Post by Admin on Jan 18, 2021 18:03:17 GMT
Lesson 3: Risk Scenarios
Post on Board: Review the two scenarios below. Consider and respond to each of the questions that follow on the Discussion Board. Remember to think about all aspects of risk as you consider the questions. Explore the various risks involved in each scenario to ensure you’ve covered all risk potential. We will have a group discussion in class - no formal presentations required.
Risk Management Scenarios:
Scenario #1: Go/No Go Analysis
Easterseals TX is contemplating going after a new contract for vocational training of individuals leaving jail or prison. Building on our current Career Design School, the RFP requires that the company develop an innovative Culinary and Facilities Management Program and place people in jobs with at least 6-month retention. The contract will be awarded in January and would need to be launched in March.
This is a performance-based contract where a significant portion of the revenue (70%) comes from meeting performance milestones. The milestones include the following:
• 300 people trained annually
• 50% of those trained are placed in jobs
• 60% are still employed in the same job 6 months later
The past provider was challenged in recruiting program participants and did not meet job placement or job retention milestones.
As the Company Executive, you are about to enter into a Go/ No Go discussion with your team. You will be leading the discussion, and you need to be fully prepared for the discussion. The questions below need to be considered. Based on the information provided how would you respond to these questions? What other questions should you consider to ensure you’ve addressed all areas of risk?
Questions:
• What are the major (obvious and not so obvious) risks of this contract?
• What should be done early to ensure that the contract does not fail?
• What are some of the tripwires that the program director needs to be able to monitor should the company move forward? How will that measurement occur?
• How can you negotiate this contract to mitigate as much risk as possible?
Scenario #2: Fraud, Control and Compliance
You have been assigned to manage a new Fedcap Group contract with a City agency that begins in December. Your counterpart at the City insists that you initially meet at a very expensive restaurant for dinner and drinks. A few weeks later, you receive a small, personalized holiday gift that is sent to your home.
As the contract begins, you get the sense that the City Agency is not very well organized. Our billing vendor keeps sending invoices that are rejected because they do not have the proper billing codes. Our accounts receivable starts to grow. As the months go by, you have difficulty arranging a meeting to resolve issues. You soon learn that the City Agency contracts with another Not For Profit to provide similar services. A few months later you hear that your counterpart from the City has left his job with no explanation given. As time goes on, our billings decrease dramatically and our contract after one year is not renewed, we eventually have to write down a substantial amount of unpaid receivables.
Questions:
• Was a fraud committed? Are there any compliance issues?
• What were the risks involved with this contract?
• How could you have mitigated them?
• What specific controls should we have implemented?
• Are there any lessons learned?
Post on Board: Review the two scenarios below. Consider and respond to each of the questions that follow on the Discussion Board. Remember to think about all aspects of risk as you consider the questions. Explore the various risks involved in each scenario to ensure you’ve covered all risk potential. We will have a group discussion in class - no formal presentations required.
Risk Management Scenarios:
Scenario #1: Go/No Go Analysis
Easterseals TX is contemplating going after a new contract for vocational training of individuals leaving jail or prison. Building on our current Career Design School, the RFP requires that the company develop an innovative Culinary and Facilities Management Program and place people in jobs with at least 6-month retention. The contract will be awarded in January and would need to be launched in March.
This is a performance-based contract where a significant portion of the revenue (70%) comes from meeting performance milestones. The milestones include the following:
• 300 people trained annually
• 50% of those trained are placed in jobs
• 60% are still employed in the same job 6 months later
The past provider was challenged in recruiting program participants and did not meet job placement or job retention milestones.
As the Company Executive, you are about to enter into a Go/ No Go discussion with your team. You will be leading the discussion, and you need to be fully prepared for the discussion. The questions below need to be considered. Based on the information provided how would you respond to these questions? What other questions should you consider to ensure you’ve addressed all areas of risk?
Questions:
• What are the major (obvious and not so obvious) risks of this contract?
• What should be done early to ensure that the contract does not fail?
• What are some of the tripwires that the program director needs to be able to monitor should the company move forward? How will that measurement occur?
• How can you negotiate this contract to mitigate as much risk as possible?
Scenario #2: Fraud, Control and Compliance
You have been assigned to manage a new Fedcap Group contract with a City agency that begins in December. Your counterpart at the City insists that you initially meet at a very expensive restaurant for dinner and drinks. A few weeks later, you receive a small, personalized holiday gift that is sent to your home.
As the contract begins, you get the sense that the City Agency is not very well organized. Our billing vendor keeps sending invoices that are rejected because they do not have the proper billing codes. Our accounts receivable starts to grow. As the months go by, you have difficulty arranging a meeting to resolve issues. You soon learn that the City Agency contracts with another Not For Profit to provide similar services. A few months later you hear that your counterpart from the City has left his job with no explanation given. As time goes on, our billings decrease dramatically and our contract after one year is not renewed, we eventually have to write down a substantial amount of unpaid receivables.
Questions:
• Was a fraud committed? Are there any compliance issues?
• What were the risks involved with this contract?
• How could you have mitigated them?
• What specific controls should we have implemented?
• Are there any lessons learned?