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Supply Chain Tops Global Risk Reports

May 20, 2016 Leave a comment dridrive

Global shipping conceptAre you making supply chain risk management a high priority? Because it currently tops the list of three new global risk reports.

First up is FM Global’s Resilience Index, which ranks supply chain risk as one of the leading causes of business volatility, and rates 130 countries and territories by their ability to respond to changing risk factors. This year’s Index saw depressed oil prices, natural catastrophes, and the spread of terrorism as key drivers that have changed the rankings – Norway lost its top ranking to Switzerland as a result, while Kuwait experienced a drop in the rankings from 50 to 59th this year, since its GDP was hit hard by the lower prices.

On the other hand, Armenia and Malawi rose in the rankings, since their lowered consumption of oil means they were less exposed to the dynamics of the market.

The Chartered Institute of Procurement & Supply (CIPS) Risk Index also saw rises for the second consecutive quarter of 2016, with North Africa, Western Europe, Asia and Latin America all seeing levels of supply chain risk grow. Among the driving factors:

  • Suppliers in New Zealand and Australia struggling to make ends meet during persistently low commodity prices and the economic slowdown in China
  • Suppliers in Sub-Saharan Africa are dealing with the prolonged drought caused by the El Nino weather system, and
  • The Brussels bombings helping to fuel the growth of far right political groups in France and Poland, increasing calls for the passport free Schengen zone to be abandoned, a move with the potential to slow the flow of goods around Europe.

Finally, a joint report from A.T. Kearney and Rapid Ratings looks at procurement organizations, finding an overall lack of risk management practices. For instance:

  • About half of companies don’t have a plan in place to ensure supply chain continuity
  • Only 34% have a response plan set up to deal with changes in supply, and
  • Only 36% of companies said they are ensuring their suppliers comply with environmental sustainability policies – a percentage that hasn’t improved much since 2008.

Reports like this make the need for strong risk management practices crystal clear. As risk strategies evolve to create a better state of resilience, the roles of those involved are converging converge to create a more holistic approach to risk management (RM), business continuity management (BCM), and cyber security. This places greater demands upon the professionals who represent these disciplines. For risk managers, a secure grasp of business continuity is absolutely critical and must include an understanding of the similarities and differences between RM and BCM, the new challenges both disciplines face, and the role of risk transfer, particularly from a global supply chain perspective.

Click here to learn more about how DRI’s Risk Management Continuity course and certification can help your organization and your career, and to register for an upcoming course.