Q2 2021 Food for Thought
Food and beverage risk managers can play a strategic role with the C-suite
As Identifying risks early — sometimes before they are even apparent — and taking action to minimize their effects is crucial for food and beverage companies to become more resilient. Risk managers have the knowledge, foresight, and ability to help their organizations be better prepared for the challenges ahead.
In the last year, food and beverage companies have contended with employee illnesses, ever-changing health and safety regulations, supply chain concerns, and a plethora of other risks — including cyber incidents and civil unrest. During this time, many leaders have turned to their risk managers to find the best ways to respond to challenges while remaining resilient.
Risk managers have come under the spotlight like never before. In many cases, their management of incoming threats and advice on their organizations’ responses has earned them recognition and elevated their role within companies. They have become key stakeholders in discussions on enterprise risk management with boards and the C-suite as they seek advice on addressing risk and improving resilience. The core of this elevated role revolves around facilitating change in ways that help the company’s culture and financial outlook.
Build a strategic partnership with the company’s leadership
Whether a company is dealing with employee shortages, a drop in demand for products and services, a break in the supply chain, inaccessibility due to civil unrest, or one of several other challenges, risk managers at food and beverage companies have proven to be a valuable resource.
As companies have pivoted to address incoming threats, mitigating and managing risk has become both a C-level discussion and a board priority. This high visibility of risk mitigation strategies has provided risk managers with the opportunity to become an integral part of the conversation and establish themselves as crucial partners.
To maintain the current momentum, risk managers should take steps to ensure that the conversation around risk continues to be a C-level priority. As a starting point, it’s critical for risk managers to position themselves as strategic partners who can guide their companies’ risk mitigation actions. But in order to do this, they need to be well-versed in strategic goals, fully understanding the actions that companies are planning to take to achieve them.
Close collaboration with the C-suite should not stop during less challenging times. Instead, risk management teams should build on the close collaborations required to address the past year’s several risks. It’s important to keep open lines of communication and be prepared to provide necessary information and advice.
Be more data-centric
It’s also imperative that risk managers ensure that discussions about risk are carried out in a language that the leadership team is familiar with. Because many decisions tend to be grounded in data, risk managers need to help the company’s leaders interpret and understand metrics to enable a better understanding of their risk profile and the potential impact of specific risks. For example, a meat processing and packaging plant may want to better comprehend the potential cost of a foodborne illness outbreak.
As they recover from the challenges of the past several months, food and beverage companies are seeking ways to become more resilient. Risk managers can help by mining data to identify potential risks and quantify their exposure.
These data-based insights allow risk professionals to make a better case for risk mitigation strategies. And, they tend to help with buy-in of investments geared towards mitigating or transferring specific risks. Once they understand the information that company leaders are looking for, risk professionals can weave the data into the narrative.
Involve leadership in risk management plans reviews
Recent challenges have raised new questions for food and beverage companies. For example, how will a poultry processing plant operate when it is severely understaffed due to a large number of sick employees? Or, how will a tomato sauce manufacturer keep its production lines going when it runs out of an essential ingredient due to a break in the supply chain?
Between the COVID-19 pandemic, civil unrest, strained supply chains, and several other challenges, food and beverage organizations have seen their operations strained. Response plans, such as crisis management, business continuity, emergency response, and cyber management plans, need to be reviewed and updated according to the learnings from this past year.
Risk managers cannot embark on this exercise alone; they need buy-in and collaboration from leadership. It is not sufficient for the risk department to revisit current plans and inform the C-suite and board about the new iterations. Instead, leadership should be involved in the process and asked for their views and opinions to ensure that newly refined plans reflect the needs of the organization and align with strategic goals.
Further, leaders should be involved in testing new plans. Not only do they need to know their individual responsibilities once a specific plan is put into action, but they can provide valuable input to identify gaps or overlaps in execution.
Break down the silos
Risk managers should have a bird’s-eye view of the entire organization, allowing them to identify current and incoming risks.
To be effective, risk managers should seek to break down silos and facilitate extensive cross-departmental collaboration. This journey starts with gaining knowledge and becoming familiar with the way different departments operate, their goals, and plans for future initiatives or expansions. Understanding the paths that different parts of the organization are following allows risk managers to identify risk interdependencies and devise a strategy to address these challenges.
There is significant opportunity for risk professionals to retain the momentum and continue collaborating across the organization. This requires building key relationships with senior stakeholders and proactively offering to help different parts of the organization identify and address risk while improving operational performance.
The COVID-19 pandemic and other major threats have been instrumental in elevating the risk management role. Risk managers should continue to showcase their indispensable contributions and help boards and C-suite executives make the necessary strategic decisions to minimize and mitigate risks and improve resilience.