The evolution of risk in the food sector

Having survived the immediate impacts of the pandemic, organizations have faced major geopolitical disruption, an energy crisis and are now coming to terms with the economics of soaring inflation and a seriously tough labour market. The supply challenges don’t end there. The impact of climate change, in particular drought, flood and fire risk has grown so far, so fast, that it’s a very real risk to food production and the quality of baseline ingredients used in food manufacturing.

Even one of these factors, in normal times, would represent a significant challenge to supply and availability – put together, they are an existential threat for many businesses and are sorely testing the industry’s ability to put affordable, quality food on people’s tables.

If all that wasn’t enough, we must also remember that these supply side pressures are only one side of the coin. For all the demonstrable challenges of production, consumer expectations are as high as they ever were, probably higher. Awareness of - and curiosity towards - where our food comes from, how it’s produced, by who, and the resources used in the process has created a fierce appetite for transparency. At precisely the point that the food industry is having to re-imagine its approach to sourcing and manufacturing, it also faces unprecedented scrutiny, not just from consumers, but from NGOs, investors, governments and regulators alike. 

None of this is a phase. Make no mistake, the risk management paradigm has shifted and it has shifted dramatically – a point underlined by the changing nature of our client work over the past 12-18 months. More and more, we’re being asked to press ‘reset’, to look way beyond food quality and safety and take a strategic view as to what really matters to the integrity of a brand. Here are five of the common themes we have seen emerge.

1. Don’t assume what’s worked before will work today.

One of the reasons our food is so safe is that the skills, processes, systems and competencies required have become so deeply embedded in the industry. There are significant upsides to this, but in such a fast-changing and challenging operating context, it’s time to ask the question: are traditional systems for controlling and managing risk still fit for purpose? 

In asking this question, producers often find themselves grappling with some big strategic choices. How many lines can I run with the people available? Can supplier onboarding processes cope, when time and agility is of the essence? Businesses are having to make wholesale changes if they are to continue putting food on their customers’ tables – it is inevitable that risk management processes will change also, if they are to remain effective.

2. Risk resides in the gap between what you say and what do

There may be little or no competitive advantage in food safety, but across other aspects of the risk management spectrum, brand marketing teams will be looking to maximise benefits.  Nowhere is this more the case than with commitments to sustainability and the environment.

As the focus on Environmental, Social and Governance (ESG) issues grows, organisations are having balance demands from employees to do the right thing; an inevitable desire to get the credit for doing so; and the more mundane – but critical – need to ensure that measures are effective and can be credibly evidenced. These issues are at their most visible in advertising and on-pack claims and we are seeing much more focus on assurance and verification as essential tools to avoid accusations of greenwashing.

3. Go deep, go wide

One of the most effective ways to manage the shift from product safety to brand integrity, is for businesses to look beyond the immediate supplier base and understand products at source: the source of your materials; the component parts; the sources your manufacturers are using.  

In a more agile operating environment, these insights can strengthen the integrity of traditional food safety elements - biological, physical, chemical, and allergenic risk factors - but must also take account of holistic ESG and reputational risks, from human rights and social welfare, to environmental practices around water, the use of plastics and, of course, carbon emissions.

4. Change is inevitable but is a point of vulnerability

Today’s operating context demands change – often at pace – which requires organizations to really look at how effectively change is managed.  Are the right mechanisms in place through which change is planned, implemented, checked and opportunities for improvement are acted on? Change management process has never been more important in the business of risk management – the days of ‘setting and forgetting’ are gone. Go back, validate, look at the evidence and ask whether the controls are actually still effective.

5. Join the dots

Food safety and quality; employee welfare; sustainability and the environment: in many food businesses, each of these risk factors will be dealt with by specific expert teams. Some organizations have re-structured, but whether it’s one team, or a number of specialist teams as is more common, achieving brand integrity means joining the assessment of those risk factors up, so that relationships between them are clearly understood.  Assume that Newton’s Third Law law applies – for every action, there is an equal and opposite action. Taking action to remove plastic in food packaging is important, for example, but those decisions need to be joined up with the impact on safety, product quality and shelf-life.

The opportunity to be part of these conversations, to listen, learn and compare client experiences gives LRQA a uniquely broad perspective on the evolving nature of risk in the food sector. In achieving food safety excellence, our sector has learned that through collaboration and shared best practice, everybody wins – especially the consumer. As the food industry faces up to a more holistic risk landscape, I hope that spirit of shared responsibility continues.                       

For more information on LRQA’s food sector services, visit: https://www.lrqa.com/en-us/food-beverage-hospitality/