Risk is inherent in any business. Managing risk is fundamental to the success of the cooperative in a world that is increasingly volatile, uncertain, complex, and ambiguous. Risk approaches have become more prevalent because of customer requirements, investors desire more information, increased regulatory and legal requirements, supply chain interruptions, cyber crime, catastrophic weather events, and product recalls.
When cooperatives leaders think about risk, consider the objective of the organization and the processes and people to accomplish such objectives. Identify the events that would threaten the accomplishment of the objectives. Rank such events based on the likelihood they would occur or the damage incurred if such an event were to happen. Determine how the cooperative will respond. Should the co-op adopt strategies to avoid the risk, reduce the risk, share the risk, or accept the risk? Create processes to track the risk, the mitigation strategy to reduce the risk, and monitoring system to assess if the responses are working.