Chapter 6: Risk analysis
Annual report 2022
We not only value transparency with agri-food companies, but also aim to give everyone who may be interested full disclosure about our own organisational practices. The final chapters of this annual report are dedicated to doing so. This chapter dives into our risk management.
Risk management is essential to us, since we’re all too aware that economic conditions can change, politics can be unstable, and markets can be volatile. Every year, we evaluate the most pressing risks to our integrity, credibility and, of course, continuation. Plus, we look into ways to minimise these risks.
Main risks
Currently, these are our main risks:
1. Reputational damage: for example, resulting from partnerships with companies. Fairfood has internal guidelines for non-disclosure agreements (NDAs) and Memoranda of Understanding (MoUs) with companies.
2. Insufficient funds are raised due to lack of time within the Fairfood team: we installed a dedicated business development team with a channelled fundraising procedure, in which proposals are written and teams put together according to the RASCI-model (Responsible, Accountable, Supporting, Consulted and Informed).
3. Illegitimate use of grant funds, which requires repayment obligations to donors: budgets are approved by our managing director and the segregation of duties in the project management is appropriate. With large grants, the suitability of expenditure is investigated by an external auditor.
4. The safety and security of our partners is not considered sufficiently: we are in close contact with partners in risk areas. Prior to any partnerships, we make agreements on how to minimise risks by our actions and support partners where necessary.
5. The unpredictability of government policies: political decision-making, and the availability of funding, are difficult to predict, as are the political forces that influence partner organisations. Fairfood collaborates with other NGOs and lobby organisations Partos and MVO Platform to influence political decision-making through smart lobbying and advocacy.
Risk management and control systems
Fairfood manages risks at organisational, programme and project level. Risks are assessed and response measures taken and monitored to mitigate and/or absorb the impact of a certain risk. Internal control procedures are in place to mitigate and/or absorb financial risks relating to potential misuse of funds (i.e. due to corruption, fraud, or theft), as well as for receiving, allocating and the payment of funds. Financial management follows a low-risk strategy, reserving funds for investment risks and potential losses.
Fairfood is committed to transparency and the effective deployment of resources. It monitors project progress and the use of funds with a project control system. Operations are audited internally and externally, and outcomes are discussed with the management and the Supervisory Board. As a learning organisation, Fairfood strives for continuous improvement. And as a member of Partos, the trade association for development cooperation, we comply with Partos’ Code of Conduct. Fairfood has an integrity policy in place. Read more about this in chapter 1.
