Identify the Natural Risks and Value Chain
“Here it is. This tool will guide you through the process of identifying natural risks, coming up with risk responses, and identifying opportunities for renewable energy integration. Take a look at this flowchart. It gives a general outline of the Risk and Renewable Energy Opportunity Identification Tool, providing an overview of how it operates.”
When he realized that everyone had looked at and comprehended the flowchart, Tashi proceeded to further explain its contents and its implications.
“Since you have got an idea of the overall procedure, I’ll walk you through the first part which is Understanding your business. The first section collects general information about your business. You know what, it will be better if we take one of your business examples.”
Tashi scanned the group and called out to Kishor.
“Kishor, why don’t we walk through an agrovet business that you aspire to establish?”
“Why not! That’ll be great.”
“Ok then. Just give me an example country in South Asia where you see yourself expanding.”
Kishor pondered for a while,
“Let’s take Nepal.”
Tashi then continued to fill in hypothetical business information about Kishor’s future agrovet.
“Did you see what automatically got updated?”
“Yes, as soon as you selected the country, the table on natural risks got updated.”
“Exactly! Based on your country selection, the natural risks table gets updated which is categorized into high, medium, low, and very low risks based on the assessment of ThinkHazard. This will help you think through the natural risks that will affect your business.
Now coming to the next section, Kishor will have to exercise what are the key external steps that happen before and after his business. Imagine a flow of goods and services. What steps do the agro vet’s products go through from start to end? In other words, this is known as a business value chain. So, keeping the agro vet business central, what are the different value chains before the product arrives at Kishor’s store – known as upstream, and after the product leaves Kishor’s store and reaches the end consumer – known as downstream? Now do you understand what I mean by upstream and downstream value chains?”
“Not really.”
“The upstream value chain includes all activities related to the business’s suppliers. Such as those parties that source raw material inputs to send to the business. Similarly, the downstream value chain refers to activities post-manufacturing/service of the business, namely distributing the product/service to the final customer. Why do you think we need this in the tool?”
“I know. It’s because MSMEs do not operate in isolation. There are external linkages that serve as inputs and outputs to the business, and because climate risks affect all in the ecosystem, the disruptions in the external linkages will affect the business in focus, in this case, Kishor’s agro vet. So, if Kishor is aware of the upstream and downstream risks, it will help him plan for his business resiliency.”
“I couldn’t have explained it better. That is right on point. So, now let’s identify some key external steps of Kishor’s agro-vet and fill in the table. Kishor, do you want to share some of the elements that happen before products arrive or leave your store”
“Umm…first, there is the seed importer. This importer will then sell to the wholesaler. My business will buy from the wholesaler who will transport the seeds to my shop. This upstream value chain is only for the seed though.”
“That’s fine, and can you share some of the downstream value chains?”
“Well, from my shop the seeds will be sold either directly to farmers or other local shops.”
“Great, I’ve noted all this. Have a look.”
Tashi turned the laptop to the group.
Kishor (nodding his head and smiling)
“Looks good.”