Buckle up. There’s turbulence ahead.

It can be difficult to reconcile a career in risk management with being an optimist and the latest World Economic Forum (WEF) Global Risk Report is a case in point. This annual survey of some 1,500 experts is tough to read - driven by the climate crisis and political conflict, two-thirds of respondents believe the coming decade will be marked by growing turbulence and the risk of global catastrophe - less than 10% predict stable, safer times ahead. We’re entering a new era of risk and WEF provides a valuable perspective on the structural forces shaping this landscape:

• Global warming and the consequences for the climate
• Changes in the size, growth and structure of populations around the world
• The development and implementation of new technologies
• Material change in the concentration and sources of geopolitical power

This analysis provides a solid foundation for understanding the evolution of risk closer to home, in the food sector. Just a few decades ago, food risk was defined almost exclusively in terms of product quality and safety – in a stable, relatively slow-moving operating environment, compliance was king, today, it’s simply not enough. Each of WEF’s global super-risks feels not just relevant but business critical in today’s risk landscape, and they must all be understood, mitigated and managed. So where do we start?

There are deep synergies between WEF’s analysis and the framework LRQA applies in its work with food clients globally. These companies are highly differentiated, complex and operating in very different markets, yet in many cases a strategic assessment of risk will include six common pillars:

• Climate: principally the impact on primary production, energy transition and management of packaging, water, food loss and waste.
• Technology: how new ways of working and cost optimization impact risk profiles
• Sourcing: ensuring responsible practices, particularly around worker welfare and child labor.
• Supply chain: understanding risk related to ever more complex supply chains and the needs for alternative sourcing.
• Cyber threat: operational risk in a world where last year, one in three food manufacturers was the target of some sort of cyber attack.
• Brand and reputation: not just delivering the right product, but meeting consumer expectations of the brand

To these six pillars, we can add a seventh vital category: inter-connected risk. Think about, for example, the effects of climate-related crop failure on supply chain agility and complexity; the need to on-board new sources; and attendant risks related to quality and brand authenticity. Or consider the inherent risk of cyber attack when selecting and implementing new technologies. It is this need to analyze and consider risk in an ‘end-to-end’ way that has driven LRQA’s focus on more integrated solutions for its customers.

When devising strategies to address this new era of risk, two questions arise time and again. First – when issues arise, what can we learn? Learning (not to be confused with training) is central to every effective, agile risk management program. We must learn from success but more important, from failure too. Not just what went wrong, or where it went wrong but taking the time to understand why the true nature of the risk was mis-understood. There’s a difference between corrective action and understanding the root cause of failure and, therefore, knowing how to prevent the failure happening again.

Fortunately, the tools at our disposal have never been more powerful…which brings us to a second killer question. Do we trust the data? That trust starts with an understanding of whether and where the data with greatest value exists and how that data is collected, stored and organized. Think negatively – ask where can data be captured and verified to identify vulnerabilities and assess the efficacy of controls? LRQA’s EiQ platform, for example, aggregates data 25,000 LRQA supply chain audits, across 20 sectors, to deliver supply chain intelligence. At this scale, data can truly inform where risk resides and help understand potential impacts to safety, operations and ultimately to brands?

It’s a new era, but from its origins in food science, safety and compliance, across the sector, there is every reason to be confident that risk practices will adapt. Consumer tastes have transformed, as have expectations of quality and availability and demand for varied, global flavors in local markets. It’s no longer enough that food tastes good, it must contribute to well-being, respect animal and human welfare and minimize environmental impact. Yet every time the risk landscape shifts, capabilities evolve and improve. WEF’s analysis makes for depressing reading, but there is room for optimism – the food industry is ready to respond.

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