This report identifies some risks that existing in crown resorts limited. In addition, the analysis of these risks is based on Australian Standard AS/NZS/ISO31000:2009 and HB436:2004 will be as the standard templates of the risk register. Furthermore, in this report, I will study the crown resorts limited case and find out some risks and issues. After that, I will discuss the level and prioritization of risks and construct the risk register, treatment schedule, action plan and offer a number of recommendations to risk management in crown resorts limited.
This report aims to provide a detailed risk analysis of Crown Resorts Limited using various analysis techniques. This analysis is expected to be useful for readers or board of directors in making the better decision of operation, particularly related to Crown Resorts.
CWN is an Australian company which has businesses in the integrated resort and entertainment, namely casinos, in Australia, Macau, and the United Kingdom. This company operates two integrated resorts, Crown Entertainment complex in Melbourne and crown Perth, which provide casino, hotels, restaurants, shopping, and entertainment facilities. The company also holds a 27.4% interest in Melco Crown and other three investments, which are Aspers Group in UK with a 50% interest, Betfair Australasia with a 50% interest, Cannery in Las Vegas with a 24.5% interest. The main revenue driver of the company is gaming revenues of the casinos. This company was founded and listed on Australian Stock Exchange in 2007.
1. Risk analysis
1.1 risk identification
The risks identified can be categorized into five types as shown in the below:
Further changes to the exchange rate of AUD/CNY
Further competition risk from other gambling companies
Crown Sydney costs increasing dramatically
Further regulatory changes to the gambling industry
Natural disaster risk
Changes for a natural disaster to severely impact revenue
Examples for each of the aforementioned risks:
The most severe change to the exchange rate of AUD/CNY would be a risk to Crown Resorts revenues. In recent periods, the exchange rate has risen on stronger confidence in the Australian market, through such announcements as lower unemployment rate and stronger GDP. If the exchange rate were to increase further, we expect that this may deter some VIP investors from visiting Australian Casino's, and will decrease revenues. After that, credit risk and equity securities risk are the common risk in the category as well.
Crown Resorts currently hold licenses for Victoria, Perth and Sydney which expire in 2050 & 2060. However, the risk here is not in the current state, but in fact in opposing states where a rival casino could attract visitors (such as the notorious VIP gamblers which account for approximately 30% of Crown Resorts revenues)(annual report, 2016). This includes monitoring your competition, changes in the marketplace, trends toward customer fraud or deception, and shortcomings in your company's procedures (George N).
Crown Resorts are currently in the process of building Crown Resorts Sydney. However, its investment in such a procedure is at risk if the estimated costs were to increase substantially, causing estimated benefits to reduce dramatically. This will not only hurt profits, but also the overall share price.
1.1.4 Political risk
The casino business is prone to extensive regulations (Shawn B, 2016). Political risk will be a major influence on Crown Resorts future revenues. We have seen the changes that regulatory issues can have on the casino market in Macau (i.e. no smoking etc.), so further regulatory issues surrounding alcohol or gambling may in fact deter visitors to the accommodating casinos.
Natural disaster risk
Natural Disasters, although unlikely, pose a risk to Crown Resorts. If an earthquake or such a disaster were to occur in any of the aforementioned cities, it could ruin buildings, and correspondingly, revenues.
1.2 level of risk
The above five types of risks can be summarized as:
Mo derately significant
Investment risk/financial risk
Political risk/operational risk