Wednesday, August 18, 2010

Supply Chain Risk only Second to Financial Exposure

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In a recent survey of 168 senior finance executives by the CFO magazine, it reported that supply chain risk was second on the CFOs list immediately after the risk of financial exposure. You can read the original article here at or see the summary below.

Financial exposure

Supply chain/logistics disruption37%
Legal liability/reputational harm 35%
Technology failure33%
Security breach23%
Natural or manmade disasters 21%
Physical-assets failure8%

It also brings out another very important point. The survey also found that, “companies often pay disproportionate attention to recent disruptions when planning for future risks………although the research suggests that many companies would benefit from a more forward-looking approach to managing risk.” This is indeed an important finding – what it highlights is that companies must continuously analyze their operations to find the potential risks as their operations and business environment changes and address them rather than simply looking back to identify their historical risks to ensure they don’t happen again. This is easier said than done, because this involves a serious analysis of the business operations and processes, and assessing their vulnerabilities. Most corporations simply do not have the organizational skills or the inclination to invest that kind of time unless the incentive to do so justifies itself!

You can also read more on supply chain risk at

© Vivek Sehgal, 2010, All Rights Reserved.

Want to know more about supply chain processes? How they work and what they afford? Check out my books on Supply Chain Management at Amazon.

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