Risk management plan as an integral part of the mid-term strategy in providing loan guarantees to agribusinesses
2012
Jirgena, H., Latvian Academy of Sciences, Riga (Latvia). Inst. of Economics | Hazners, J., Latvian State Inst. of Agrarian Economics, Riga (Latvia)
The negative impact of the global crisis on the Latvian agriculture and food processing has led to a necessity of revision of the mid - term strategy of the Rural Development Fund as a sole provider of loan guarantees to Latvian agribusinesses. The aim of the research is to select an appropriate strategy for the Fund and elaborate an action plan for the three years period from 2012 to 2014. The selection of the strategy is based upon the available results of the SWOT analysis. The selected defensive strategy requires an elaboration of a risk management plan. While the internal factors of the operation of the Rural Development Fund have remained much the same, the external environs have changed rapidly. Several factors have a major share in the changes of external risks. Therefore, it is necessary to elaborate the risk management strategy by identifying the most important threats factors and providing risk analysis with risk prioritising. Out of the four main risk management strategies, the avoidance and imitation are not applicable to the Fund, as the organisation cannot leave the market and the Fund operates in the sector where no competitors or leaders do exist. After the threats analysis and evaluation, risk management plan is worked out to avoid risks or to mitigate risk impact. The identified threats are evaluated and mapped on a semi-quantitative risk matrix. The study results into a detailed risk management plan including risk prioritisation, responsible persons, and actions to be taken.
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