Supply Chain Risk & Resilience

The classical approach to supply chain risk management involves assessing the probability and likely impact, in terms of magnitude and duration, of all identified risks facing a company and its suppliers. This analysis is then used to funnel down these risks into those that should be monitored or acted upon. Given the inherent unpredictability of risk events and the complexity of many supplier networks, it is improbable that a company would be able to predict and prepare for all eventualities. Therefore, scenario testing for specific risk events results in a great deal of wasted time, effort and resources for organizations. Given this outcome, companies are slowly realizing the need for a more effective approach.

As a result of this realization, the concept of risk management is increasingly being combined with the concept of resilience, which aims to enhance a company's dynamic abilities to respond to risk events in ways that minimize impact and potentially enable the organization to capitalize on competitive opportunities. The extent to which companies can bounce back from volatility more quickly and less expensively than others determines whether they can reap the rewards of having the only product on the shelf or becoming a trusted business partner.