Business continuity in the UK food and drink industry
Business continuity and risk management in the food and drink industry seem to be in a peculiar state of flux. On the one hand, things seems to be progressing well: there is increasing regulation and proliferating standards for compliance. Some might even say there is an over-preponderance of `regulatory creep’. At the same time, consumers are demanding more transparency and overt integrity and authorities require more traceability. Surely this set of triggers is leading to better risk management and business continuity? It must be unavoidable to side-step good practice, to anticipate risk and to apply appropriate plans or mitigate or eliminate it. In fact, good business continuity and risk management, you would think, is becoming a natural, integral part of each businesses’ licence to operate… But no. Things are not quite that simple. There is another side to the story, at odds with the surface drivers that point to better regulation and a rise in pre-emptive best practice. This is evidenced, for example, by the findings of the DEFRA report of last summer – ‘Resilience in the Food Chain: A study of business continuity management in the food and drink industry’. In the report, Dr Helen Peck, of the Resilience Centre, pointed out that while most companies of the 28 representative, leading businesses surveyed were pursuing “wider operational risk management programmes, for reason of compliance”, few of them had moved beyond “reactive crisis management to proactive or preventative business continuity management”. However, the case for business of all kinds to embrace proactive business continuity and risk management is universally acknowledged. Not just as a defensive measure but as a positive, strategic business choice. Writing in an article in the Financial Times in October 2006, Lord Levene said: “Every business takes risks, and in today’s world those risks simply must be well managed to ensure success. Everyone involved, from the coal face to the board room, has to understand the risks they face, know their limits, and be prepared in case things go wrong. “But risk management is not simply about preparing for the worst. It’s also about realising your full potential. With a clear understanding of the risks they face, businesses can maximise their performance and drive forward their competitive advantage. “Yet research carried out by Lloyd’s last year showed that not enough is being done on this by businesses across the world. This has to change. “Effective risk management ensures that a good understanding of risk is backed up by the right appetite, capacity and controls. In today’s increasingly risky work, and particularly in the insurance industry, I just don’t see how any business can survive without it. It separates those who are educated, careful risk takers, from those who are simply gamblers.” Among those who are gambling needlessly, we might assume, are the food processors and packagers who, according to the DEFRA report, are sometimes in a “precarious position”, mainly fearing food contamination scares which have destroyed brands in the past. They are also vulnerable to loss of site (fewer and larger production sites mean an increasing impact from natural disasters like fire and flood) that can also disrupt brand reputation and loyalty. How proactive risk assessment can help redress the balance A prime example of where simple is best is in applying risk assessment to each key stage of the product management cycle. The risk assessment workshop mechanic, based on variations of the trusted Impact and Likelihood format, can be applied to various stages of a programme aiming at pre-empting or dealing with product withdrawals or full product recalls. There are three primary stages where it can be introduced, summarised here: * Start with a clear overview of your products and their risks The first part of the workshop focuses on identifying those products that have most risks attached or where common risks are shared across a range of products. The severe risks would be identified. The second part of the session then focuses on action plans to remove, reduce or deal with the identified high risks – those with the greatest impact and likelihood. As part of an overall risk management programme, this sort of overview assessment should happen at least annually – or as triggered by major product changes or additions. * Testing the existing product recall approach The risk assessment would systematically work through the processes and ask the assembled functional experts to debate where the gaps or shortfalls lie. Again, an action plan might then be put in place to tackle the high-risk areas and, eventually, would naturally lead on to a simulation to test that the improved processes and materials actually work. This sort of process should definitely include the communications team and any press office function. * Working out the strategy for a live or imminent product recall On such an occasion, the senior team dealing with the problem need to take at least an hour (even in an urgent situation) to assess the scale and potential of the recall and to work out the best approach. A quick risk assessment coupled with use of a generic strategy checklist is the ideal way to pinpoint the detail of the risks, to work out how to deal with these risks and then to set these against the overall strategy. This dual approach is also very powerful if you have a senior team who can’t decide whether or not to go ahead with a full recall or not and are asking basic questions like `Are there enough reasons to take this drastic step?’ `How much will it cost?’ `Is the customer/consumer really in danger?’ The risk assessment, carefully structured, is a sure way to demonstrate `how bad it is’ and, working alongside the company’s crisis policy, will help determine the appropriate action to take. Chris Woodcock is managing director of Razor, a company that specialises in both building and protecting reputation and which has a focus on working with clients in the international food and drink industry on both communications and risk management programmes. Razor runs the DARE risk, issues and crisis service with Campden & Chorleywood Food RA. Contact Razor at: +44 (0)1869 353801. www.razor-pr.com
•Date: 4th May 2007• Region: UK •Type: Article •Topic: Retail BC |
