Risk is an inherent part of a business. There is no way that a company can correctly predict every disaster or challenges coming its way. However, as ‘prevention is better than cure’, deploying risk management strategies can prove to be fruitful for companies in the long run. As far as the food industry is concerned, risk management is of particular importance as missteps can have adverse effects on more than just productivity. When companies in the food industry slack on their policies, consumer health can be put at risk since the mismanagement of food products can cause major illness outbreaks. Players in this sector need to embrace the operational, scientific, and consumer perspectives of food safety in order to identify and mitigate the myriad of risks facing their company. To facilitate this, it is important that food industry companies have the right risk management strategies in place. Here are four tips for risk management for companies in the food industry:
Ensure coverage for supply chain risk
Supply delivery in the food industry can be interrupted by many factors – including price increases, adverse weather, infrastructure issues, or damage to a supplier location. If companies in this sector even lose one dependable supplier, this can lead to a loss of income and can affect the quality, consistency, and service of a foodservice provider. To avoid huge losses in such situations, companies can use risk management strategies such as ensuring an insurance cover for the goods. This will help companies to meet the loss of business income and extra expenses that result when a supplier located within a policy territory fails to deliver because of damages resulting from a covered cause of loss.
Consumer demands, especially in the food industry, are constantly changing. This is driving co-ops and processors to research and develop new types of packaging, a wider variety of flavors, partially prepared options, and facilities dedicated to organic, allergy-free, or kosher foods. To prevent customers from flocking to competitors, companies in the food industry must incorporate innovation in their products and packaging as a part of risk management to avoid loss of customers to other brands.
Ensuring product quality is a vital aspect of risk management for companies in the food industry. End consumers expect whole and partially processed foods and beverages to be safe, fresh, and continually available regardless of how distant the originating source or what must be done to ensure quality. Hence, companies in the food industry must compete on their ability to provide a consistently high yield of blemish-free perishable goods and also a superior on-time delivery performance at the lowest cost.
Regulatory compliance and food safety
Companies in the food industry have long been subject to the regulations of the United States Department of Agriculture (USDA), Food, and Drug Administration (FDA), and the Environmental Protection Agency (EPA). Interestingly, this represents only a fraction of regulatory requirements and guidelines that companies in the food industry are expected to uphold to ensure environment, product, and worker safety. As a part of their risk management strategy, food companies must ensure that they do not fail to comply with these regulations.