INTRODUCTION:This will be the initial article of five. The titles are:
- RISK MANAGEMENT IN THE SUPPLY CHAIN
- BARRIERS TO RISK MANAGEMENT
- RISK IN PROCUREMENT
- PROCESS VIEW OF SUPPLIER RISK
- RISK MANAGEMENT PROCESS
RISK MANAGEMENT IN THE SUPPLY CHAIN:
A description of supply risk is the likelihood/consequence of events at any point in the supply chain that could result in a negative impact to downstream flow. Remember, the only constant in global supply chain seems to be “UNCERTAINTY”.
There is a world of risks existing. Listed below are a few:
- Civil unrest
- Climatic
- Cyber Security
- Human Rights
- Reputational
- Financial
- Geo-Political
- Supply Chain Continuity
- Regulatory
To further enhance these there is a matrix which provides segmented view of the respective risks:
Operational Risk
Bid Process
Information Transfer
Construction Management
Accounting Process
Financial Risk
Cost of Capital
Growth Capitalization
Market Risk
Bank & Surety Support
Strategic Risk
Customer/Industry Changes
Branding/Image
Competition
Hazard Risk
Employee Injury/Illness/Theft
Third-party Liability
Natural Hazards
Property Loss
The impact of loss can be fall into multiple scenarios:
- Loss of goods, reputation, or money (attributed to fraud, theft, corruption, bribery)
- Loss of intellectual property
- Loss from lawsuitsLet’s get a further understanding of terms related to and aid in managing risk:
Term Meaning
RISK A future condition/circumstance which could impact objectives if it occurs
ISSUE A current event/condition that must be dealt with
TREATMENT An additional mechanism to be implemented which will seek to reduce the current likelihood and/or consequence of the risk
CONTROL An existing mechanism which can be verified and seeks to reduce the likelihood and/or the consequence of the risk
Look for more insight in the next article entitled, “BARRIERS TO RISK MANAGEMENT”.