MBA402

Governance, Ethics and Sustainability

Risk and Sustainability Consultancy Report

 Contents
Introduction..........................................................................................................................................2
1. Applying the ASX principles...........................................................................................................2
2. Risk management and mitigation....................................................................................................3
3. Sustainability Concerns...................................................................................................................5
Conclusion...........................................................................................................................................7
References............................................................................................................................................8
Introduction
In the given report, Roger and Jay have been asking to advise me on how to proceed with the

challenges and want more ideas and opinion about appropriate risk management, governance and

sustainability approaches. The report is bifurcated into three distinct categories. In the first part, the

discussion has been made about application of the ASX principle; in the second part appropriate risk

management and mitigation strategies has been discussed. Lastly, it has been followed by a social

sustainability analysis of the company.

1. Applying the ASX principles

The ASX principle that has been considered is a principle one that is laying solid foundation for

management and oversight. Having a solid foundation for management and oversight is extremely

important for the success and good governance of this company because it is the management that has

the power to take all the relevant and strategic decisions of the company; whatever happens in a

company regarding its operations, succession planning or further diversification of the product and

service portfolio comes under the direct purview of the management (Tarantino 2008) Furthermore,

management is also responsible for making sure that all the operations in the company adhere to strict

guidelines of ASX as well as other relevant company laws and sustainability measures. Hence, having

a robust management and oversight team becomes very important not just for proper planning and

implementation but also making sure that the company strictly adheres to all the relevant protocols

and guidelines (Tarantino 2008).

Steps FFF can take to embrace the proposed ASX principle.

1. In order to have a robust management and oversight team, it is important that the company has

independent set of company board, it comprises of all the key members as well as independent

chairperson, that will ensure integrity of the company and will ensure that decisions are taken in the

best interest of the stakeholders in general (ASX 2024).

2. Furthermore, it is also important that there should be key performance metrics on which all the

board members and all the C-level executives of the company should be analyzed. It is important to

have periodic scrutiny of the top-level executives in the company to ensure that they are being

transparent and ethical in their conduct (Lama et al. 2015).

3. Furthermore, it is also important to have periodic training and development programs for the

management on various concerning and important topics relevant for the company; one such topic

could be diversity management in the top level executive or adopting cultural sensitivity practices

(ASX 2024; Jiu 2012).

2. Risk management and mitigation

Risk Matrix Model

Risk Likelihood Impact Risk Level

Market Risk High High Critical

Operational Risk Medium High High

Reputational Risk Medium Medium Medium

Regulatory Risk Low High Medium

Table 1: Risk Matrix

Risk Description Management Strategies Classification

- Diversification of client

mining industry has volatile economic base Reduction and

Market Risk
cycles Market Analysis for Sharing

new countries to enter to

Reduction and

Retention
Health and Safety
Risk Description Management Strategies Classification

Operational Managing safety and well-being of the Systems:

Risk workers, logistics supply issues Employee Programs:

- Ethical Recruitment
maintaining good relationship with
Reputational Practices Avoidance and
clients and maintaining ethical
Risk Effective Reduction
recruitment policies
Communication

proper compliance with safety risk

Regulatory standards financial reporting - Compliance Programs Avoidance and

Risk requirements pertaining to mining Legal Advisory Services Retention

segment

Table 2: Risk Analysis

Two risks that can be managed

1. Market-related risks

Market risk is one of the biggest risks that the company can fix. It is important to note that the mining

sector can be highly volatile which means that there could be seasonality of demand. There can be

increase in demand in one season and the company can also face low recruitment drive due to slowing

down on the industry (Yihdego et al. 2018). Hence, it is very important that the company should not

be reliant on just one sector it should try to expand its portfolio base by gathering two other similar

kinds of industries such as oil, cement or petrochemical. The company already has good amount of

knowledge and reputation in the “fly in and fly out” kind of work, there are also similar industries

where people are required to work extensively for four to six weeks, hence the company can leverage

its knowledge base and expertise in hiring such employees to other similar industries as well

(Yihdego et al. 2018).

The company can also do proper market analysis to better anticipate the trend in mining as well as

other industries and accordingly expand its services, as of now it can be noted that the company is

currently operating in Australia only (it is assumed so; considering the fact that it wants to be listed on

ASX); however the company can further start catering such services to other countries as well such as

India or South America where similar kind of industries are present.

Operational Risks

Furthermore, for the company it is extremely important to manage the operational risk which can be

attributed to the fact that the workers would be working in extremely isolated conditions for a period

of four to six weeks. Furthermore, mining itself is a very risky area to work in because of the health

hazard also high risk of fall and other kind of dealings with big equipment’s, thus safety becomes one

of the critical areas which needs to be prioritized (Bauerle et al. 2022).

In order to manage the operational risk of the safety and health hazard of the workers it is important to

make sure that there is adequate safety and well-being programs for the employees, there should be

nurses and doctors available on site all the time furthermore, all the workers should also be adequately

trained about the safety precautions that needs to be done; additionally, there should also be provision

of safety audits on a timely basis (Bauerle et al. 2022).

3. Sustainability Concerns
Work-Life Balance

For the organization, one of the most challenging tasks should be to manage the work life balance of

the workers it is because in the mining sector people often have to live away from their personal life

they have to leave their city life and live in extremely isolated and remote areas. This can have a

significant impact on the well-being of an individual because they might not be getting all the

recreational amenities which a person can get in a city, furthermore, staying for extended period,

without friends and families can also make people feel extremely lonely and isolated (Mancini & Sala

2018).
Hence, in order to promote proper work life balance of the workers the company should consider

several provisions such as giving extended holiday, special holidays in case of any emergencies and

there should also be development of recreational parks and other Co-curricular activities for the

workers when they are not on shift (Mancini & Sala 2018).

Diversity and Inclusion

Furthermore, it is also important for the company to think about diversity and inclusion from the case

study it can be inferred that the company operates in Australia and most of the mining areas in

Australia are located on Aboriginal and Indigenous people land. Hence, it is very important for them

to involve all the stakeholders of the community in the decision-making process (Russel 2013). There

should be several important designations and posts that should be held by people of Indigenous origin

also because mining is going to have significant environmental cost as well and can negatively impact

the area and it was located. Hence, it is important to include the Indigenous and local people in

developing adequate programs to advance towards sustainable development as well (Russel 2013).

The diversity and inclusion attribute of the company can be increased by giving autonomy to the local

bodies and taking their decision and point of view as well while making any proper strategic

development plans, furthermore, the employment of the company should be such that it does not do

any kind of discriminatory policies and everybody is given a chance irrespective of their color or race;

the company should adopt stringent policies against any kind of discrimination; furthermore the

principle of cultural sensitivity should also be used at the workplace (Trigger et al. 2014).
Conclusion
Thus, in a nutshell, it can be seen that having a robust management and oversight team becomes very

important not just for proper planning and implementation but also making sure that the company

strictly adheres to all the relevant protocols and guidelines. Market risk is one of the biggest risks that

the company can fix. It is important to note that the mining sector can be highly volatile which means

that there could be seasonality of demand. Furthermore, for the company it is extremely important to

manage the operational risk which can be attributed to the fact that the workers would be working in

extremely isolated conditions for a period of four to six weeks. Also, in order to promote proper work

life balance of the workers the company should consider several provisions such as giving extended

holiday, special holidays in case of any emergencies and there should also be development of

recreational parks and other Co-curricular activities for the workers when they are not on shift. Also,

it is important to include the Indigenous and local people in developing adequate programs to advance

towards sustainable development as well

References
ASX. 2024. ASX corporate governance principles. https://www.aicd.com.au/good-governance/asx-

corporate/principles.html

Bauerle, T.J., Sammarco, J.J., Dugdale, Z.J. and Dawson, D., 2022. The human factors of mineworker

fatigue: An overview on prevalence, mitigation, and what's next. American journal of industrial

medicine, 65(11), pp.832-839. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9018855/

Lama, T. and Anderson, W.W., 2015. Company characteristics and compliance with ASX corporate

governance principles. Pacific Accounting Review, 27(3), pp.373-392.

http://ir.canterbury.ac.nz/bitstream/handle/10092/11010/12655553_Finalised_Paper_for_UC_Reposit

ory.docx?sequence=1

Liu, J., 2012. Board monitoring, management contracting and earnings management: an evidence

from ASX listed companies. International Journal of Economics and Finance, 4(12), pp.121-136.

https://www.researchgate.net/profile/Jinghui-Liu-4/publication/314575413_Board_Monitoring_Mana

gement_Contracting_and_Earnings_Management_An_Evidence_from_ASX_Listed_Companies/

links/5e4de824299bf1cdb938cd27/Board-Monitoring-Management-Contracting-and-Earnings-

Management-An-Evidence-from-ASX-Listed-Companies.pdf

Mancini, L. and Sala, S., 2018. Social impact assessment in the mining sector: Review and

comparison of indicators frameworks. Resources Policy, 57, pp.98-111.

https://www.sciencedirect.com/science/article/pii/S0301420717301484

Russell, J., 2013. Aboriginal inclusion in Yukon's mining industry: training for employment.

University of Manitoba (Canada).

https://mspace.lib.umanitoba.ca/bitstream/handle/1993/18345/Russell_Jennifer.pdf

Tarantino, A., 2008. Australian Corporate Governance: The Asx Principles. Governance, Risk, and

Compliance Handbook: Technology, Finance, Environmental, and International Guidance and Best

Practices, pp.685-709.
http://ndl.ethernet.edu.et/bitstream/123456789/6385/1/77%20.%20Dr_Anthony_Tarantino.pdf#page=

741

Trigger, D., Keenan, J., de Rijke, K. and Rifkin, W., 2014. Aboriginal engagement and agreement-

making with a rapidly developing resource industry: coal seam gas development in Australia. The

Extractive Industries and Society, 1(2), pp.176-188.

https://www.sciencedirect.com/science/article/pii/S2214790X14000598

Yihdego, Y., Salem, H.S., Ayongaba, B. and Veljkovic, Z., 2018. Mining sector challenges in

developing countries, Tigray, Ethiopia and inspirational success stories from Australia. International

Journal of Mining and Mineral Engineering, 9(4), pp.321-367.

https://www.researchgate.net/profile/Hilmi-Salem/publication/328730745_Mining_Sector_Challenge

s_in_Developing_Countries_Tigray_Ethiopia_and_Inspirational_Success_Stories_from

_Australia/links/5c3ed40b299bf12be3cb4351/Mining-Sector-Challenges-in-Developing-Countries-

Tigray-Ethiopia-and-Inspirational-Success-Stories-from-Australia.pdf?_sg

%5B0%5D=started_experiment_milestone&origin=journalDetail