While there is no way for a company to truly predict every disaster it will face – having risk management policies in place can help soften the blow of business disruptions and sometimes prevent the problems altogether.
In the food industry, risk management is of particular importance as missteps can result in more than just productivity problems. When food businesses slack on their policies, consumer health can be put at jeopardy as the mismanagement of food products can cause major illness outbreaks.
Risks are something businesses are exposed to on a daily basis. Whether it is an internal failure or an external event, there is a seemingly endless list of things that can threaten business productivity at any given moment. Some of these risks are even serious enough to jeopardise an organisations’ survival.
According to CPA Australia’s Risk Management Guide for Small to Medium Businesses, solid risk management policies can result in a variety of advantages including:
- A decrease in insurance premiums
- A diminished chance of being targeted by legal action
- A decrease in cash/stock losses
- A reduction in business down time
So, how do businesses go about better addressing their risk management protocols? The first step involves identifying the potential risks not only for your industry as a whole but for your particular business.
What risks should you be aware of?
In a contributing article for Food Processing Magazine, Vice President of the Food Industry Division at SullivanCurtisMonroe Craig Kwitoski laid out some risks that specifically pertain to the food industry. According to Kwitoski, comprehensive risk management of these areas can not only salvage a business’ livelihood but improve profitability in the long-term.
Supply chain risk: Compared to other industries, the food sector is particularly reliant on its suppliers. However, there is a long list of things that can interrupt supply delivery. Whether it be an internal problem with the supplier or a natural disaster, shipments of products can easily be tied up, explained Kwitoski.
When a major supplier is out of commission, food businesses can suffer major losses both financially and in terms of productivity. Leaders can take a variety of approaches to addressing this industry risk, from securing coverage with business interruption insurance to varying suppliers to avoid too much dependence on a single source. The important thing is to address this potential problem before it presents itself as a major roadblock.
Without the proper plans, food businesses can suffer major financial losses.
Food health safety risks: One of the biggest risks associated with the food industry is health. Products need to be stored at certain temperatures, expiration dates need to be monitored, cross-contamination needs to addressed and the list goes on. This area is of particular concern when you consider the number of food poisoning cases in Australia annually.
According to the Food Safety Information Council, there are 4.1 million cases reported per year, 31,290 of which result in hospitalisation and 86 of which result in death. Leaders in the food industry can address this particular risk by implementing better internal procedures for monitoring inventory. Advanced Business Manager’s inventory functions can help management keep better track of expiration dates, stock levels and internal organisation.
Cyber risk: In an increasingly digital world, risks related to data breaches and stolen information are of considerable concern. Consider this: A joint study by the Ponemon Institute and Experian found that 60 per cent of companies had experienced more than one data breach in a two-year span. Yet, according to Kwitoski, only one in 10 organisations have cyber-liability coverage.
Food industry leaders need to protect their businesses against the potential risks associated with a tech-driven world. With many processes moving online, a growing number of businesses store the majority of their personal and financial data digitally.
This often extends to client and customer information meaning a lack of cyber protection could result in considerable reputational damage. Considering the number of cyber security solutions on the market, this is a fairly easy risk to address. Implementing the relevant protection early on can save major headaches down the line.
Improving your risk management approach
The benefits of good risk management combined with the potential risk of neglecting these practises makes an enticing case for improving your approach immediately. So, what should be your first steps?
- Assess and plan: The first step to good risk management is assessing your current state. Where are you most susceptible to risk and how much work needs to be done to prevent it? Deciding what state you are in currently can help you better formulate the correct plan for your business. From there, you should start laying out a concrete strategy.
- Communicate your plan: A plan is rendered useless when it’s not efficiently communicated to the necessary parties. Business leaders should make sure these new processes and risk policies are readily available to employees new and old. Upon the completion of your risk management plan, hold a company wide meeting and open the field for questions and clarifications.
- Improve internal processes: Improving internal management functions is one of the best ways to tackle potential business risks immediately. From optimising accounting procedures to better tracking your inventory and warehouses, leveraging a business management software like ABM can help significantly lower your chances of falling victim to common industry problems.
Technologies like ABM’s management platform can be a useful helping hand to ensure that your processes are aligned in the best way to avoid susceptibility to risk. To better understand how our various modules work, take a look at our food industry infographic today.