1. Creating Value from Risk Management
Peter McGee
Belinda has shown us the potential impacts of a food safety crisis on your business.
I can only echo her sentiments.
First a poll:
How many have a recall exposure?
How many have plans?
How many run tests?
How many purchase insurance?
Does this still keep you awake at night?
But the fact is, if we are in business then we are taking risks. We take risk every day and so why then the negative connotation to the term risk?
Following on from Belinda’s presentation my intent is to show you how risk can create value in your business.

2. CREATING VALUE $$$$ Risk Value
Businesses are valued many ways, but when it comes down to it, the value in your business is derived from:
A Revenue or profit measure
A risk factor
The risk factor is ultimately about the certainty of these cash flows
We focus on the revenue and profit numbers of our businesses every day, but how much focus do we put to this risk factor?

3. Risk has Upside and Downside
“Risk is the management of uncertainty of objectives” (ISO31000:2009)
The definition of risk in the international risk management standard, ISO31000 provides a useful tool in switching or focus from loss avoidance.

5. ALIGN RISK FRAMEWORK TO STRATEGIC OBJECTIVES
What are the risks worth taking?
Fundamental Objective
Strategy 1
Strategy 2
KPI
Which risks will prevent me from getting there?

6. A word on Reputation:
Reputation
Consequence

7. How do we create value? Better Decisions Competitive Advantage
Resilience
Risk Culture
Cost Reduction

8. How do we create value?
Australian food industry’s high food safety standards has:
"created disciplines and processes in the business that make us world leading in supply-chain management”
Anthony Di Pietro, Premier Fruits Group, AFR, 29/7/13

9. Result Problem Solution Outcome Better Decisions
Major food processing business with:
spiraling insurance costs
impacting on EBITDA
Impacting on valuation for potential exit
Problem
4 year Investment in risk improvement:
Capital improvement
Improved systems
Solution
Better Decisions
Allocation of capital based on risk priority
Competitive Advantage
Strengthened balance sheet
Resilience
Customer confidence in product availability
Risk Culture
Improved performance and reduced insurance claims
Cost Reduction
Premium savings over five years of more than $4M
Outcome
Trade sale:
Improved EBITDA
Better multiples
Result

10. What could they have done differently?
Better Decisions
Competitive Advantage
Resilience
Risk Culture
Cost Reduction
What could they have done differently?
The sales team estimated an increase in sales of $3-5M if credit controls cold e loosened.
Insurance option presented to Board as $100K investment for $3M in sales.
$100K policy deemed expensive

11. Risk Maturity
Naïve
Compliant
Developing
Mature
Value Adding

12. How do you make your investment decisions?
Better Decisions
Competitive Advantage
Resilience
Risk Culture
Cost Reduction
Option 2
Option 1

13. Thank You Peter McGee Come and see us at Meet the Experts tomorrow
Belinda has shown us the potential impacts of a food safety crisis on your business.
I can only echo her sentiments.
But the fact is, if we are in business then we are taking risks. We take risk every day and so why then the negative connotation to the term risk?
Following on from Belinda’s presentation my intent is to show you how risk can create value in your business.
Come and see us at Meet the Experts tomorrow