Chapter 4: Risk analysis
Annual report 2023
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 specific 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.
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 a changing political environment in the Netherlands: Fairfood changed its funding strategy to become less reliant on Dutch funding. In 2021, 95% of our funding originated from the Netherlands. Currently, over 50% of our funding comes from international organisations. Our overall reliance on grants has decreased significantly from 47% in 2021 to approximately 20% now.
3. Illegitimate use of grant funds, which requires repayment 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 come to agreements on how to minimise risks in our actions and support partners where necessary.
5. This one proved to be a valid risk in 2023: the unpredictability of government policies. Political decision-making, and with that, 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.
