An Integrated Approach to Managing Supply Chain Risk
Andrew Tait, Principal at Core Risks Ltd., in conjunction with JLT Specialty Limited held a presentation, via audio conference, to a group of life science companies on Supply Chain Risks and what an Integrated Approach to Managing Supply Chain Risk should look like.
The session itself actually touched on a number of other issues such as some of the emerging issues, and potential starting points for supply chain risk management but the main issues that were addressed were the cycle of risk management starting with risk identification and moving through the qualification/quantification stages to prioritisation, mitigation and transfer.
Supply chain integrity has never been a bigger or more complex challenge for today's global businesses. Increased pressure for improved financial performance, combined with the need to optimise assets and resources, has resulted in a growing reliance on out-sourcing and off-shoring,often to developing countries. But with the benefits of reduced costs comes the increased and more complex threat of supply chain interruption. Increasing numbers of company financial reports now make mention of supply chain risks as being one of the key business exposures - but many do not seem to have an integrated model to identify, quantify and manage risk.
Efficient supply chains are by definition lean, stretched and fragile, resulting in an ever present threat of breakdown. While most organisations prepare themselves for the more obvious areas of weakness, breakdown can come from unanticipated causes. And all too often, traditional insurance products fail to provide any or sufficient financial help in these situations.
Managing supply chain integrity is about acknowledging the connections from threat through to interruption. To properly do this, companies have to develop an integrated approach covering identification, quantification, mitigation, financing and acceptance of supply chain risk. Many companies fail to appraise the full extent of supply chain vulnerabilities and as a result are not totally confident that risks are managed within acceptable financial targets.
Andrew explains how an integrated model for the identification, treatment and acceptance of Risk can address these concerns. Finally, the session touched on the management of risk through contracts and how insurance should be considered as the end point of the risk management process plus some new approaches
Click on the link below to view the presentation.
