Developing a strategy plan, ensuring a correct insurance policy is followed, and being able to respond and recover are some of the top tips for risk management in the dairy industry, according to food and beverage specialty leader, Deirdre O’Shea.
O’Shea spoke on behalf of Aon, services and management consulting firm, at the Bord Bia Dairy Markets Seminar yesterday (Tuesday, April 16).
She said that business owners in the dairy industry “must not look at risks in isolation, but realise that they are interconnected”.
Risk management plan
According to Aon’s 2023 Cyber Resilience Report, 62% of those surveyed said they could deal with one of the top 10 risks, however 30% experienced a financial loss from one of the risks occurring.
O’Shea said that unless risks are planned and quantified then it can be difficult to mitigate potential impacts.
Only 13% of the survey respondents said that they quantify risks.
To do this, scenarios should be selected that require quantifying or calculating how much a risk is worth, and then possible events are developed.
Correct insurance policy
O’Shea said that in order to get the correct insurance policy “it is all about making your business attractive to insurance companies”.
She said that dairy businesses generally retain a level of risk, and transfer the rest into an insurance company.
In order to calculate the ideal amount to retain and transfer, O’Shea recommended using an actuarial model for calculating the financial risk decision.
The calculation looks at risk appetite and what the appropriate level of retention is.
Respond and recover
In order to respond and recover from an incident, O’Shea advised business owners to have a strong claims advocacy involved in risk management plans, and to review the indemnity period.
This is the period that an insurance company is legally bound to accept the claims.
If this is broken, owners may be liable for both the direct and consequential losses of the claim.
Climate
For the first year ever, climate change appeared in Aon’s 2023 Cyber Resilience Report.
The risks include losses from natural disasters, where the impact is immediate, causing business interruption, material scarcity, supply chain issues, and reputation damage.
O’Shea said there is now more pressure on stakeholders to accelerate climate adaptations.
She recommended firstly mitigating physical risks and then engaging in sustainable growth processes.
Cybersecurity
The food and dairy industry has been “a target” for cybercriminals in the last two to three years, according to O’Shea.
She said that there is less investment into cybersecurity used when compared to other industries that have been subject to the risk for longer.
O’Shea added that there is a lot of operating technology used within businesses, increasing the opportunity of hackers getting into systems.
She said business owners should identify vulnerabilities early on to avoid future risks.