Risk Management in Cooperative Operations

The challenges of cooperative operations cannot be solved without looking into the risks involved in the day to day operations. This brings us to the idea of sharing some insights on risk management in cooperatives based on certain literatures and experiences in the cooperative movement. As I cannot fully dwell on the subject, some pointers are provided to guide cooperative staff and officers willing to embrace the concept. Risk management is a broad subject that encompasses various facets of the business operations and we do not intend to provide the answers to all the issues.

Businessdictionary.com defines risk management as the identification, analysis, assessment, control and avoidance, minimization, or elimination of unacceptable risks. An organization may use risk assumption, risk avoidance, risk retention, risk transfer, or any other strategy (or combination of strategies) in proper management of future events.

From this definition, one has to be inclined in the flow of business transactions, governance, organizational culture, policies, plans and programs of the institution.

Further, as the cooperative business diversifies; employment of people with diverse background occur; the relationships in the business operations need to be diagnosed holistically. This can be done through a closer look at the articles of cooperation and by-laws; manual of policies/operations; organizational structure; human resource composition; services offered; plans and programs; and financial reports can help in understanding the dynamics of the organization. Given a clear idea of how the cooperative operates as an institution with a mission to fulfill provide a framework for its assessment. But it does not end at the organization level as its relationships with stakeholders need to be considered in the process. While organizations do business with members and stakeholders certain issues arise and requires solutions to enable management attain its objectives within the required period.

Moreover, you might be asking why we need to undertake risk management in cooperative operations. The answer could be within your reach but allow me to cite the importance of risk management as gathered from various sources. Risks exist in every dimension of business, but project management efforts are particularly sensitive to identifying and minimizing risk potential so project completion is not jeopardized (http://smallbusiness.chron.com). Risk management is recognised as an integral component of good management and governance. It is an iterative process consisting of steps, which, when undertaken in sequence, enable continual improvement in decision making. Risk management is the term applied to a logical and systematic method of establishing the context, identifying, analysing, evaluating, treating, monitoring and communicating risks associated with any activity, function or process in a way that will enable organizations to minimize losses and maximize opportunities (http://www.dmp.wa.gov.au). Managing risks means to understand, evaluate and take the necessary steps to increase the probability of success and reduce the likelihood of failure (http://www.thebrokeronline.eu).

Based on the above cited importance of risk management, it can be said that cooperative management, officers and members must recognize the need to fully appreciate and understand the steps involved in Risk Management. Cooperatives must be prepared to face uncertainties due to the changing business environment. For cooperatives to be competitive there is a need to address issues and concerns that affect the attainment of established goals and objectives.

Finally, this article does not intend to solve the prevailing development challenges of most cooperatives. Our concern is to provide tips to some cooperative and business leaders that can motivate them to undergo Risk Management courses. Observations indicate that not all cooperative officers prepared Risk Management Plans for their respective organizations. As institutions that handle peoples’ resources, we need to assure our shareholders that their hard earned investments are protected. This can be done through proactive handling of potential threats coming within and outside the organization. I go with the idea of most authors that risk can be minimized when we can identify; analyze and prioritize; plan and schedule; track and report; and control events that occurs or may occur along the business life of the enterprise.


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