What should businesses look for in a risk management firm?
Look for a firm that has agribusiness and food system experts. This is important because they can help you plan for changes in import and export laws, trade restrictions and governmental regulations. Doing business on a global scale does not mean you should be vulnerable to constant shifts in the political, economic and business landscapes of regions around the world.
Also, look for a firm that uses proprietary analytical tools and risk management methodologies to create a powerful global knowledge base that will help you target the specialized risks in your industry.
How can you protect your value chain?
As part of a highly integrated industry, your value chain is complex. It requires interdependent relationships with suppliers, vendors, partners, consumers and customers around the world.
Conducting business in global markets exposes you to unforeseen volatility and places your business at risk. Nonperformance of key suppliers or service providers, as well as labor disputes, wars, economic upheaval or natural disasters, can disrupt a company’s normal trade practices.
The results are significant: lost or damaged assets, lost sales and substantial unbudgeted expenses, including contractual penalties and expedited costs. To protect your business interests around the world, you must address key risks such as supply chain disruptions, commodity price risk, and negative financial impact due to interdependent or volumetric risk.
There are tools that can help you understand and manage the risks of conducting business in potentially unstable regions. A political and economic risk map can analyze data collected by trade credit and political risk underwriters. The map’s supply chain vulnerability index ranks the top 50 countries that U.S. and European companies rely on most for imported goods and services.
How can a risk management firm help a company improve its food safety and security?
The well-publicized outbreaks of mad cow and foot-and-mouth disease, combined with the increasing risk of bioterrorism, have brought the issue of food supply safety into the harsh spotlight in communities around the world. When one component of the food chain is deemed unsafe, the dependent parts of the chain are damaged along with it.
In this age of open access and media scrutiny, your business faces key challenges in food safety and security such as foreign and domestic terrorism, accidental and malicious contamination, and product recall and reputational damage.
Risk management experts develop cost-effective risk funding and transfer options to mitigate your business risks. They conduct extensive site surveys, design security systems that blend tampering deterrence with acceptable public interfaces, and adopt standardized security approaches at your facilities. They use their broad experience and international network of resources to conduct threat assessments on a multinational level and across the enterprise, helping you implement robust internal controls.
Leo G. Walter III is executive vice president of Aon Risk Services Inc. Reach him at (330) 836-8866 x126 or [email protected].