StratDairy Foods — Risk Assessment & Mitigation
The following risk assessment framework identifies and evaluates the principal risks facing StratDairy, together with specific mitigation strategies and residual risk ratings:
Section 8 · Business Plan
Risk Assessment & Mitigation
The following risk assessment framework identifies and evaluates the principal risks facing StratDairy, together with specific mitigation strategies and residual risk ratings:
8.1 Risk Matrix
The following risk assessment framework identifies and evaluates the principal risks facing StratDairy, together with specific mitigation strategies and residual risk ratings:
| Risk Category | Description | Impact | Likelihood | Mitigation Strategy |
|---|---|---|---|---|
| Raw Material Price Volatility | Milk price increases above budgeted levels | High | Medium | Long-term contracts with price floors; MPO benchmark indexation; futures hedging |
| Cold-Chain Failure | Refrigeration breakdown causing product spoilage | High | Low | Redundant systems; 72-hour backup power; real-time IoT monitoring |
| Retail Listing Competition | Inability to secure or maintain shelf space in national chains | High | Medium | Early category negotiations; promotional funding commitments; unique SKU differentiation |
| Load Shedding / Energy | Eskom power interruptions disrupting production | Medium | High | 500kVA diesel generator; 200kW rooftop solar PV installation (Year 2) |
| Regulatory / Compliance | Non-compliance with DSA, DALRRD, or labelling regulations | Medium | Low | Dedicated QA Manager; proactive regulatory engagement; external audit programme |
| Key Person Risk | Departure of founding executives | Medium | Low | Key-man insurance; vesting schedules; succession planning from Year 2 |
| Foreign Exchange | Imported equipment and ingredient cost exposure | Medium | Medium | Forward cover on capital imports; local sourcing maximisation |
| Consumer Demand Shortfall | Slower than projected market adoption | High | Medium | Phased rollout reduces capital at risk; flexible production scheduling; aggressive sampling |
8.2 Sensitivity Analysis
The financial model has been stress-tested against three scenarios to assess the robustness of projected returns:
| Scenario | Key Assumptions | Year 5 EBITDA | IRR |
|---|---|---|---|
| Base Case | As per financial model | ZAR 23.8M | 30% |
| Downside (−20%) | Revenue 20% below plan; margins 3pp lower | ZAR 12.5M | 18% |
| Upside (+15%) | Revenue 15% above plan; faster margin expansion | ZAR 31.2M | 38% |
Even under the downside scenario, the Company remains EBITDA-positive from Year 3 and generates a positive IRR for investors, demonstrating the resilience of the business model.
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