quinta-feira, 2 de maio de 2024

Risk Management in Brazilian Breweries

Climate change risk: the risk below the radar.

As a professional in the area of ​​Governance, Risks and Compliance, I often mention, in related articles, various risks that exist in different sectors of the economy, including the beverage segment.

Among the risks, I mention, for example, losses in volume and market share, losses due to price, competitor actions, breakdown of machines and equipment, tax and fiscal risks, environmental, health and safety risks, human contamination, damage to the image and reputation, IT and Cyber. These are the most evident and common in companies. However, there is a risk that has increasingly stood out and that was previously not on organizations' radar: the risk of climate change.

Southern Brazil is an area of ​​critical climate convergence. In that environment, the Antarctic cold meets the heat of the Midwest, plus ocean winds causing atmospheric pressure and sudden extratropical cyclones, typhoons, gales and, consequently, damage and loss of property and lives are impacted. To make matters worse, the abrupt change in climate causes heavy rains and floods. In this sense, a series of disasters, when analyzed together, become a true catastrophe. It's a total disaster. Highways are closed, the supply of drinking water is cut off, electricity is interrupted, and the supply becomes limited or even scarce. The government is not up to the task, even with the best crisis & contingency plan in hand. Humanitarian aid becomes essential. After all, we live in a community. (This scenario is very similar in the Florida region. Officially the hurricane season in Florida is from June to November. The latest records show that the most impacted months are August, September and October. These are the months with the highest probability of formation of storms and hurricanes.)

After reading the CNN news, more than 154 cities were affected due to heavy rains in Rio Grande do Sul. Knowing that this Southern State is one of the largest producers of craft beer, considering the number of manufacturers, these are certainly being impacted in some way. For example, the brewery Blaut Beer, from Farroupilha-RS, announced on its Instagram channel the momentary interruption of pre-May 1st holiday (Labor Day) activities due to heavy rain. I do believe that other breweries did the same.

The observations above lead to a path: do a benchmarking, put the topic on the agenda of the meeting of partners and shareholders, build your risk map considering climate risks (also include severe droughts.) Create mechanisms to mitigate physical and digital risks and, above all, consider including the assessment of this risk by the broker when purchasing an insurance policy to mitigate the impacts, sharing the risk with a first-rate insurer.

  


I wish my friends in the brewing chain (farmers, logistics companies, suppliers) and brewers in Rio Grande do Sul luck and a quick recovery in their operations, including partners, customers and employees. I sympathize.

References:

https://noticias.uol.com.br/cotidiano/ultimas-noticias/2024/05/02/brasil-tem-8-das-10-cidades-com-mais-chuvas-no-mundo-em-24h-mostra-ogimet.htm?cmpid=copiaecola

https://www.cnnbrasil.com.br/nacional/chuvas-no-rs-governo-confirma-29-mortes-e-60-desaparecidos/  

#pelosatelite #avecesarco #djjonesco #breweries

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