What is more, nearly a quarter do not analyse the source of the disruption.
#SUPPLY CHAIN RISK MANAGER FULL#
The BCI report states that 69 percent of executives do not have full visibility into their supply chains. For insurance companies, it gives a clearer picture of their supply chain exposure, enabling them to provide higher coverage limits and offer the proper risk premiums.Īt present, organisations and insurers are not sharing this data consistently. For example, reliable data can provide suppliers with a foundation for a business continuity plan in the event of a facility shut down. Supply chain partners, like insurers, benefit from shared data that is analysed and acted upon. Instead of transferring risk to other supply chain partners, companies might be better served if they emphasise greater data transparency, a critical element of risk management strategy. While transferring risk will not eliminate the risk entirely, it ensures that the company can recover and resume its operations quickly. If any losses are incurred along the way, the supplier or carrier is responsible. Another way companies can transfer risk is by including language in contracts that shifts responsibility to the supplier or carrier. With the risk transferred to the insurer, an organisation can receive partial or full repayment. While the insurance premiums can be expensive, a fire could destroy inventory that took years to build and would be prohibitively expensive to replace. For example, you may buy fire insurance for your distribution centre. When risk cannot be avoided, looking for ways to transfer that risk is the next-best strategy. Know the damage that can be done digitally and consider it a fundamental aspect of any risk-planning exercise. Across an organisation, professionals must consider the implications of a data breach and plan accordingly. Protecting your data, and the data of all your value chain partners, can be just as important as protecting your goods and your facilities. Therefore, cyber security is an essential risk-avoidance strategy. Yet, we also know that increased technology usage has created opportunities for hackers and other cyber criminals.
And as new technologies continue to develop and grow, they will prove to be even more critical to business operations. That number is expected to more than double – to 74 percent – within the next decade. According to Deloitte, 35 percent of businesses are currently using automated techniques.
For example, technology can play a significant role in risk avoidance.
Wise executives will look for specific areas or processes in which they can reduce or eliminate risk, leading to a stronger organisation overall. If you can control the sources of supply chain complexity, you can decrease the likelihood of risk. There are four primary supply chain risk management strategies to consider: avoidance, transfer, mitigation and acceptance. When making critical decisions, supply chain managers must be adequately equipped to measure the likelihood and impact of risks and should employ a disciplined risk management process. Supply chain risk extends from the supplier’s supplier to the customer’s customer and includes the global environment in which they operate, so an end-to-end supply chain encounters numerous potential challenges. And the risk is prevalent: nearly two out of three businesses experienced at least one disruption last year, according to the latest report from the Business Continuity Institute (BCI). A recent study we carried out jointly with Michigan State University found that supply chain risk is one of the top concerns keeping today’s supply chain executives awake at night.īesides a lack of sleep, supply chain disruption can result in several other consequences, including a loss of productivity, an increased cost of working and more complaints from customers. However, many companies fail to separately assess supply chain risk, even though it is becoming a growing concern for those tasked with managing it. Risk management traditionally resides within the finance function of an organisation due to its impact on the bottom line.