Risk Analysis & Mitigation
…
Risk Analysis follows from Sector Analysis and defines the Risks, Issues and Mitigation strategies to be included in the Land Use Plan.
A risk is an event that may happen while an Issue is a risk that has happened. Both must be addressed.
Table of Contents
How to Analyse Risk
The benefit of risk analysis appears when the risk becomes an issue. Instead of running around madly trying to determine a solution for a dozen “hair on fire” things simultaneously, you have already determined the actions required and the people to do them. Just follow the list of steps and all will be well.
Brainstorm Risks and Mitigation Strategies
Gather a relevant team then brainstorm the risks and the mitigation strategies.
It is not as difficult as it appears. When both likelihood and severity have high scores, the urgency shows a high priority. Plan these first.
When a risk occurs, it is much easier to reach for the folder with all of the answers.
Rank Your Risks
Assign a number between one and ten for both likelihood and impact severity of a risk or issue.
Multiply these numbers to create a score between 1 and 100 defining their urgency.
Sort them by urgency and you have a prioritised list.
A problem with a low likelihood (2) and a low impact (2) will rank low (2 x 2=4). The converse (8 x 8=64) will rank high and demand a more serious planned response.
The Mitigation Strategy
The mitigation strategy must contain both the step by step solution of what is to be done and the list of people to action each. This would be:
- what to do
- who to do it
- in what order
- who is affected
- what processes are affected
- who to report progress to
Types of Risk
The list below will assist you to prepare.
Commercial Risk
Economic Risk
Economic risk derives from changed trade and economic parameters. Classic examples are recession, depression or trade war. Currency value changes can also cause broad upset.
Environmental Risk
Financial Risk
Intellectual Property Risk
Labour Shortages
Litigation Risk
Physical Risk
This is a risk involving damage to people and equipment. It can have long lasting implications and reduce your business – thankfully damage to equipment is usually covered by insurance. Damage to people may also be covered, but is a major nuisance.
Overall, insurance payouts never cover the full cost of any event.
Regulatory Risk
Any government regulates agriculture through various policies and regulations, which can impact farm operations and profitability. You should consider any regulatory risks and compliance requirements associated with the farm you are interested in purchasing.
Reputation Risk
Your business reputation is possibly one of a companies greatest assets. It determines who will deal with you and to what extent. You do not want people to feel that they must count their fingers after shaking hands with you!
Social media is all pervasive and internet copy is for ever!
Safety Risk
Weather Risk
Weather can be very destructive. Storms, fire, floods, strong wind, drought etc may be covered by insurance, but you never seem to recover the full value of the damage as there are often many intangibles and lost profit due to poor subsequent production.
Business Continuity Plan
A continuity plan ensures that the business can continue through the event and its aftermath.
Ensure that each mitigation strategy takes the form of an Incident Response Plan (or a Disaster Recovery Plan depending where you are from).
Each step must be initialled with date and time by the relevant person. This is necessary as sometimes an incident can go legal – particularly if someone is hurt or the cost of damage is high.
What to Include
Include:
- a contact list
- a comprehensive action list
- the locations of needed equipment and reference
Do not forget to include your insurance, suppliers and customers in the notification list – they will be very appreciative as they are definitely affected and timely notice will trigger their action list.
In most circumstances, the insurer must be informed quickly so they can get an assessor on-site. This will start the ball rolling quicker with less angst.
Prior to devoting my time to Properly Organic and Designer Acres, I served as a contracted super tech in the bleeding edge of satellite imagery, business management and accounting software, then telecommunication software bringing SMS and Mobile Application Protocol into Australia. I then decided to return to the land. I quickly discovered that apart the shape of the bales and the colour of the tractors little had changed.