How you do manage a risk you don’t know about? Extend your risk management platform
A recent story on the BBC website BBC http://www.bbc.co.uk/news/business-28737071 about British pork farmers being at risk if Russia bans the import of foreign pork, reminded us just how diverse risk can be.
It set me thinking about globalisation, supply chains and the effect on business. Globalisation has enabled many organisation to trim costs by extending their supply chains and move to just-in-time inventory. Rather than keeping the supply chain in-house or at least closely controlled, now most processes that are not a core business tend to be outsourced to specialists that can build economies of scale. However disruptions to a supply chain that you no longer control can reduce revenue as sales are lost, damage market share as customers place orders with competitors, increase costs as you scramble for alternative suppliers. Such disruptions damage reputation and credibility, and according to research it can take at least two years to recover.
So what can you do? First you need to understand the potential risks, and identify the key points that could cause the most damage. Many organisations rely on insurance to mitigate supply chain disruptions, but while there might be some financial pay out it doesn’t address the longer term issues such as loss of reputation. Classic risk management suggests a three phased approach; Prevention (stopping dangerous practices that could affect production), controlling the effects of any incidents that can’t be prevented and mitigating any disasters that do happen, which is when insurance should come in to play.
BUT how can you manage risks that you might not even know about? An Enterprise-wide approach to risk using a risk management platform, such as ARM, enables organisations to take all of these approaches, embracing stakeholders across the business including dedicated risk managers and line of business operational specialists, and beyond. For example, with ARM Apps it is easy to involve many more people in the risk process, by giving access to a cut down version of the risk platform that simply provides the functions relevant to their job. This approach can also be rolled out to your extended supply chain.
Roche is a prime example of this type of approach. It has offered some 150 affiliate organisations the option to take advantage of its risk management platform, offering help and guidance as required. The full case study is well worth a read http://www.sword-activerisk.com/roche-healthcare/
For more information about extending your risk management platform to cover your entire supply chain, contact your account manager today…