Sub-principle 5.D

Establish provisions to mitigate and manage risks


Why is it important?


Companies are responsible for conducting due diligence and risk management. A risk management process involves the systematic application of policies, procedures and practices. Development co-operation projects and partnerships should operate in line with the tenets of presumed full disclosure and transparency, principles of accountability, provision for public oversight, a public consultation mechanism and a publicly communicated complaints mechanism, including public reports on the outcome of complaints in line with due diligence principles and guidelines. Examining the sustainability impacts of business processes and practices (including along value chains) can help companies detect and mitigate risks.

Self-reflection questions
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  • In the development co-operation projects in which you are involved, have you set up a risk management process to monitor and manage risk? 
  • Have you discussed with development partners how they could mitigate financial risks and minimise the costs so you can engage in activities? 
  • Have you undertaken an internal assessment of your institutional capacities to understand where there may be risks of the partnership not being as effective, collaborative and supportive as possible? 
  • Have you built in incentive structures for your staff to manage risk?

Actions to consider
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  • Carry out regular risk assessments against purpose, implementation plans, indicators and expected behaviour with all partners and correct course when necessary. 
  • Include assessing gender impacts and human rights frameworks as part of your risk mitigation strategy.
  • Anticipate, manage and mitigate conflicts of interest.
  • Build a framework that supports a learning partnership that supports employees and management to experiment and discuss and share lessons learnt.

Pitfalls to avoid
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  • Prevent innovation and experimentation; tolerate failure and take risks in the partnership.
  • Stop communicating openly with partners, staff and stakeholders about the approach for handling conflicts of interest.


The Better Cotton Initiative has created a manual for employees which provides advice on creating and managing partnerships. The manual also contains tools to help create an agreement, manage communication and monitor the partnership.

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