SECTION 2.3 - RISK MANAGEMENT
Getting a grip on potential supply chain threats can be a daunting prospect. The globalisation of supply chains, introduction of lean practices, growth of outsourcing and offshoring, and ongoing reductions in supplier numbers are among the trends that have increased the potential of supply risks to inflict damage upon organisations. In practice, managing supply risk can feel like a vast and unobtainable goal, which helps to explain why typical responses have tended to be reactive and superficial. Even when good work has been done at both a corporate and local level, often there is a lack of information sharing and co-ordinated action to bring it together into a coherent and consistent strategy.
Risk Management involves analysing and mitigating the risks of disruption to the supply of products and services.
In this section of the survey, we have the opportunity to compare the views of Greek organisations on risk management with those of organisations that took part in a global survey (Risk in the 21 st Century Supply Chains) that State of Flux conducted in 2009. Supply chain risks are exposures to events that have the potential to cause significant disruption to the supply of capital equipment, raw materials and services that are critical to an organisation’s operations. These disruptions can emanate from any point within a supply chain and can lead to a loss of revenue, erosion of market share, fall in share price or damage to brand reputation. During the past 3-4 years we have noted, not only in Greece but also globally, an increasing focus on risk management as organisations become more interdependent and vulnerable to external changes (2011 was the costliest year on record for economic losses stemming from natural disasters). Interestingly, risk management was one of the first discussion topics raised by participants during our post-survey workshops, indicating that it is high on many practitioners’ agendas. Risk management needs a focus. In order to prioritise activities designed to mitigate risks in the supply chain, organisations must fully understand where their supply chains are vulnerable to disruption and the levers that influence their value at risk. First, organisations should analyse the threats that will have the greatest impact on revenues – the ‘Value at Risk’. Next, the probability of those threats occurring should be estimated. Lastly, for those risks with the greatest impact and likelihood, appropriate risk management strategies and tactics should be employed. Risks in the supply chain The vast majority (84.1%) of Greek organisations believe there are inherent risks in their supply chains, compared with 90.9% of the previous global research sample.
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