Question

Pepsi Refresh Project Risk Management Scenario

Scenario Background

Company:

Pepsi

Pepsi’s Product Portfolio

Fun for you

Better for you

Good for you

Pepsi’s Target Markets

Millennial

Generation X

Baby Boomer

Internal Environment

Board of Directors

Risk management director at board level

Multiple levels of corporate management

Chief risk officer at corporate management level

Multiple divisions

Multiple management levels within divisions

Executive risk manager at divisional level

Wholly owned subsidiaries

Multiple divisions within subsidiaries

Multiple management levels within divisions

External Environment

Bottling companies

Distributors

Point of sale locations

Community relations

Strategic alliances

Competitors

Risk Environment

Appetite

High degree of risk acceptance for marketing programs

High degree of risk acceptance related to return on investment timeline

Moderate degree of risk acceptance for distinction between lines on product portfolio

Low degree of risk acceptance regarding company reputation

Tolerance

High tolerance for risks related to relations with bottlers and distributors

Moderate tolerance for community relations

Low tolerance for risks related to brand image

Threshold

Defined by risk policies and procedures at the corporate and division levels

Scenario

The Pepsi Refresh Project: A Thirst for Change- This project allowed people to submit ideas for grants to “refresh” their communities. Grants were awarded to ideas that generated the most votes.

Pepsi has concluded that continuing the Pepsi Refresh Program will, in fact, be profitable in the medium-term and is worth the investment outlined in the board’s subcommittee report. The board has directed the company executives to execute a pilot that will roll out the redesigned program for a period of 1 year. After 1 year, the board will analyze the results and make a determination on continuing, tweaking, or halting altogether the program.

The initial plan was to reduce focus on social media and focus more on traditional and sports marketing vehicles; however, the board received an industry report that shows companies are realizing increased revenue through increases in earned media value, and companies increase earned media value by combining traditional marketing vehicles with social media. Pepsi will increase focus on this one area during this 1-year pilot. The chief executive officer (CEO) assigned a program manager to implement the redesigned Pepsi Refresh Program and a project manager to focus on the combination of traditional marketing vehicles and social media.

The project manager assembled a project team with a project risk management professional (RMP) to manage project risks. The RMP will develop a project risk management plan that will integrate with theprogram risk management plan of the pilot program. The risk management plan will define procedures to identify risks throughout the phases of the project. The plan will lay out the major categories of risks associated with the project, how each category will affect the project's stakeholders, and how stakeholders will be engaged in the risk management process.

The risk management framework, detailed in the strategic plan, will serve as the foundation for the risk management plan employing corporate and division policies and procedures to manage risks to the project schedule, budget, and scope. The RMP will detail the risks to organizational assets and outline the environmental factors that the program and project managers should consider as they plan, execute, and monitor the project. Risk impacts and probability scales must show alignment with the organization’s risk appetite and tolerance and must set thresholds used to manage monitoring and response strategies. These strategies must allow for responses leveraging both external factors and relationships and internal corporate and divisional resources.

Based on this scenario, we need to identify potential project risks and document them in a risk register. Think about possible sources or categories of project risks related to continuing the Pepsi Refresh Program as a way to organize the risk list.

QUESTION:

Describe the types of risks that should be defined, such as operational, technical, regulatory, etc.

Answer 1

The term business risks alludes to the likelihood of deficient benefits or even misfortunes because of vulnerabilities e.g., changes in tastes, inclinations of buyers, strikes, expanded rivalry, change in government strategy, outdated nature and so on. Each business association contains different hazard components while doing the business. Business dangers infers vulnerability in benefits or threat of misfortune and the occasions that could represent a hazard because of some unanticipated occasions in future, which makes business come up short.

For instance, a proprietor of a business may confront distinctive dangers like underway, chances because of unpredictable supply of crude materials, apparatus breakdown, work agitation, and so on. In showcasing, dangers may emerge because of various market value vacillations, changing patterns and forms, mistake in deals determining, and so on. Likewise, there might be loss of benefits of the firm because of flame, surge, seismic tremors, mobs or war and political distress which may cause undesirable interferences in the business tasks. In this manner business dangers may occur in various structures relying on the nature and size of the business.

Business dangers can emerge because of the impact by two noteworthy dangers: interior (dangers emerging from the occasions occurring inside the association) and outer (dangers emerging from the occasions occurring outside the association). Inward dangers emerge from factors (endogenous factors, which can be controlled, for example, human variables (ability administration, strikes), innovative components (developing advancements), physical elements (disappointment of machines, fire or burglary), operational elements (access to credit, cost cutting, commercial). Outer dangers emerge from factors (exogenous factors, which can't be controlled, for example, monetary elements (advertise dangers, estimating weight), characteristic components (surges, quakes), political variables (consistence and directions of government).

The Business hazard is arranged into various 5 fundamental writes

1. Strategic Risk: They are the dangers related with the tasks of that specific industry. These sort of dangers emerge from

a. Business Environment: Buyers and merchants associating to purchase and offer products and ventures, changes in free market activity, aggressive structures and presentation of new innovations.

b. Transaction: Assets movement of mergers and acquisitions, turn offs, organizations together and joint endeavors.

c. Investor Relations: Strategy for speaking with people who have put resources into the business.

2. Financial Risk: These are the dangers related with the monetary structure and exchanges of the specific business.

3. Operational Risk: These are the dangers related with the operational and regulatory methodology of the specific business.

4. Compliance Risk (Legal Risk): These are dangers related with the need to agree to the principles and directions of the legislature.

5. Other dangers: There would be distinctive dangers like common disaster(floods) and others rely on the nature and size of the business.