Annex 3: Risk management framework

Risk category = Strategic, Governance, Financial, People | Level of impact = Goal, Purpose, Strategic Objective 1, 2 or 3
RISK LEVEL OF RISK RATING (H,M,L)
EXTERNAL RISK
CATEGORY IMPACT LIKELIHOOD IMPACT
1. Fairtrade is not able to access, participate and/or be adequately represented in policy making Strategic Goal M H
discourses for global trade
EXISTING MITIGATING FACTORS (EXTERNAL) EXISTING MITIGATING FACTORS (INTERNAL)
- Growing recognition of Fairtrade’s importance in international trade discourses - Strategy and Policy Unit work on position papers etc.
- Regular participation of Fairtrade in international fora
- Increasing number of partnerships with key international institutions
ACTION (PRE-EMPTIVE)
- Development of partnerships approach to engage with key international actors

LEVEL OF RISK RATING (H,M,L)

RISK
EXTERNAL RISK IMPACT
CATEGORY LIKELIHOOD IMPACT
2. Support for Fairtrade within global trade discourses does not reach the critical mass necessary Strategic Goal M H
to drive changes in conventional trade
EXISTING MITIGATING FACTORS (EXTERNAL) EXISTING MITIGATING FACTORS (INTERNAL)
- Growing recognition of Fairtrade’s importance in international trade discourses - Strategy and Policy Unit work on position papers etc.
- - Increased engagement with Fair Trade Advocacy Office
ACTION (PRE-EMPTIVE)
- Ongoing work in policy, brand communication, impact assessment
- Development of partnerships approach to engage with key international actors

RISK LEVEL OF RISK RATING (H,M,L)

EXTERNAL RISK
CATEGORY IMPACT LIKELIHOOD IMPACT
3. Consumer support for Fairtrade is not strong enough to ensure Fairtrade principles are included Strategic Goal L H
in international trade agendas
EXISTING MITIGATING FACTORS (EXTERNAL) EXISTING MITIGATING FACTORS (INTERNAL)
- Consistently growing consumer support -
ACTION (PRE-EMPTIVE)
- Strategic focus on business- and consumer-facing functions, e.g. Global Account Management, Global Product Management
- Development of new markets strategy to expand Fairtrade’s international market presence

RISK LEVEL OF RISK RATING (H,M,L)

EXTERNAL RISK
CATEGORY IMPACT LIKELIHOOD IMPACT

Annex_3_Risk_management_framework_NOV_09_FINAL.doc
4. Spill-over effects to non-Fairtrade-certified producers are not proven, thus limiting Fairtrade’s Strategic Goal L H
impact
EXISTING MITIGATING FACTORS (EXTERNAL) EXISTING MITIGATING FACTORS (INTERNAL)
- Evidence from impact studies showing positive spill-over effects, particularly when Fairtrade - Increasing number and quality of impact studies
sales reach 30% of exportable production
- Strong business and consumer interesting Fairtrade, enhancing the likelihood of producers
reaching 30% threshold
ACTION (PRE-EMPTIVE)
- Strategic focus on increasing the percentage sold on Fairtrade terms

RISK LEVEL OF RISK RATING (H,M,L)

EXTERNAL RISK
CATEGORY IMPACT LIKELIHOOD IMPACT
5. Engagement with major market partners does not lead to their promotion of changes to Strategic Goal M M
conventional trading practices
EXISTING MITIGATING FACTORS (EXTERNAL) EXISTING MITIGATING FACTORS (INTERNAL)
- Consistently stronger commitment by major market partners means Fairtrade principles are -
becoming more widely adopted
ACTION (PRE-EMPTIVE)
- Global Account Management function aims to increase industry’s commitment to Fairtrade – assumption that this will lead to market partner promoting
Fairtrade principles

RISK LEVEL OF RISK RATING (H,M,L)

EXTERNAL RISK
CATEGORY IMPACT LIKELIHOOD IMPACT
6. Growth in Fairtrade negatively influences grassroots campaigning capacity Strategic Purpose L M

EXISTING MITIGATING FACTORS (EXTERNAL) EXISTING MITIGATING FACTORS (INTERNAL)

- - Existing grassroots campaigns
- Strong links with NGOs, ATOs and 100% Fairtrade
companies
ACTION (PRE-EMPTIVE)
- Expansion of grassroots campaigns like Fairtrade towns
- Focus on maintaining close links with NGOs, ATOs and 100% Fair Trade companies in Fairtrade governance.

RISK LEVEL OF RISK RATING (H,M,L)

EXTERNAL RISK
CATEGORY IMPACT LIKELIHOOD IMPACT
7. Consumer demand does not match Fairtrade’s ambition Strategic Purpose L H

EXISTING MITIGATING FACTORS (EXTERNAL) EXISTING MITIGATING FACTORS (INTERNAL)

- Consumer demand consistently growing, even during economic crisis - LI consumer-facing activities

Annex_3_Risk_management_framework_NOV_09_FINAL.doc
- Commitment from major market partners
- Consumer interest in broader Fairtrade product range
ACTION (PRE-EMPTIVE)
- Increased investment in consumer awareness-raising
- New product development
- New market development

RISK LEVEL OF RISK RATING (H,M,L)

EXTERNAL RISK
CATEGORY IMPACT LIKELIHOOD IMPACT
8. Facilitating more producer ownership of Fairtrade’s development outcomes does not translate Strategic Purpose L H
into a louder voice for Fairtrade in development discourses
EXISTING MITIGATING FACTORS (EXTERNAL) EXISTING MITIGATING FACTORS (INTERNAL)
- Strong interest of key development actors to engage with Fairtrade - LI consumer-facing activities
ACTION (PRE-EMPTIVE)
- Focus on developing strategic partnerships with key development actors

RISK LEVEL OF RISK RATING (H,M,L)

INTERNAL RISK
CATEGORY IMPACT LIKELIHOOD IMPACT
1. Consensus is not reached for major decisions within Fairtrade Governance Strategic L H
objective 1
EXISTING MITIGATING FACTORS (EXTERNAL) EXISTING MITIGATING FACTORS (INTERNAL)
- - Significant achievements during Strategic Review process
ACTION (PRE-EMPTIVE)
- Revised Governance Model under development
- Ongoing consensus building work across Fairtrade

Annex_3_Risk_management_framework_NOV_09_FINAL.doc
 RISK LEVEL OF RISK RATING (H,M,L)
INTERNAL RISK
CATEGORY IMPACT LIKELIHOOD IMPACT
2. Consensus is not reached on revenue distribution within Fairtrade Governance Strategic L H
/ Financial objective 1
EXISTING MITIGATING FACTORS (EXTERNAL) EXISTING MITIGATING FACTORS (INTERNAL)
- - Significant achievements during Strategic Review process
- Unanimous agreement that more efficient and cost
effective financial model is required
ACTION (PRE-EMPTIVE)
- Revised financial model under development

RISK LEVEL OF RISK RATING (H,M,L)

INTERNAL RISK
CATEGORY IMPACT LIKELIHOOD IMPACT
3. FLO-CERT does not have capacity to certify substantially increased numbers of Financial/ Strategic M H
producers/traders People objective 2
EXISTING MITIGATING FACTORS (EXTERNAL) EXISTING MITIGATING FACTORS (INTERNAL)
- - Consistent growth in FLO-CERT capacities
ACTION (PRE-EMPTIVE)
- Focus on aligning FLO-CERT’s planning with Fairtrade’s ambition
- Consider alternative certification options
- Focus on achieving sufficient investment in FLO-CERT

RISK LEVEL OF RISK RATING (H,M,L)

INTERNAL RISK
CATEGORY IMPACT LIKELIHOOD IMPACT
4. Fairtrade can not develop the partnerships needed to deepen its impact, e.g. in conflict- Strategic Strategic L H
affected regions objective 3
EXISTING MITIGATING FACTORS (EXTERNAL) EXISTING MITIGATING FACTORS (INTERNAL)
- - Existing partnerships can act as building blocks
ACTION (PRE-EMPTIVE)
- Focus on developing approach to strategic and operational partnerships
- Strengthening links with key actors
- Stepping up impact assessment - proving Fairtrade’s development potential
- Policy work outlining how Fairtrade can contribute to development in non-traditional areas like climate change and conflict-affected regions

Annex_3_Risk_management_framework_NOV_09_FINAL.doc