Leading food distributor leverages risk management strategies to reduce overall spending

Client background

A large consumer products company operating in the food industry provides a wide range of products, including groceries and health and wellness items, to supermarkets, natural food stores and other retailers. The organization is a nationally based company with a robust supply chain, employing more than 30,000 people and generating around $30 billion in revenue.

The business challenge

After identifying and establishing an enterprise-wide risk register, the organization’s executive leadership team wanted to conduct a facilitated risk review focused on several key risks within the organization. Leadership also leveraged the risk review session to validate existing risk tolerances around the organization’s key risks and assess management’s view on the acceptable level of exposure given the organization’s strategy. This exercise would be used to course-correct and ensure that risk levels were in alignment with leadership’s expectations around the management of the risk.

Strategy and solution

Using a statistical modeling approach to evaluate the most likely outcomes and their associated impacts, the Baker Tilly team helped the company right-size the current resources and reduce the overall spend related to risk mitigation activities.

First, Baker Tilly worked with risk owners to identify 3-5 key scenarios, inputs and drivers for the impact and likelihood of occurrence for each of the selected risks. These risks were then researched to gather benchmarking data to generate Risk Quantification™-driven Monte-Carlo simulations of the outcomes associated with each scenario. The model was incorporated into the risk team’s reporting to justify further action needed in a key business area that leadership previously believed was sufficiently managed and within tolerance. Baker Tilly delivered a final report which provided the guidance necessary to determine the level of additional spend required to mitigate the risk within an acceptable level.