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  February 18th, 2021 | Written by

Managing Risk in the Food Manufacturing Business

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  • There are several risks involved, and managers need to be prepared to combat them when they arise.
  • In the 21st century, technology plays a decisive role in the way company’s effectively manage risks.

The food industry is one that the world cannot do without. It often experiences various evolutionary stages that make it difficult for food manufacturers, suppliers, and retailers. There are several risks involved, and managers need to be prepared to combat them when they arise.

Some of the common risks involved in the food business are customer taste changes and compromised quality of ingredients and materials. Contamination and poisoning of ingredients and end products are also problems food manufacturers deal with. Thus, it is vital for food manufacturing businesses to manage risks in non-harmful ways that won’t affect their company and customers.

What Is Risk Management?

According to the Corporate Finance Institute, risk management entails identifying, analyzing, and responding to risk factors that form a business’s life. Effective risk management means finding proactive ways to control future elements that might lead to problems. Companies that imbibe the culture can reduce the possibility of risks and its negative impact.

Most food manufacturing companies are not prepared to manage risks because they have ineffective data management software. At other times, the solutions they have do not support their risk management strategy. It affects how the business can effectively manage and reduce problems, which affects their profits.

How should companies manage risk to reduce disruptions and improve running costs and profits? Let’s find out.

How To Effectively Manage Risk in the Food Manufacturing Business

A business that desires to manage risk in the food manufacturing industry effectively must do the following:

Manage the Supply Chain

The food industry has a history of being adversely affected by its supply chain conditions. A drought, too much rainfall, or sudden pest infestation can affect a supplier and interrupt business operations. While these circumstances may seem beyond anyone’s control, there are ways to handle them.

One of the best ways is to have business interruption insurance. The policy protects a company while giving them time to sort out their supply chain problem. This way, the business doesn’t shut down entirely or resort to lesser options in a bid to remain in production.

Inspect Equipment for Risks

The food industry is nothing without its equipment. If a piece of equipment fails, it could potentially cost you an average of $25 per minute of downtime. Thus, it’s evident that the benefits of having a piece of functioning machinery far outweigh the risk of not owning one.

To prevent situations where the company bleeds funds, train employees to clean and sort out faulty equipment. Ensure they clean and replace damaged parts with suitable components. Beyond the preceding, carry out regular maintenance using a professional, and invest in backup equipment.

It would also help to have more than one machinery for a particular task, for increased efficiency. Automating equipment reduces the need for human intervention, thereby limiting operating problems. The only downside is that it requires highly skilled personnel to run.

Insure Spoilage and Containment

Anyone who ever visited knows how vital it is to eat the right and uncontaminated food. As mentioned earlier, food spoilage and contamination are two of the most common risks manufacturers face. It could be from a problem with the supply chain or storage equipment failure.

It’s worse if any of the tainted food left the company facility, and there’s a recall. Whatever the case, the best way to mitigate this risk is by having food spoilage insurance. The policy supplies a business with funds to repurchase supplies and covers other spoilage liabilities. Like the classic case of the moldy yogurt from Chobani, no one is immune to manufacturing risk, so plan.

Have Soundproof Food Safety Plan

A significant risk management factor is food safety and the prevention of outbreaks. Carrying out antimicrobial testing of food products can prevent disastrous situations. Bacteria aren’t just specks; there are specific ways to test them, especially the common ones like Staphylococcus, E. coli, Listeria, and Salmonella.

Get a testing company that tailors its procedure to each pathogen to examine products before shipping them out. Doing this will prevent recalls and the millions of dollars spent settling personal injury and defective product lawsuits.

Invest in the Right Technology

In the 21st century, technology plays a decisive role in the way company’s effectively manage risks. When choosing a tech to help determine high-risk areas, it should be one that is capable of providing market and industry insights on developing trends.

The software must flag inefficiency and detect bottlenecks in the running processes. Other things to watch out for are whether the tech can strengthen the system functionality, track contamination causes in real-time, and improve data accuracy.

If the technology can perform these functions, among others, then it has a greater chance of effectively managing risks. This way, food manufacturers can match opportunities with capabilities, achieve category leadership, and get a holistic view of problems.

Additionally, companies will quickly detect areas of non-compliance and share product data across several platforms and partners. Measuring ROI will be more accessible, and manufacturers can cut high-risk areas and be better managers.


Risk Management starts with prevention and ends with recovery methods for better and more efficient productivity. As a food manufacturer, it is essential to cut down risk factors using the techniques discussed. Be proactive when approaching problems, and always have a backup plan. Lastly, risk management might seem complicated and tedious, but it pays off in the long-run and will keep the business going for a long time.


Nancy Loo is a professional blogger who has a lot of creativity and likes writing about spiritual development, food and her adventures. She is the author at blog, where she covers different cooking topics.