Operational risks

Guiding Definition

Potential losses resulting from external physical events and management’s failure to plan and mitigate against these events.


  • Reduced primary crop or livestock production
  • Higher transport costs to haul imports longer distances
  • Stranded assets due to shifting production zones

Business Risks - Operational Examples

Climate Change

Campbell’s Soup Company has struggled with extreme weather in California, a key growing region for its carrot supplies. In 2014, California's record-setting drought followed by intense rains led to a 28% decline in profits for its carrot division.


  • Reduced agricultural productivity
  • R&D spending for more resilient varieties

Water Use and Pollution

Illovo, the South African sugar producer, temporarily shut down a large sugar mill in early 2015 as drought was predicted to destroy $81 million in local production.


  • Revenue decline resulting from decreased production