Various Risk Factors in Food Companies

Recently, a famous Korean dairy company has been in a major crisis due to CEO risk, causing much social controversy. This incident has made us think again about risk management in food companies, especially ‘CEO risk’.

1 Who owns the milk?

Milk is originally food for calves. Humans eat this cow’s milk as a substitute, but it has various implications in that it is ultimately an act of taking resources from life. Calves have a rennet enzyme in their stomachs shortly after they are born, and when they drink their mother’s milk, it coagulates it and slowly digests it. In the past, this enzyme was extracted from the stomachs of male calves and used to make cheese, but it is now being replaced by an industrially synthesized method.

It is said that the history of cheese began with milk that coagulated accidentally in a camel skin bag in the desert, and it developed mainly in Europe, and in some regions such as Imsil in Korea.

2 Milk and the Future

Winston Churchill, the British Prime Minister during World War II, once said, "The best investment for the future is to feed your children milk." This shows how important the health and nutrition of the next generation is for the long-term prosperity of the country.

However, today, milk consumption is decreasing due to lactose intolerance, declining birth rates, an increase in the vegan and vegetarian population, and an increase in diabetes caused by the sugar contained in lactose. In addition, milk from the farm is transported to the processing company through refrigerated distribution, and in this process, dairy farmers suffer from the double burden of lack of price negotiation power and decreased profitability.

<Camembert Cheese>

3 CEO Risk and Corporate Fate

In the sensitive and delicate food industry like milk, 'trust' is the most important asset. However, a recent careless remark by the CEO of a certain dairy processing company on a socially sensitive issue led to a boycott by consumers, and the aftermath led to decreased sales, a drop in stock price, and damage to brand value.

This is not a simple mistake, but a typical case of ‘CEO risk’ that shakes the entire company.

4 CEO risk cases around the world

Uber – Travis Kalanick

CEO Kalanick, who was famous for his aggressive growth strategy, was at the center of various controversies such as inappropriate treatment of employees, covering up internal sexual harassment, and conflicts with the taxi industry. Ultimately, these leadership issues caused serious damage to the brand image, and he had to step down as CEO.

Papa John’s – John Schnatter

As the founder, he was criticized by public opinion for his racist remarks, which caused his image and brand trust to plummet. He was eventually removed from the board of directors, and the company had to carry out a major brand renewal.

Tesla – Elon Musk

Musk is a genius entrepreneur, but his unexpected remarks on social media (such as his remarks on delisting Tesla) have caused conflicts with investors and the SEC (U.S. Securities and Exchange Commission) on several occasions. This resulted in a fine of hundreds of millions of dollars and a temporary restriction on the CEO role.

These cases clearly show how the words and actions of a single person can affect a company worth trillions of won.

It clearly shows how not only the personal problems of the CEO, but also poor management judgment and lack of ethical awareness can cause great risks to the company. Therefore, companies must make multifaceted efforts to prevent and manage CEO risks.

5 Interpretation from an Eastern humanistic perspective

In the East, corporate leaders are not simply viewed as 'operators', but as beings who carry out the will of heaven (天命). As can be seen in the Feng Shui concepts of 'talsingong (奪神功)' and 'gaecheonmyeong (開天命)', leaders have the responsibility to 'take what belongs to others and make it their own, but the process must be just and in accordance with the laws of heaven.'

The Feng Shui perspective that interprets milk as 'taking what belongs to others and making it their own' is interesting. This may be a contrast to the '義(義)' of ants moving in groups or the '봉(蜂)' of bees serving with devotion.

6 In conclusion

A company is a community responsible for the livelihood of numerous employees and their families. Considering the influence that a single word or action of a CEO can have on the entire organization, a more cautious and responsible attitude is required. This is especially true in an industry where trust is vital, such as the food industry.

If we examine the CEO risk of a recently controversial dairy company from an oriental humanities perspective, we can see that the CEO, as a representative figure of the company, can determine the fate of the company with his or her words and actions. Therefore, we must be wary that an absurd mistake by an arbitrary management team can lead to an irreparable crisis. In addition, companies must keep in mind that they are responsible for the livelihood of numerous employees and their families, and they must strive to be cautious in their words and actions and manage their positive media reputation. The importance of fostering middle managers cannot be overlooked.

A CEO is not just a title; his or her personality and philosophy influence the entire organization. Therefore, fostering middle managers and a healthy check and balance system within the organization are essential. Autocratic leadership can temporarily grow a company, but it can ultimately be a factor that threatens sustainability.

Even in a 'glass of milk', ethics, life, and social responsibility are melted. And we must not forget that at the center of it all is always the person, the CEO.