Although all sectors require efficient risk management, agribusiness must map, control, and, when possible, mitigate its risks with much greater emphasis, as its results are directly impacted by them.
Often, the risks that have the most significant impact are those that cannot always be controlled, such as weather conditions, pests, among others. Therefore, strategies and contingency plans are needed to navigate these situations and ensure positive outcomes despite the challenges.
The main risks faced include climate risk, market risk due to volatility, credit risk for investments, as there is a possibility of default; health risks related to diseases and pests, as well as logistical and regulatory risks.
Minimizing the Chances of Unsatisfactory Results
The sustainability of agribusiness and agroindustry is closely tied to the ability to mitigate risks or be prepared to face them. To achieve this, an efficient risk management system must be implemented.
However, for this to happen, the process must start by identifying the risks through data analysis and the history of information collected by your business. This will allow you to map behavioral patterns, both in terms of weather and market conditions.
This identification can be carried out with the help of tools such as the Ishikawa Diagram, Scenario Simulation, and SWOT Matrix, for example.
Once the risks are identified, they must be classified according to their impacts, separating them into those that can be eliminated, controlled, or mitigated, and determining the priority of each.
At this stage, the probability of the risk occurring must also be considered: how likely is it to become a reality?
What about the impact if the risk does materialize? Just like probability, the impact must also be mapped to understand its consequences and potential losses.
This indicator can be easily determined through a Business Impact Analysis (BIA), which identifies and evaluates the effects of business interruptions and helps plan contingency measures.
Action plans are part of the contingency measures, prioritizing the most significant risks and guiding the creation of the business’s response strategy.
For action plans to be executed at the right time, they must be described clearly, with specific and achievable actions that deliver quick wins. As with other business action plans, the 5W2H tool can be very useful at this stage.
At this point, it may seem that risk management is well-structured. However, there is no efficiency without continuous monitoring to identify whether the risks remain the same, whether their impacts and priorities are still consistent, and whether the action plans remain effective for the mapped situations.
Key Performance Indicators (KPIs) can make the implementation of monitoring and control mechanisms measurable, providing relevant information for decision-making during this ongoing process.
Interact Helps You with Risk Management
Interact Suite SA features an exclusive module for managing risks across companies from all sectors.
With it, your agribusiness will be able to identify, analyze and audit control practices with the aim of preventing the materialization of strategic, process, financial, climate-related risks, and more.
The module also includes tools for Risk Management and Mapping, Alert Monitoring, Risk Maps, Reports and Analyses, among others.
Interact also offers solutions for companies that need a Digital Transformation to enhance results through integrated and secure management controls.
We are the answer to elevate your results to a new level. Visit our website and rely on Interact Suite SA to manage, analyze, and make strategic decisions.
Author:
Bianca Wermann
Journalist, Communication and Marketing Analyst at Interact Solutions.
