2
Internal collaboration Risk management is not the sole responsibility of one department or function but a joined- up process. Our experience shows that internal collaboration, especially between the procurement and risk functions, is critical for the effective management of supply chain risks. They can share risk registers and information about potential threats in the supply chain, identify insurance products that cover disruption events and even go as far as putting in place effective risk management processes to reduce the premiums charged by insurers. The latter highlights the cost-saving nature of effective risk management. Can effective risk management reduce costs? To mitigate losses in the event of a supply chain disruption, companies can choose to buy insurance products to cover the impacts of these events happening. The premiums that insurance companies charge their clients depend on how vulnerable their clients are. The more vulnerable the clients, the higher the insurance premiums they pay. Obviously, the more an organisation is able to mitigate potential risks in the supply chain, the less the total cost of insurance. Leading organisations have been using this principle to strike a balance between insurance cover and other risk management approaches. Improvements in risk management processes are also regarded as cost-saving initiatives, as these reduce the premiums that organisations are required to pay to insurance companies for the cover. Four out of 10 respondents believe that procurement significantly co-operates with the risk function in mitigating supply chain threats. About 1 in 5 (18.7%) say that the procurement function either does not co-operate with risk or does so to a very low degree.
Figure 33: TO WHAT EXTENT DO THE PROCUREMENT AND RISK MANAGEMENT FUNCTIONS IN YOUR ORGANISATION WORK CLOSELY TOGETHER TO MITIGATE SUPPLY CHAIN RISKS?
40.9% 40.7%
Significantly
23.1%
Partially
40.9%
12.1%
Entirely
4.5%
9.9%
Very little
11.4%
8.8%
Not at all
2.3%
4.4%
There is no corporate risk function
1.2%
Other
0
10%
20%
30%
40%
50%
Greece 2011 Global 2009
45
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