MER732 - Enterprise Risk Management

Question

Total Data Centre Sdn Bhd (TDC) is an IT outsourcing Service Provider (SP) which provide Data Recovery Centre (DRC) services and operate in a purpose build data centre building at Bukit Jelutong, Selangor. The services include total IT outsourcing for supporting the Information Technology (IT) operation of processing, storage, networking and data management. Consider yourself as the Risk Manager of TDC and provide your opinions on how to manage its risk exposures.

a. Draw a basic Risk Matrix (Probability vs. Impact) and plot the following FIVE (5) risks.

▪  Loss of physical assets

▪  Loss of human capital

▪  Technology/ equipment failure

▪  Operational loss

▪  Loss of supply

▪  Public Liability

Answer 1

As the Risk Manager of Total Data Centre Sdn Bhd (TDC), you can create a basic Risk Matrix to assess and visualize the risks the company faces. A Risk Matrix typically involves assessing the likelihood (probability) and impact of each risk. Here's a simplified example of how you could plot the five risks you mentioned:

For this example, let's use a scale of 1 to 5 for both probability and impact, where:

1. Probability:
2. 1: Very Low
3. 2: Low
4. 3: Moderate
5. 4: High
6. 5: Very High
7. Impact:
8. 1: Insignificant
9. 2: Minor
10. 3: Moderate
11. 4: Major
12. 5: Catastrophic

Now, let's assess and plot the risks:

1. Loss of Physical Assets:
2. Probability: 4 (High) - Due to the presence of valuable IT equipment and data center infrastructure.
3. Impact: 4 (Major) - Significant financial loss and potential service disruption.
4. Loss of Human Capital:
5. Probability: 3 (Moderate) - The risk of key personnel leaving or being unavailable.
6. Impact: 3 (Moderate) - Disruption to operations and knowledge loss.
7. Technology/Equipment Failure:
8. Probability: 4 (High) - IT equipment and systems can experience failures.
9. Impact: 4 (Major) - Potential service disruption, data loss, and financial impact.
10. Operational Loss:
11. Probability: 3 (Moderate) - Risk of operational errors or process failures.
12. Impact: 3 (Moderate) - Financial loss due to operational disruptions.
13. Loss of Supply:
14. Probability: 2 (Low) - Risk related to the supply chain for IT equipment.
15. Impact: 4 (Major) - Potential delays and financial impact if critical supplies are disrupted.
16. Public Liability:
17. Probability: 3 (Moderate) - Risk of legal claims or liabilities from third parties.
18. Impact: 4 (Major) - Potential significant financial and reputational damage.

Now, you can plot these risks on a matrix with the probability on the x-axis and the impact on the y-axis. You can use different colors or labels to categorize the risks based on their position in the matrix, such as low, moderate, or high risk. This visual representation will help prioritize risk management efforts, focusing more on the risks with higher probability and impact. Additionally, you should develop risk mitigation and contingency plans for each identified risk to minimize their potential impact on TDC's operations and reputation.