Consulting skills Report 5 Resort Development Risk Management Plan

Sandip Kumar
S02009002
Consulting skills Report 5

Resort Development Risk Management Plan
The report is prepared for an Italian investor who wants to invest in Vava’u at an outstandingly beautiful waterfront location.
Type of risks analysis with their mitigations are discussed below.
1. “Site risk (high risk):”
Risk: site is located near sea and most lands are customary land.
Risk management plan: employ nearby locals in the resort, contribute a certain portion of income to churches and schools, allow nearby residents to sell handicraft in the resort.
2. “Design and Construction (medium risk) :”
Risk: unavailability of electricity at construction site, harmful chemicals are used for construction which could end up in the ocean.
Risk management plan: before construction starts, invest in solar based electricity.
Building approval based on green buildings
3. “Partner and Financial risk (high risk) :”
Risk: change in tax law, high interest rates
Risk Management plan: consult the IPA in Tonga in terms of FDI. Get a 10 years
National Development plan. Get loans with fixed interest rates over a period of 10 years.
4. “Operating Risk (medium risk):”
Risk: lack of human capital, poor infrastructure e.g. electricity, lack of human resource.
Risk Management plan: using solar based energy for electricity will reduce reliance.
Employ expert staff to train local based staff. Hire IT based staff from Fiji if not available in Tonga.
5. “Market or Demand Risk (medium risk):”
Risk: Allocation of marketing budget
Risk Management plan: have a marketing department to market the resort mainly in
Australia and New Zealand. While getting tourist will benefit the resort, it will also benefit the country. Get assistance from tourism ministry to market the resort in major world markets.
6. “Network and interface risk (low risk): “
Risk: roadblocks by landowners, unavailability of electricity for construction.
Risk management plan: obtain approval from landowners before construction. Actively taking care and responsibility in the community by providing financial assistance to churches and school. As mentioned before, invest in solar panel for electricity generation.

7. “Industrial Relations risk (medium risk):”
Risk: industrial conflict from construction employees and pressure from trade unions might delay construction and increase construction cost.
Risk management: have a proper legal contract for construction. A clause that contractor has to pay a certain amount if construction isn’t complete by a certain date.
8. “Legislative and Government Policy risk (low risk):”
Risk: change in government policy
Risk management: consult IPA and Revenue and Customs department before investing.
9. “Force Majeure risk (low risk):”
Risk: Circumstances that are beyond human control such as natural disasters.
Risk management: insure the property with a recognized insurance company
10. “Asset Ownership risk (medium risk):”
Risk: over a period of time and changing technology, the structure and facilities will be outdated
Risk Management: have plans for renovation and upgrade at least every 5 years.