A number of risks — ranging from a public health crisis to extensive protests —challenged food and beverage companies throughout 2020. As we begin a new year, senior leaders need to identify the learnings from these various disruptors and enhance their risk management strategies to emerge stronger.
As the coronavirus spread across the world, food and beverage companies were affected in a multitude of ways. With restaurants closing or changing their business models, food and beverage manufacturers, processors, and distributors saw demand for their products shift significantly. Some raw materials, meanwhile, were no longer available. Keeping employees safe and healthy became a challenge for companies whose people are accustomed to working in close proximity to each other. Moreover, in the midst of a public health crisis, social activism challenged food and beverage companies to review longstanding practices and messages to ensure they reflect their organization’s values and consider how they align with consumer expectations.
As we begin a new year, food and beverage companies will need to focus on five main challenges and use learnings from 2020 to more effectively manage the potential risks ahead.
The pandemic, along with civil unrest, an active hurricane season, and wildfires, tested food and beverage companies’ business continuity plans. Finding themselves in uncharted waters, many companies tapped into existing or newly created task forces and steering committees to help them navigate the confluence of events that threatened their operations. Nevertheless, faced with unprecedented challenges, some organizations were forced to make ad hoc decisions to respond in a quickly fluctuating situation.
Going forward, food and beverage organizations should review and refine their business continuity plans, setting clear strategies that allow them to remain resilient in the face of multiple risks. Companies should also create event-neutral plans that can be adapted to different perils. This strategy requires identifying key processes and resources, mapping out how they could be affected by various events, and taking steps to increase their resilience. Companies may augment their event-neutral plans with unique preparation and response activities for certain perils — for example, certain companies would do well to revisit hurricane-specific procedures while those in areas affected by wildfires should review those specific plans.
It is important for senior leaders to look beyond the four walls of the organization and to hold conversations with key partners and suppliers to gain insight into their resilience plans. It is also good practice to identify core interdependencies by mapping out both your key supply chain locations — for example, supplier sites and ports — as well as your suppliers’ own supply chains. This practice should allow you to increase visibility into potential risks that may disrupt operations and better understand the potential effects of a variety of other, often global, risks.
These past several months have seen businesses across the country — and the world — move a good part of their operations online. Food and beverage companies too increased their remote work headcount to keep their people safe. This new reality has given rise to increased cyber vulnerabilities. With cyber criminals becoming more savvy, food and beverage companies need to be aware that a cyber event can bring an entire plant’s operations to a halt.
Senior leaders need to think beyond a potential attack on their systems, instead considering how their operations could be affected if one of their partners experiences a cyber event. They need to think through different scenarios and determine their response to each.
While investing in security measures remains essential, senior leaders must accept that even the best security may not fully protect them from a cyber breach or attack. Food and beverage companies should develop and test robust plans to quickly identify, respond, and recover from a cyber event. The recent increase in ransomware frequency and severity has resulted in many affected organizations being caught off guard and unable to respond effectively or in a timely way, resulting in significant financial losses that could have been mitigated through a proactive plan. Companies should regularly test their plans and make the necessary changes to ensure they remain effective and relevant and that all key stakeholders understand their roles and responsibilities.
Now might also be the time to review your cyber insurance coverage and confirm it is in line with your risk profile and risk tolerance, especially considering any increased cyber vulnerabilities due to a change in work practices. New and innovative risk management products, such as security and integrity incident response solutions, can help businesses augment their holistic crisis management capabilities through an added layer of coverage that can respond upon the suspicion, imminent threat, allegation, or occurrence of a covered event.
The events of 2020 underscored the need for food and beverage organizations to be ready to pivot according to changing needs. In the early months of the pandemic, for example, a number of breweries and distilleries were quick to repurpose their facilities to make hand sanitizer, which was in high demand and short supply. Many had to quickly change work practices in order to keep their people safe, introducing temperature checks before workers entered the premises and providing facemasks to employees.
Senior leaders and risk managers need to be prepared to make similarly quick changes when the need arises in the future. However, they also must be aware of the potential risks that such changes can bring — and be ready to address them.
When changes in manufacturing require a shift to manual processes, whether fully or partially, organizations will need to be conscious of potential ergonomic challenges due to employees doing jobs they are not familiar with or that have not been thoroughly tested. Even processes intended to keep employees safe can backfire. For example, the introduction of plexiglass dividers might mean that employees will have to reach around or over, and distancing between employees on a production line could require maneuvers, for example reaching behind them to pick an item off a cart, that could lead to musculoskeletal injuries. Changes such as these should be properly reviewed so organizations can identify potential risks and be prepared to address them ahead of time.
In addition, when senior leaders and risk managers think through how different challenges — ranging from another public health crisis to a natural disaster — could affect their current processes, they can also identify ways their companies might need to pivot to turn challenges into opportunities. It is important to think ahead of time how any changes to your work processes could affect your risk profile, and take the necessary measures to protect your people, your business, and your customers.
The COVID-19 pandemic was far from the only challenge that food and beverage companies endured in 2020. Social activism following the deaths of George Floyd, Rayshard Brooks, and others has highlighted the need for food and beverage companies to make sure their brands are culturally sensitive. Amid protests and civil unrest, some companies changed their logos and retired brand images perceived to be racially insensitive.
Whether or not your company has been the target of social activists, consider reviewing your existing branding and messaging, and weigh whether it appropriately reflects modern cultural sensibilities, racial and otherwise. You might want to create a crisis management team, or a more targeted working group, tasked with identifying any potential challenges, developing and testing guidelines for your company’s reaction to issues related to branding and messaging, and working to set the right tone in your internal and external communications.
Consider seeking the input of your employees, encouraging them to share ways the company could be more emphatic to causes they hold dear and encourage — and train — your managers to have in-depth discussions with employees about issues relating to cultural sensitivities. Organizations should also reevaluate their hiring practices to make sure they foster a diverse and inclusive culture.
The pandemic has underscored the need for food and beverage companies to keep their people safe and healthy, including making sure that sick employees stay home and quarantining those that have been in close contact with others that are suspected of or confirmed of having COVID-19.
Some companies have seen their plants grind to a halt when a number of workers were sick at the same time. On the other hand, some food and beverage companies invested in keeping their people safe; measures included the implementation of health screenings, proactive exposure tracking programs within plants, redesigning workplaces to enable distancing and other measures to reduce exposure, and changing sick leave policies so employees who are unwell don’t feel obligated to go to work. These workplaces have seen their production levels remain relatively constant, allowing them to remain operational while better ensuring workplace safety.
Even when the pandemic is over, food and beverage companies will need to continue investing in keeping their people safe and engaged, leveraging learnings from the past year. Work practices should be regularly reviewed and any changes should be communicated clearly.
There is little doubt that 2020 was a challenging year for most organizations. However, food and beverage companies will need to look for opportunities in a crisis and leverage the lessons learned throughout the year to build stronger organizations that are able to withstand the effects of a variety of risks.