Integration between Risk and Value management considering Environmental impact in industrial sector

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Thesis Paper on:
Integration between Risk and Value
management considering Environmental
impact in industrial sector

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Chapter-1
Introduction
Introduction
Value Chain Management (VCM) is one of the most important tools in the organization
for bringing development. This is also been a core part of Supply Chain Management
(SCM). The concept of supply chain management is related with the process that
ensure products flow from organization to customers whereas value chain works in a
reverse manner. In this case, the flow starts from customers end with organization.
Another important tool for measuring the organizational development process is the
Risk Management. The risk management process helps in identifying the risky areas in
the process. This research mainly focus on the integration between risk and value chain
management in the industrial sector by considering the environmental impacts. By this
research we will be able to know the relationship between risk and value chain
management as well as its importance in the sustainable supply chain management.
Background of the Study
In this modern business world, different types of industries are emerging and
contributes in the economic development of the country. The industrial sector basically
controls or influence the economic growth of the country. For the effective management
and continuous development of this sector it is quite important to have clear ideas about
its ins and outs i.e. the growth opportunities and threats. The incremental growth of this
sector has contributes in the development of different supply chain processes so as to
ensure sustainability of this sector. Sustainable supply chain management is the key
part of this growth process which ultimately ensures effective management of the
overall process of the organization. From the sustainability point of view, the value chain
management acts reversely in comparison with Supply Chain Management. On the
other hand, the value and risk management works in a parallel manner. The value chain
process shows the way for improvement and risk management identifies the threat
areas in this development process so as to mitigate or reduce the risk. This study will

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help in having a clear in-depth understanding of the importance of value and risk
management in the industrial sector. The effective integration of value and risk
management can only ensure the consistent growth of the organization. The
implementation of both value chain and risk management process is differs from
organization to organization. In the industrial sector there are lots of opportunities to
have exponential importance of value chain and risk management process. The second
chapter of this paper covers the detail information of value chain and risk management
along with sustainable supply chain management in the industrial sector. The research
methodology chapter covers the qualitative research methods so as to enhance the
importance of this process.
Rationale of the Study
Most of the industries don’t have any clear understanding of applying value chain
management in an effective manner. Without value chain analysis it’s not possible to
ensure development within the organization. Value chain management is the reverse of
Supply Chain Management. Sustainable supply chain management ensures the
effective flow of goods from organization to customers whereas value chain
management ensures the feedback about the products and services so as the
organizations can improvise their activities in order to ensure customer delight. For
example, Supply Chain Management ensures the delivery of food items or services to
the end users whereas Value Chain Management confirm the proper feedback of the
products and services from end users to the organizations R&D for improving the
organizations products and services. Within this feedback process, there comes the
concept of Risk Management. Risk management basically helps in identifying the
probable threats or risks related with the process which may cause trouble or become
an obstacle in the development process. This study will help in having a clear in-depth
understanding of the value chain management and risk management concept and the
integration between this two concepts which can ensure effective development within
the organization.
Problem Statement

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In every organization there is risk that is inherent in the process flow. In that case, all
industries or organizations tries to manage those risks in a different manner. It depends
mainly on the operational activities of the organization which is quite different from
industry to industry or organization to organization. The main objectives of any
organization is to ensure customer delight by providing their best products and services.
In this process, industry also need to focus on what customers want from them
otherwise it would be difficult for the organization to improvise their products and
services as per the requirement of the customers. In this connection, it can be assumed
that, the feedback receiving structure is different from organization to organization which
logically interlinked the risk management process and the value chain management
process differentiation from industry to industry.
Supply Chain Management is one of the core parts of the organization which ultimately
ensures customer delights. Most of the organizations in Bangladesh don’t aware of
effective supply chain management as well as efficient value chain management which
can bring paradigm shift within the industry which now becomes one of the most
important burning issues. On the other hand, risk management structure is also not in
place in most of the big organizations where without any questions it goes for the small
organizations also. The effective risk management process helps in identifying the
possible threats in the development process of the organization.
As the world is becoming more competitive day by day, thus the supply chain process is
also becoming more complex in order to cater those situations. Thus, it becomes
mandatory to maintain effective risk management structure as well as value chain
management structure so as to ensure smooth development for the organization. It
goes without saying that, Supply Chain Management ensures the bottom line of the
organization by managing its overall activities very effectively and efficiently. Thus
disruptions in supply chain activities may hamper the bottom line profitability of the
organization. The main risks may involve in this case is not meeting customer demand
due to unavailability of required materials. This may reduce the market share of the
organizations due to sales loss which ultimately generated from Raw Materials or

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Packaging Materials stock unavailability at Factory. In this case, it has become very
important for every organization to ensure proper value chain and risk management
structure effective in places.
Research Aim and Objectives
The aim and objective of this study is to help the industrial sector or organizations in
identifying the problems of the process and to provide better solutions through analyzing
all the required data and the process flow which may in turn helps the organization to
establish error free process which can ensure improved services or products to the end
user.
The main objective of this research is to present the clear concept of Value Chain
Management and Risk Management along with sustainable Supply Chain Management
process.
The research objectives are stated below:
 Identify the best possible strategies to ensure or bring development within the
industry by applying value chain management and risk management concept
 Establishing the concept of Sustainable Supply Chain Management thru’ Value
Chain Management
 Identify the best strategies to implement risk management concept within the
industry
Research Questions
There are some questions arises in line with the concept of this research topics which
are appended below:
 What are the strategies for bringing development within the organization or
industrial sector?
 How these strategies can support environment by aligning with the go-green
concept?
 How value chain and risk management can be integrated?

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Overview of the upcoming chapter of the report
Chapter-2: Literature Review
The literature review section actually helps to understand the study from the theoretical
point of view. It developed in developing and implementing the concept regarding the
importance of the integrated value and risk management process under the supply
chain management process by keeping the environmental issues into consideration so
as to ensure the development of the organization in a consistent manner. The
integration process tried to ensure the proper combination of the value management
and risk management process in order to enjoy the value addition benefits in the
process by mitigating or reducing the probable risks that may arise in the process.
Chapter-3: Research Methodology
Research methodology is the process of executing the research work in order to
establish the aim and objectives of the study. To attain the present studies, mainly the
qualitative approach has been applied among the other available approaches like
qualitative, quantitative, inductive or deductive, strategies like single or multiple case
study, research designs like various sampling methods, data validity and reliability of
this research, and the ethical consideration. There is a common model of the research
process named research onion which has been developed by Saunders, Lewis, and
Thormill (2009).
Chapter-4: Conclusion and Recommendations
To cope up with the changing view of the world industry, it is quite important to ensure
the implementation of integrated value and risk management within the organization in
line with sustainable and profitable supply chain management where the environmental
issues has been arise to cover the modern concept of the industrial organization for
emphasizing the Go-Green Concept.

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Chapter-2
Literature Review
Introduction
Supply Chain Management is the backbone of any organization. From this concept
there arise different other concepts which till day contributing in the improvement of the
industry bottom-lines. There is a word shared by the legends of supply chain
management is that “If Sales team sell a 1-taka product than they may contribute 10-15
paisa in the company bottom line whereas if supply chain saves 1-taka than that whole
amount will add in the company bottom-line”. From this point, it is clearly visible the
importance of supply chain management. The concept of supply chain management is
mainly starts with planning for delighting the customers and end with customers i.e. at
the E2E process customers are the all in all. From supply chain point of view, there
arise value chain management as supply chain is the process where different cross
functional teams works together in order to achieve the ultimate goals of the business.
The value chain concept arise in adding valuation in the overall process aligned with
supply chain management. While adding value in the process, there are some risks may
arise which needs to be catered very carefully and on prioritization basis. Thus on the
basis of this, the risk management model has arrived. Different researchers described
this value and risk management process differently which has been discussed in the
following points in line with sustainable supply chain management by keeping the
environmental issues into consideration.
Sustainable Supply Chain Management
The sustainability of the industrial organizations mostly depends on the effectiveness of
the supply chain management of that industry. For ensuring sustainability of the
organization it is very crucial to know about the environment, social and economic
impacts and viability which are directly or indirectly related with vendors. Nowadays
customers are becoming more cautious about the products and services offered by
different organizations where the feedback ultimately managed by the supply chain
management. History says that governments were the key driver of the changes but

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currently every organizations are seeing or feels the corporate pressures on suppliers
and vendors which more likely lead the way to sustainable growth of the organization.
The management of this sustainability mostly done by the supply chain management.
Industrial sectors are more likely to operate in a sustainable manner in order to remain
competitive in the market. Currently, the go green concept is mostly followed by the
organizations considering the dark impact of the industrial activities on the environment.
Being the environment friendly is the main way to remain in the competition in near
future. Considering the environmental impacts, nowadays industries are trying to
maintain quality in every aspects of its activities without harming the environment
(Raikes et al., 2000). In this connection, now we are seeing jute bags or paper bags
instead of polythene though it will take some time to replace polythene but the concept
has already established and organizations are trying to follow that trend quite strictly
which also creates pressures on vendors or suppliers.

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Industries are now thinking about the sources of raw materials of their products so as to
ensure quality in every steps. Most of the organizations are strictly checking the quality
spec of the raw materials shared by the suppliers as well as the overall manufacturing
process at their end. Not only that, they are also checking the supplier’s supplier
condition as well which ultimately is the true picture of the implementation road map of
sustainable supply chain management. The process are becoming more robust day by
day which ultimately gives the suppliers a message that either you do business in a
proper manner or get out of the way (Raikes et al., 2000).
Doing business in a sustainable manner doesn’t stop by ensuring environmental factors
it also impacts social and economic factors. Now think of the situation that your raw
materials are extracted by forced child labor in a third-world country and continuation of
your business with that raw materials are encouraging that situation. In that case, you
are not running the business in a sustainable manner.
There are some questions are now arising in favor of sustainable supply chain
management which are likely, from whom the organizations are getting the raw
materials? Who are the suppliers? Where it produced? How the suppliers do produced
that raw materials? Is there any other third party sources? Do they have valid license to
do that business? Do the raw materials meeting the desired spec?

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These are the questions are coming in the mind which all the industries are asking
themselves and their suppliers. This process will help in implementing top class
sustainable supply chain management process within the organization. However,
currently, industries are trying to determine the way forward and generating new policy
in order to run the business in a sustainable manner which creates the essence of
sustainable supply chain management.
Green Supply Chain Management (GSCM)
In this modern business world, it has become an important issue to consider
environmental management in an effective manner along with the process available
within the industry. This will help the organization to be competitive by enhancing
market share and profitability thru’ incremental sales with delighted customers. The
concept of Green Supply Chain Management represents in different areas differently in
the literature.
Accordingly, Zhu and Sarkis defines GSCM as has ranged from green purchasing to
integrated supply chains starting from supplier, to manufacturer, to customer and
reverse logistics, which is “closing the loop”. According to Srivastava, GSCM can be
defined as “integrating environmental thinking into supply chain management, including
product design, material sourcing and selection, manufacturing process, delivery of the
final product to the consumers as well as end-of-life management of the product after its
useful life”.
1980s and 1990s there arise quality revolution and supply chain revolution respectively
which helps in extending the concept of green supply chain management in the
literature. Considering the fact, it also introduce the concept of corporate environmental
management, environmentally conscious manufacturing strategy, and supply chain
management literature. The integration of go green concept with the ongoing process
proves to be the best way to implement the green supply chain management within the
industry and the concept is gaining incremental interest among its potential
practitioners. Already, different countries like Japan, Germany, Portuguese, UK,

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Taiwan, and so on tries to adopt and implement the concept. But developing countries
are also showing their interest in adopting this concept though the rate is quite minimal.
Green Supply Chain Management in Developed Countries
There are some basic characteristics based on which countries can be categorized as
developed or developing. These characteristics are consists of economic,
industrialization, and Human Development Index (HDI). The per capita income ensures
economic growth, the condition of tertiary and quaternary sectors of industry confirms
industrializations and HDI is consists of economic condition, country income, and
education. In this connection, it can be assumed that developed countries are strictly
deals with environmental issues than any developing countries. Different researchers
have conducted their research on developed countries to examine the integration of
environmental factors with supply chain management.
Large and Thomsen from Germany has conducted a study where they identified 5
potential drivers of green supply chain management-
1. Green Supply Chain Management Capabilities
2. The Strategic Level of Purchasing Department
3. The Level of Environmental Commitment
4. The Degree of Green Supplier Assessment, and
5. The Degree of Green Collaboration with Suppliers.
Another study by Azevedo et al. regarding the examination of the links between green
practices of supply chain management and supply chain performance in the context of
Portuguese automotive supply chain where he gained the conceptual model from data
analysis that proves that there is a positive impacts of green supply chain on quality and
customer satisfaction. Chiou et al. also done a study on the correlation between
greening the supplier and green innovation in Taiwan Industry by using Structural
Equation Modeling. From this study, they found significant benefits to the environmental
performance by implementing the green concept among the suppliers for ensuring
green innovation.

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The green supply chain management concept also been implemented on 3rd party
logistics (3PL) in Italy which was conducted by Cagno et al. From this study, they found
that work has tremendous impact on having depth understanding the potential effects of
Green Supply Chain over company performance.
Green Supply Chain Management in Developing Countries
It is a common belief that Green Supply Chain ensures environment friendly products,
process, systems, and technologies in line with the process of conducting the business.
From a study conducted by Anbumozhi and Kanda, it becomes clear that most of the
industries in developing countries tries to adopt this concept in order to reduce negative
environmental effects thru’ there products and services instead of using the green
concept for implementing the proactive approach to lessen the sources of waste. This
concept has become the traditional command over the situation. More emphasis on this
concept has become a demanding questions in this modern era for the developing
countries mainly in the Asian Regions.
Basically, the GSCM concept is new to most of the industries in South East Asian
Region. Only few industries are able to adopt this concept where the whole scenario in
that region is quite opposite. The green concept has already started taking its place in
Philippines, Indonesia, Malaysia, Thailand, and Singapore which comes from a study
done by Rao.
Thus, these findings will help the countries in developing region to adopt the Green
Supply Chain Management concept in order to reduce the environmental problems.
Business Risk Management
Every organization use to face risk that may threaten its success. Risk is basically the
possibility of an event and its consequences. The concept of risk management arise
from reduction of risk that happens thru’ organizational processes or systems. Risk
Management is mainly a tool that helps the organization to minimize the risk at a level

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from where the road map of success can become smooth. This tool helps in identifying
what could go wrong, evaluating which risk should be dealt with and the way forward to
minimize that risk.
Industrial organizations are used to face many events that may have both positive and
negative impacts. In this case, the negative impacts considered as risk which may
become an obstacle in adding value to the organizational development process. On the
other hand, events with positive impact may lessen the risks and represents
opportunities for the development of the organizational process and systems.
Business Risk Management (BRM) mainly deals with risks and opportunities that affects
value generation within the organization, which is the core part of strategic management
process. This process helps in making decisions both at strategic and operational levels
which ultimately brings benefit for the organization. Every industrial organization or
organization should have clear in depth understanding which actions can have negative
impacts over organizations and the way to overcome those negative outcomes in order
to ensure development road map. If the organization can achieve that understanding
than overall performance will improve which may lead to gaining competitive edge that
may end with enhancing market share of the organization.
To develop and implement an effective risk management system, all the concerned
management bodies will play a major role. In most of the cases, senior management
team decides up to what level the organization is willing to take a risk. In this case,
according to them the risk can be shown in different forms like earning volatility, and
potential losses of capital, equity or assets. The committee that are responsible for
identifying risks, mainly decides how to handle the risks in an efficient manner so that
organizations get benefitted from that actions.
Risk Analysis
Identification of risk is one of the core processes which is a continuous process runs
through the entire company life cycle. Basically, the key components that helps in

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identification of risks are business activities and decision making which can be
categorized as strategic, project/tactical, and operational. Risk identification process can
be done with the help of following tools-
1. Interviews and self-assessment
2. Facilitated Workshops
3. SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis
4. PESTLE (Political, Economic, Social, Technical, Legal, and Environmental)
analysis
5. BPEST (Business, Political, Economic, Social, and Technological) analysis
6. Porter’s Five Forces
7. European Foundation for Quality Management Model
8. Risk Questionnaire and risk surveys
9. Cause and effect diagramming
10.Scenario analysis and planning
11.Brainstorming
12.Questionnaires
13.Event inventories and loss event data
14.Checklists, inspections, and audits
15.Workforce involvement and consultation
16.Accident and loss investigations
17.Task analysis
18.Using technology and
19.Other techniques
There are different classes of risks are available in the industry which also needs to be
prioritized based on the gravity of the risks. The different types of risks are appended
below:
 Strategic
 Compliance
 Financial and
 Operational

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These risks are of different characteristics. For example, strategic risks are related with
the issue when a new competitors are entering into the competition.
The details of the above mentioned risks are stated below:
Strategic risks mainly appeared in line with the operations. This type of risk happened
in a particular type of industry. In this connection, risk may arise from:
 Merger and Acquisition activity
 Changes in market demand
 Changes in the industry type
 Research and Development
Compliance risks are particularly related with the risks that are associated with the
compliance of rules and regulations along with laws. It also may become an impediment
in ensuring customer delight. For example, there are some customers who would like to
be sure whether the industry is fully complied with govt. rules and regulations or not.
Financial risks is related with organizations financial transactions, process, and
structure. By ensuring proper monitoring on industry’s daily financial transactions i.e

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cash flows, organizations can identify the risk effectively. Let’s put this through an
example, if the industry is solely dependent on single customer for its particular
products, than there remains huge risks involved from financial point of view because if
the customer don’t ensure payment on time than the organization can fall in huge
financial risks which may questions the business viability.
Operational risks are those risks that involved with organizations operational activities
or administrative activities. Both internal and external factors can be the influencer in
generating risks in this case. Operational risks can be raised from following activities-
 Recruitment
 Supply chain
 Transportation
 Accounting controls
 IT systems
 Regulations
 Environmental risks
 Employee risk management
 Political and economic stability
 Health and safety risks
 Commercial risks
However, dealing with risks is the most important part through which risks can be
mitigated. There are four different process of managing risks which are-
 Accept
 Transfer
 Reduce
 Eliminate
Risk Evaluation
There are different factors like economic, social, and legal helps in the evaluation of
business risks. As we know, risk is the outcome and consequences of any actions or

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events. The gravity of the situation confirms the type of risk. The risk can be assessed
by applying both qualitative and quantitative techniques whichever is applicable for the
assessment purpose obviously by factoring the gravity of the situation.
Identify the risks, ranking or mapping the risks by listing it is one of the core techniques
of qualitative method. However, there is no formal process or quantitative techniques
that has been applied for risk assessment. In this case, only method applies that is
identify the risk and prioritize them for mitigation purpose.
The risk evaluation technique helps the industry to identify the gravity of the risks and
take necessary action to reduce or minimize the risk. But the main part is to identify the
risk and then it becomes easier to ranking those based on the significance of the risk.
This process helps the organization to overcome the possible losses that may occur
thru’ that risk (Faruk et al., 2002). By differing from organization to organization, the risk
can be segregated as high, medium and low. This categorization mainly associated with
the industry objectives i.e. which risks can damage or hamper the achievement of the
organizational objectives. Furthermore, there may arise some situation where mitigating
the risk can be much higher compare to the loss if the business don’t take any action to
mitigate that risk.
There are some tools for risk mapping. With this tool, it can be easily understandable
the significance of the risk. If the risk falls in red row if every sector than immediate
actions required to mitigate that risk as the risk considered to be the catastrophic. On
the other hand, if the likelihood as well as the impact of risk is very low than the risk is
insignificant that means right now there is no action required to cater that risk (Faruk et
al., 2002).

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Value Chain Analysis
Value chain is one of the most important concepts that are adopting by most of the
industries nowadays. This is the range of activities that start from idea generation and
ends with distribution to customers. In order to remain competitive in the market,
industry need to conduct R&D on regular basis so as to cater the demand of the
customers as per their requirements so that people can say that the product is value for
money.
Value chain management is the process of organizing all these activities in a proper
manner so that the process flow works smoothly and without any major obstacles.
Michael E. Porter is the first one to introduce value chain concept. He also the inventory
of Five Forces Model. This model helps in having a better look of the business position
in the competition. According to Porter, “Competitive advantage cannot be understood
by looking at a firm as a whole.”

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Now a days, value chains are one of the most important part of organizations strategic
planning process. This process indicates the total life cycle of a product or process
including material sourcing to recycling.
The value chain analysis has been evolve from time to time by factoring the business
requirements. Previously, value chain mainly focused on adding values to different
areas and the distribution of these value added items which is one of the conventional
process of analyzing value chain in the organization. But with the changes of business
types and requirements i.e. conversion of business from local to global, the concept of
value chain has also been changed. Nowadays it is really important to link the value
chain with both upstream and downstream stages. Focusing only on single stage may
lose potential opportunities to add some values in the business products, services or
processes. In this connection by considering the global concept the spatial range of
value chain has been expanded. Currently, in the value chain processes the
environmental economics and natural resource management has also been added. For
this reason, there need to meet some additional requirements for complying with
environmental process which includes the cost and benefits associated with natural
resources. Therefore, economic value chain has been extended to integrate
environmental flows for having an in depth estimation of total value chain process.
Recent environmental catastrophic has emphasized on incorporating the environmental
factors in the value chain process. The VCA concept has been originated from two
different concepts i.e. the French “filiere concept” and Wallenstein’s concept of
“Commodity Chain” which evolved in 1960’s and 1970’s respectively (Raikes et al.,
2000; Bair, 2005). The filiere concept mainly focus on manufacturing and distribution
process within national boundaries in a structured manner whereas the Wallenstein’s
concept target of global dynamics through the distribution of value chain activities
(Raikes et al., 2000).
The main purpose of value chain analysis is to improve the competitiveness of the
organization by breaking down its regular activities into value added activities. Porter’s

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value chain concept has evolved in 1980s. Porter’s value chain concept has been
implemented in individual organizations within national boundaries by factoring
particular industries. On the other hand, Gereffi has developed another commodity
chain which is developed based on Wallenstein’s commodity chain. In his concept
Gereffi mainly focused on the on the balance of power which is adjacent to the
production system that is globally interlinked (Gereffi, 2005).
The above concepts are related with pure economic value chain analysis. However, the
natural resource and value chain integration has got attention which is quite incremental
among the probable practitioners. In this connection, terms like “environmental value
chain” or “greening the value chain” becomes quite popular which mainly indicates the
importance of environment within the industrial value chain process.
The entire input-output flows in a value chain occurs at product level or if require in a
national context at a spatial level (Faruk et al., 2002).
Product focus: in this case, the value chain analysis done on a specific functional unit
of goods or products. The analysis is not being site specific. Here the boundaries are
related with the up and downstream stages of the value chain process.

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Spatial focus: Here the value chain process done based on regional economy of the
country which is from spatial perspective.
In addition to the above orientation, the value chain analysis take socio-economic or
environmental focus. Economic value chain analysis includes economic and financial
commodity chain analysis with the framework national accounting. In this case, the
evaluation basically done in monetary terms. Besides that socio-economic value chain
analysis additionally focus on distribution aspects where the income distribution of
households comes into consideration. On the contrary, environmental VCA is quite
different than economic VCA. In environmental VCA physical units input-output flows
comes into focus i.e. life cycle assessment, materials flow analysis or energy analysis.
Value Chain Mapping
Mapping is the illustrative representation of the organizations value chains at different
functions which is the first step of value chain analysis. Value chain mapping defines the
scope of the analysis or the limits to other linked value chains which is done in later
steps in the actual value chain analysis. The systematic concept of value chain mapping
has been defined by the Food and Agricultural Organization (FAO) which is noted as
functional and institutional analysis (FAO, 2005a). The value chain mapping mainly
provides an overview of institutional analysis along with the interaction between all the
main streams (functional analysis). This process initially helps in measuring the
importance of value chain segments (Rudenko, 2008). Kaplinsky and Morris (2002)
place a proposal of “initial map” including value chain boundaries, core functions,
activities, connections, and flow size indicators.
Practically, value chain is more complex than the linear conceptual illustration. In the
value chain there exists multiple links and connections with other chains. Here one actor
may have connections with different suppliers or traders which is described in the value
chain as the value chain network.
However, identification of the value chain complexity is one of the major tasks for the
further improvement of this process. Clottey et al. (2007) and Kim and Shin (2002) has

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introduced Social Network Analysis in order to overcome this complexity which is based
on social sciences. This method is more applicable in value chain when the network is
higher rather than linear vertical chain.
On the other hand, in the value chain mapping environmental input-output flows should
be considered. The main objectives is to cater all the impacts on natural resources by
taking into consideration. Production inputs like energy, water, land etc. and outputs like
possible wastes and emissions are considered as natural resources. However, the
value chain mapping is quite similar compare to life cycle assessment and material flow
accounting.
Relationship between Value and Risk Management
Value management and risk management are one of the core parts of the organization.
In some cases, it is considered that value management can be applied in association
with risk management so as to minimize the risk effectively. The proper integration or
relationship between Value management and risk management can bring consistent
improvement within the organization. This integration process may help to avoid work
duplication and smooth delivery of the order or project activities. Basically, the value
management process helps in identifying the objectives of the organization and risk
management ensures that whether this objective can be affected by future uncertain set
of risks. Both the method, helps in improvising the way of running the business so as to
cater maximum number of customers. However, creativity is required for both these
methods. In case of value management, the creativity will help in identifying the
alternative options which may help in adding value within the organizations functions
without bringing any changes. On the other hand, creativity in risk management, helps
in identifying the potential risks that may hamper the growth of the business. There is a
common factor that available in both the methods that is both methods helps in
achieving cost savings within the business activities. The risk management method can
contribute in cost savings options by managing the risk in an effective manner on the
other hand, the value management can do this by running value engineering on
different projects or activities which actually cuts down unnecessary costs of the

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business activities. By factoring above discussions, it can be proved that value and risk
management is very much required for the betterment of the industry so as to ensure
the future of the business.
Integration of Value Management and Risk Management
Both the value management and risk management tools are well accepted in the
industries especially in the construction industry where these are considered as the best
practice tools (Griffin, 2006) for better management in the industry. The concept has
been shared by Weatherhead and Griffin where Griffin argues over a point that whether
these two process used separately or it should be integrated but Griffin voted for
integration so as to ensure effective management within the organizational activities. To
emphasize over Griffin argues, OGC also agreed that, both the process should be
integrated and carried out in a parallel manner (OGC, 2003) so that tasks can be
completed effectively. According to OGC, the value management process helps the
client to identify the best possible way to meet the business requirements and on other
hand, risk management helps in managing the risks associated with the solution. The
main objective of the integration between value management and risk management is to
ensure or optimizing the value within the organization. According to Dallas (2006),
moving forward towards implementing or adding value in the organization will become
meaningless, if any significant risks becomes responsible for imbalance of the power
management by destroying the value. Besides that, these methods seems to be
compatible and complementary according to Paliokostas (2000). In this connection, the
use of this technique separately will result in wastage of time and resources. Thus for
effective implementation of this method, the integration is must.
On the other hand, the value management should be carried out first so as to identify
the definite value of the business that may occur from the delivery of the project which is
followed by OGC (2003). After the identification of the value management, then the
process of risk identification comes. In this case, risks are identified considering the
most probable areas. This method will be in use in a consistent manner so as to

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balance the risk and value after reaching the optimum level. It is quite notable that this
practice of integration between value management and risk management can ensure
the reduction of negative impacts on the business or industry as well as the
improvement of the value. However, if there remains the possibility of raising risk from
alternatives than it is obvious the decision making process can be influenced regarding
the aims and objectives of the business where the overall outlines can be redesigned
(Connaughton & Green,1996) in order to strengthen the idea of integration which has
also been supported by Othman (2004). He confirms that without integration of value
management and risk management it will be difficult for the industry to overcome the
risky situation. Different other researchers like Connaughton & Green (1996),
Paliokostas (2000), Smith et al. (2006), and Thompson (2004) have supported this
method as well. They all provided the reasons for the requirement of the value and risk
management integration which are appended below:
 Utilization of the same resources
 Effective workshops by ensuring stakeholders contribution or involvement
 Introduction of Value and Risk Management within the organization in a more
effective manner
 Ensure the consistent improvement in the business growth assessment
 Ensure detail level assessment process
 Develop awareness about the strengths and weaknesses of the organization
 Improvise the risk mitigating process by shortening the time frame
Some researchers proposed that through workshops risks can be mitigated by
implementing ideal settings which will be used for validating the business objectives in
line with possible risks. This can be done based on the available resources where the
experts will share their feedback on the process of reducing the probability of risks. This
method has been shared by Kirk (1995).
Benefits of incorporating Value and Risk Management
Value management and risk management are an integral part of the business. The
consistent development of the business process can be ensured by applying the value

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and risk management properly. There are some benefits of incorporating the value and
risk management which are appended below for better understanding:
 Value and risk management can help in having a clear understanding of the
client’s requirement based on which the organization can improvise its products
and services where customer delight is the ultimate destination.
 Both the methods can help in reducing or cutting down unnecessary costs of the
business. By ensuring value engineering on different projects, products or
services, value management can add value to the organizational activities
whereas risk management do the same by managing the risk very effectively and
efficiently.
 Organization can be benefitted from the lead time reduction in completing a task
or projects
 It helps in developing the team work and improve the level of commitment among
the stakeholders as the success of the organization depends on the actions of
the individuals. The decision making process within the organization much better
and precise.
 These methods helps in generating creative and innovative ideas as the main
objective is to add value within the organizational activities.
 Generating optimum value for money by ensuring customer delight
 Effective management of variations at different stages of the industry is one of
the core competency of these two methods. By doing this, these methods help in
adding value within the organization.

26. 26

27. 27
Chapter-3
Research Methodology
Introduction
Research methodology is the core part of this study. Establishing the aim and objective
of the study is the most important and critical part. Research methodology helps in this
case by implementing the achievement process. Research methodology is the process
of executing the research work in order to establish the aim and objectives of the study.
The triumph of any study mostly depends on the perfect execution of the research
methodology. Different techniques, process, methods and previous studies have
included in the research methodology sections which basically makes the whole
process successful and fruitful. The present study is on the integration of risk and value
management by considering environmental impact in the organization. There are
various approaches like qualitative, quantitative, inductive or deductive available in the
research methodology are but the qualitative research process is the core one based on
which this section has been covered. There is a common model of the research process
named research onion which has been developed by Saunders, Lewis, and Thormill
(2009). The research onion model has been described in the below:

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Figure: The research “onion” (Saunders, Lewis &Thornhill, 2009)
Research Purpose
The aim of this study is to integrate the value management and risk management along
with the environmental impact over organization so as to ensure development of the
organization effectively and efficiently.
Variable of the present study
The objective of this study is to integrate the value and risk management process by
keeping the environmental impact into consideration with a view to ensure
organizational development. Different types of variables have been covered in this study
like independent and dependent. Proper establishment of the connections between the
study and the variables actually ensure the successful implementation of the research
objectives. In different research methods identifying the variables varies. In case of
quantitative research methods or approach identifying the variables is quite easy

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whereas in case of qualitative approach this process becomes difficult. This study
mainly focuses on the qualitative study which has been developed through different
variables in order to justify the current study. The variables of this study is to have a
clear understanding the process of value management and risk management,
integration of these processes, awareness about the benefits of being integrated and
achievement of industrial aim by implementing these process in an integrated manner.
Research Philosophy
There are different types of research philosophy have been available which helps in
justifying the present study. The different research philosophy is better understandable
by the researcher. The positivism philosophy in the study helps to understand the
existence of the concept of the study in the real time where researcher can attain the
objectives by analyzing the facts and figures and using different observation,
responsiveness and hypothesis. On the other hand, the social constructionism refers to
the different types of characteristics like explanatory, observer, sampling,
generalization, and human interest (Smith et el. 2008). This is some sort of new concept
for the researchers. Through this process, the researchers can analyze the study and
link them with the practical situations. The study basically focus on the integration of
value management and risk management for the development of the organizational
processes, is mainly based on the positivism philosophy and covers this concept in
order to evaluate the methodology of this study.
Research Approach
The various research philosophies mainly act as the reason in the development of
different research approaches. There are different types of research approaches
available but the whole research approaches can be categorized in the following two
approaches—
1. Empirical Approach: This approach also has been broken down in three
different partitions like- qualitative and quantitative, inductive and deductive, &
objective and subjective approach.
2. Non-empirical Approach

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Besides these two approaches there are some other types of research like primary
research, and secondary research (one type of non-empirical research) which are
appended below:
Secondary Research:
The secondary approach of this study basically tried indicates that the information about
value management and risk management, their importance in the sustainability of the
supply chain management, ensuring environmental safety through the integration of
value and risk management process, and so on which have already been available in
different sources. For the continuation of the study, it is very essential for the
organization to identify that available information to secure the preliminary stage of this
study. In different sources, the secondary data was available. And based on those
available information, the researcher tried to develop the study outline in a proper and
effective manner. The information regarding the value chain management, value chain
analysis, risk management process, implication of value and risk management within
the environment and the organization, are available on the internet in different sites
which basically helped in the development of the structure of this study. The secondary
research is also known as the non-empirical research. However there is a
disadvantage of this study using the secondary research data as the data may be
outdated or expired. The secondary research is very important for the continuation of
the study. However, this type of information or data was easily available from different
sources which helped in the development of this study.
Research Limitation
The concept of this study is new for most of the organizations if we think from
Bangladesh point of view. In our country, most of the organizations are managing their
businesses in Traditional manner whereas the world has advanced far way then the
existing practices available in this country. This is core limitation of this study. Besides
that there are some other limitations which are appended below:

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1. Lack of adequate knowledge about value management and risk management
along with the integration process
2. The infrastructure of the organization both internal and external are not well
suited with the implementation of this value management and risk management
process
3. Inadequate training facilities for the rapid implementation of the integration
process as there are very few mentors available to do this job where the
probable candidate is limitless
4. Absence of Standard Operating Procedures (SOPs) within the organization
Considering the above limitations, most of the organizations are trying to overcome the
situation so as to implement the standard working procedure by aligning the value
management and risk management in line with environmental factors.

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Chapter-4
Conclusion and Recommendations
Conclusion
Value management and risk management is one of the factors in the development of
the organization. The integrated value and risk management covers both the
opportunities as well as the related risk which are the major impediments in the
improvement of the organizational process. The value management process helps in
adding values within the organization by taking environmental issue into consideration.
The sustainable supply chain management is the key parts of the organization that
ensures consistent improvement of the organization. On the other hand, in the
development process there remains some risks that may become the impediment in the
development process of the organization. Thus, identifying the risk of the value chain
process is the major activities that the organization needs to perform. In this study,
different researchers has shared their view about the integrated value management and
risk management process where most of them agrees on the integration process rather
than performs these processes individually. However, in order to facilitate this issue, the
industry also needs to focus on the environmental issue so as to remain updated with
the modern concept. The go-green concept is one of the most focused topics nowadays
where all of the organizations or industries are trying to align them with this concept. In
this connection, different researchers tried to share different models in order to bring
organizational development where some focus on individual applications of value
management and risk management process, some on integration of value and risk
management, and some on environmental factors in line with sustainable supply chain
management. Apart from all of the above discussion, this is needless to say that,
integrated value and risk management is key process that can ensure sustainable
profitable growth within the organization and considering the environmental factors in
line with this process will help the organization to meet the corporate requirements as
well as the industry will remain competitive in the market by ensure the customer
delight.

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Recommendations
This study will help the organization or industry in achieving its ultimate goal the
customer delight by applying different models related with value and risk management.
Though the concept is emerging nowadays, there are some recommendations based on
the above discussions which needs to be followed-
1. Improve awareness among the key stakeholders in order to implement the value
management and risk management process
2. Ensure implementation of integrated value and risk management process
3. Develop awareness about the concept of value management and risk
management individually
4. While implementing the integrated value and risk management process, the
industry needs to factor the environmental issue
5. Develop and implement the concept of sustainable supply chain management so
as to ensure sustainable growth in the organization
6. Most of the organizations or industries are not well aware as well as equipped for
the implementation of integrated value and risk management. They don’t know
how to use these models to bring development within the organization.
In a nutshell, all the models for the development of the business has been identified or
generated only to cater the demand of the customer. If customer delight can be
achieved than the activities or actions taken behind the scene will become successful
as well as the role model for further development in the future.

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Websites & Other Links:
https://www.rmagreen.com/rma-blog/what-is-sustainable-supply-chain-management
http://article.sapub.org/10.5923.j.james.20180201.01.html

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