Risk Identification in Agribusiness

One of the most common words any Nigerians (can I say Uarians) say to themselves every time is “everything in life is a risk” is this statement true? Well, I won’t be dissecting how trust worthy that statement is but we all would be looking at how important it is to take risk and what to expect anytime we close our eyes to take risk especially in the agribusiness sector.

Running an agribusiness venture comes with many types of risks. Some of these risks can destroy an agribusiness firm, while others can cause serious damage that is costly to work on. Despite the risks implicit in doing agribusiness, CEOs and risk management employee can prepare, regardless of the size of their business for better profitability and sustainability of the business.

Risk is any situation that is exposed to danger, it can also be described as a situation where some or something is exposed to danger, harm or loss. Agribusiness risk can also be seen as any other sector risk even though it should be managed differently. All sector have its own risk and agricultural sector risk can’t be overlooked.

Agribusiness possess much more threat due to its vulnerability to natural disaster and the limited number of willing heart to provide solutions to all the available problems in the sector. Risk abound in the agricultural and the limited number of expert keep taking this risk. The ability to recognize risks is a key part of strategic business planning. Risks are identified through many ways. Strategies to identify these risks rely on deliberately analyzing a company’s specific business activities. Most agribusiness ventures face preventable, strategic and external danger that can be managed through acceptance, transfer, reduction, or elimination of their weakness, threat and danger.

It is important and wise for all business executives especially the human resource managers to get the staff trained on how to see risk and tackle it. Instead of employing a security man that will show your staff the way out during a sudden fire attack why not include how to manage fire extinguisher in their lecture during their orientation before becoming a full staff. Why not educate the staff on the reasons for high bird’s mortality so that in case mortality start with no reason they can know how to address the threat. Most times early risk identification helps the organisation to reduce unnecessary expenses that might later be spent on the havocs or result of dangers.

There are different steps to risk management and identification in agribusiness and they include:

Risk Recognition: The purpose of risk recognition is to know what, where, why, how, and when something could affect an agribusiness venture ability to operate. For example, when a venture can predict when grasshopper will affect their plant, we can say that is risk recognition

Risk Analysis: This step involves establishing the probability that a risk event might occur and the potential outcome of each event. For example, knowing when the grasshopper will strike the plant physically and accessing it cause could be seen as risk analysis.

Risk Estimation: Risk estimation compares the degree of each risk and ranks them according to their consequence. For example, The effect grasshopper attacking a farm vegetable can be lower to other invisible pest affecting the vegetables. Whichever damage is determined to have a higher probability of happening and causing damage, it would rank higher.

Risk Treatment: Risk treatment is also referred to as Risk Response Planning. In this step, risk mitigation strategies, preventative care, and contingency plans are created based on the assessed value of each risk.

Risk Monitoring: Risk management is a rotunda kind of process that adapts and changes over time. Repeating and continually monitoring the processes can help assure maximum coverage of known and unknown risks.

Different types of risk exist and let us take a look at it:

  • Technology Risk
  • Building Risk
  • Location Risk

Technology Risk: Nigerians and Africans at large are faced with the constant power outage, agribusiness ventures needs power as one of the major amenities needed for food production. Since owners of this ventures understand the peculiarity of their environment , this should be considered as threat and employers and owners of companies should sort the problem out by identifying it early and providing a backup generator.

Building Risk: Building risks are the most common type of risk in agribusiness ventures. Sudden fire outbreak, building collapse, insect invasion and lot more. To manage building risk, and the risk to employees certain measure have to be in place for example farms should have extra pen house that can be used in case of sudden collapse, farms should have some chemicals that can be used to fight off sudden insect invasion.

Location Risk: Among the location hazards facing a business are nearby farm theft, storm damage, floods, bad roads and other natural disasters. Farm employees should be familiar and master the streets leading in and out of the neighborhood on all sides of the place of business, employees should know different route that leads to their venture of work for security purposes. Individuals should keep sufficient fuel in their bikes or vehicles to drive out of and away from the area. 

How to deal with risk

We have different ways risk can be dealt with and here some ways;

Hire a risk analyst: A risk analyst is not a waste of money. They help see what we agriculturist can’t see. They are aware of unseen dangers and they can advise accordingly.

 Insure the venture: We have not started realizing the use of insurance, as agribusiness owner insurance should be cherished and signed up for to prevent loss.

Brainstorming: Brainstorm to identify more solution that fit you according to your environment.

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