurrence but also because of the expected increase in flood cases over several decades (Schulte & Hallstedt, 2018). The expected impact is high because the hazard risk affects structural damage to working equipment and projects, resulting in financial losses.

2.5.3 Control RiskConstruction of infrastructure projects requires a lot of manpower and mechanical equipment. Negligence or improper operation will bring serious consequences. The control risk of CCCC is safety accidents.

In 2017, tower cranes collapsed at the construction site of guangzhou Headquarters Base B Project, causing 7 deaths, 2 serious injuries and a direct economic loss of 8.47 million yuan. The company was ordered to suspend operations for 90 days and not undertake new projects during the period. (Li Ying,2020). Control risk is generally related to management, which brings serious economic losses and negative image to enterprises. This risk requires organizations and companies, like internal governments, to adjust to changes in the external environment.

2.5.4 Opportunity RiskOpportunity risk is the failure rate attached to an organization in case it takes upon a new venture. This may be in terms of branching to other areas or diversification of the business to introduce a new product of or service (Sum & Abdul, 2020). The size of the China Communication and Construction Company served as the cushion or mitigation measure for the occurrences attached to this risk. The size of the organization offers more resources to conduct research and investigation for relevant market data so that any decision or step there henceforth is statistical to avoid guesses and avoidable risk ventures (Panjehfouladgaran & Lim, 2020). The probability of the opportunity risk occurring is low however the impact of the same is high which may cost the company an entire branch or financial losses on initial investment costs on new product or services.

3. Risk Management PlanIn the preceding sections, China Communication and Construction Company has been investigated on the risks that are in direct and indirect effect to the company and the impacts these risks may carry. The section has shown that a risk is associated with a number of outcomes whose individual magnitude can be measured. The risks have been investigated with their relation to the economy surrounding China Communication and Construction Company both inland (within Chinese borders), and overseas in other branches of the company located in different countries and different economies subsequently. The section has also shown that in the case of an uncertainty situation the investigator can never have a specific strategy in dealing with the situation rather anything can be expected that no one is ready and prepared to tackle. The risks occurrences are also investigated in their compliance to the legal setting of the company’s locations. Having identified the major risks that are linked to the China Communication and Construction Company, this section presents the available mitigation strategies that are available useful in curbing the risks to protect the company from suffering the impact of occurrences from the risks noted.

3.1 Control MeasuresFrom the risks discussed above, it can be noted from the context that some of the occurrences have the power of impacting the company to cause a major loss of survival-threatening damage. To ensure thriving of the business, there has to be measures to be taken in ensuring the position of the company is protected from the environmental, legal, social and Economical perspective.

The principle framework of a risk control initiative include: identification of the possibility of risk in the organization; identification of the most likely employees or groups of employees to be impacted; educating employees on the probability of risks; train employees on what to do in the event of emergencies, reporting the incidence, and making decisions; perform periodic evaluations of the workplace including the knowledge of employees on risk and risk control expectations and measures; and to reprimand employees and procedures that are not aligned to the risk control measures.

Specifically, China Communication and Construction Company is required to ensure effective risk control measures. These include: performing good and best-practice housekeeping actions and responses in the workplace including work evaluation in every major area for risk issues; establishing a stable structure to handle legal risk issues; auditing; redesigning tasks that have high probability and risk; and implement policies for people to follow in order to reduce risk.

For example, the legal department of the company ensures that the operations within and around the company are in the total compliance with the respective laws. This is by ensuring that the products and services offered by the company are in accordance with the standardization regulation for customer protection and the environmental protection. For protection of the companies and the general public, the company, which is publicly traded, is expected to act under compliance of the company Law, The Law of Enterprise Income Tax, Basic Rules for the Enterprise Internal Control, Anti-Unfair Competition Law, Labor Contract Law and the Interim Regulations on Prohibition of Commercial Bribery. These laws are incorporated to serve the regulation purpose and enhance general compliance. For the China Communication and Construction Company, the possibility of the occurrence is generally low from the strict observation from the management and the legal department set to ensure compliance (CCCCLTD,2021). The company is also publicly traded and most of the ownership left to the state which ensures the compliance of the whole organization is at per for the interests of the government and the public at large.

The pricing of the products and services should all go hand in hand with the pricing act of the law (Gokmenoglu et al., 2019). And the general sustainability of the acquisition process and should be systematic in a way it ensures sustainability in the entire process. The Human Resource department should ensure compliance with the labor law as stated in the company law of the country. For every contract assigned, the labor acquisition should be checked in way that it respects and adheres to the labor law of the country. The company interaction in the market should be controlled to ensure protection of the company from Anti-Fair competition in tender winning and other multi-company involvement activities. The legal team should also study and understand the relevant laws of other countries in which the company works with or is starting to work with to avoid inconveniences when the company’s operations unintentionally assumes some regulations.

Project managers within the company should ensure that the safety measures are put in place I every project to avoid injuries and subsequent disasters from mistakes in safety measures ignorance. Proper fire-fighting equipment should be installed within the buildings of the company and other related buildings including the project sites. The company employees should also undergo necessary fire drills and other training first aid and other short medical care procedure in case of disaster. Projects in foreign countries should be thoroughly planned to accommodate any disaster expectation in the foreign land for example the case of tornadoes in The American Countries. This fore investigation ensures earlier preparations for the expected disasters which would help avoid injuries and at most save lives.

The marketing department and the data handling department together with the management should be in constant check of the statistics within the company operations and compare the current statistics with the previous ones to know and understand the position of the company against that of the prevailing economic climate. These should also use the data obtained for future planning to cope with the constantly changing market. This strategy ensures that the steps of the company are informed for thriving and progress and most of all adaptation to the prevailing market flow to maintain the current market share and even expand under right conditions. The management team and the data handling department should take proper steps in the investigation and projection of any major step in the company’s operations such as expansion or diversification to prevent unnecessary blunders

3.2 Corrective MeasuresThe management should always ensure harmonious working of the different departments to ensure effective information passage in the moments of updates and sensitive changes (Vekasi, 2019). The legal department should ensure they are always updated on the latest updates on the relevant laws and pass the information effectively to the relevant departments and personnel. This includes foreign laws, in countries that are in constant operations with the company and those starting their operation with company. Innovation within the design team should always be high to ensure the company maintains its market share for quality in the services offered (Han et al., 2018). Structural changes should also be undertaken within the working environment to accommodate relevant drills and ensure the health acts is strictly followed. Structural changes are also necessary when trying to curb any disaster such as fire outbreaks in working environment. Previous mistakes within the company should be noted and studied to help avoid the same mistake in future or any related mistake henceforth. The management should also consider foreign assessment or auditing from known companies to ensure the company is in the same position and direction as the internal auditing states.

3.3 Record Keeping and Review FrequenciesFor efficiency, the company must ensure proper record keeping which means the system and mode of keeping records should be such that the retrieval and access of the stored information is not interrupted and should not lose information (Chang et al., 2018). For China Communication and Construction Company, all incidents on law infringement within the company operation should be recorded in proper details and the number of occurrences to be used in decision making and for addressing the entire company personnel together with the public during the annual meetings.

One of the most effective ways to respond to risk is through proper record keeping. Record keeping enables Risk managers to act based on available knowledge and information. Record keeping entails the information collected from: business expenses, tax documents, accounts payables and receivables, employee information, sales records, vendors, and customer lists. This information is necessary in informing the direction of management in regard to policy formulation and decision making.

Records are an essential element to the management of risk. For China Communication and Construction Company, records are used as proof of compliance and aids in the avoidance of legal issues including fees and penalties. The company also uses proper records to make decisions. Risks in the organization are related to management decision making. For example, failure to properly record employee information on an important management matter such as diversity could lead to poor decision making at an organization level. To ensure that proper and useful information is recorded, China Communication and Construction Company also conducts frequent reviews on a monthly, quarterly, and annually basis to ensure that the position of the company on various elements are kept at par with organizational and management goals. Such methods also aid in the management of risk.

4. ConclusionThe China Communication and Construction Company being a very large organisation, should invest effectively on the risk study and mitigation. The organization with its size and value may be highly prone to assume proper running and production efficiency since it is difficult to identify any problem embedded in the large sections and department. Therefore to curb disaster the company should ensure proper check and study of various sectors in the internal and external environment both macro and micro to uncover risks and mitigate them for survival and thriving.

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