Posted: July 31st, 2019 9:09am UTC

Retail risk management

Unfortunately for Ocado, the warehouse fire in Andover on 5th February 2019 has had devastating effects on the business with share prices dropping 6%. Over 30,000 orders are fulfilled from this warehouse each week which accounts for 10% of Ocado’s capacity.
The fire will continue to have a huge knock on effect to the business:

Logistics
Ocado will not be able to receive any more deliveries for the foreseeable future at this site. Ocado luckily has several other warehouse facilities; with the correct business continuity planning these will potentially be able to be used to fulfil orders and take additional deliveries to make up for the Andover site being out of action.

Customer loyalty
Customer orders may well be delayed or unfulfilled. Customers may be frustrated by their deliveries being cancelled or delayed. They may choose to shop elsewhere (at least in the interim).

Reputation
As one of the major supermarket brands, the way they deal with this set back and ensure business continuity is restored as soon as possible will determine how significantly their brand reputation is affected. Ocado has an opportunity here to raise their profile for reliability and resilience if they can satisfy customer orders and are clear in all communications with their staff and customers.

Risk management
It is the responsibility of the risk manager to ensure that all risks are recorded and that necessary mitigations are in place. These mitigation activities may well be delivered by managers and employees. Risk management is important for the whole organisation to understand and to contribute to.

Incident management
It is important to record any incidents. Incidents may well offer the opportunity to mitigate any issues before a significant risk occurs. In a retail environment, the store environment has a responsibility to its staff, customers, contractors and suppliers. If several trips or falls are recorded for example, then it would be prudent to ensure that all staff have the correct training to ensure that they are always using the correct equipment, signage and completing the relevant safety checks too. This additional training could ensure that no greater accidents occur.

Claims management
Successfully mitigating risks will hopefully reduce insurance claims and therefore reduce insurance premiums too. Ocado has already stated that they have suitable insurance to cover property, stock and equipment as well as losses caused by business interruption.
In this instance, Ocado has been fortunate that no one has suffered any personal injuries. With the correct business continuity planning and clear communications, a quick claims process, Ocado should recover from this incident swiftly. Investigations into why the fire started will be the starting point for future mitigation and risk management planning and to ensure lessons are learned for Ocado.

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