Integrated Value Chain Risk Management

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Jan 2016
A widespread view in the private sector is that the lack of access to finance significantly limits the entry into and the performance of value chains. Access to finance is expensive, scarce, and short term in countries in Latin America and the Caribbean, and it hampers firms' investment and the financial management required to gain entry and remain as participants in a value chain. The lack of access to finance is a consequence of a series of market failures that form the basis for public policy intervention. The region's development banks and specialized agencies have thus designed programs to ease access to value chains and improve their performance. This paper suggests that the public sector could have a more effective role in enhancing value chain access and performance by embracing an integrated risk management approach to value chains. This approach will assist thepublic sector identify the various threats to which value chains are exposed, estimate the probability of occurrence and severity of such risks, and ensure risk prevention and mitigation through the use of a cost-effective combination of financial and nonfinancial instruments.