Question

The food industry is also a highly competitive field. On top of that, today's population is increasingly concerned about the food safety and proper diet. What can this company do to satisfy their stakeholders and remain a going concern? There are many companies exposed to high risk, such as investments brokers, oil and gas, transportation and insurance industry, what precautions should companies do to eliminate or reduce such exposure. We can see that in the past most of the action affected consumers. Any other alternatives?

Answer 1

I am assuming that both of above questions are independent.

1. The company can do the following to satisfy their stakeholders and remain a going concern:

• Innovation : The food industry is ever evolving and to survive, one needs to innovate continuously.
• Keep proper controls on quality: Quality is an important factor which could be a game changer.
• Compliance: To stay going concern, one has to comply with all laws and regulations.

2. To cover these risks, the company should hedge the position. For example, if there is risk of high transportation or oil prices, that can be hedged using financial instruments. Also, I would recommend making a Risk Control Matrix, popularly known as RCM. This would help in identification of risk as well as developing controls to mitigate this risk.