1 What does risk management mean to you?

(I am looking for a deep understanding of how you approach the risk

management / discipline).

In principle risk management is an integral part of the end-to-end supply chain process where the risks with the highest loss
and/or impact) and the highest probability of occurring are handled first, and risks with lower probability of occurrence and
lower loss are handled in descending order.

In practice eliminating risk completely is not feasible due to financial and or practical limitations; a certain level of residual risk
should be handled anyhow. On the one hand the risk management process creates some inputs for the Business Continuity
Planning (e.g., assets, impact assessments, cost estimates); on the other hand Business Continuity Planning may go beyond
risk management and assumes that a certain disaster might happen at some point.

Instead of investing a lot to eliminate all the risks there is a better way in risk management: make supply chain more resilient.
Continuously matching the supply chain objectives by preventing or, if necessary, recovering quickly from risk-related
disruptions may be more practical. By addressing vulnerabilities that companies have a degree of control over, they build
resilience to risks that are otherwise uncontrollable.

Suggested approach: Make targeted investments in areas that proactively mitigate risk: enhancing the visibility of the supply
chain, implementing analytics and data visualization tools, collaborating with suppliers, improving the control of key
operational and quality processes, and enhancing flexibility to improve responses to changes in the external environment.
Main steps:
Identify and classify risks at multiple level in source analysis with risk charting
o Macro environmental from sources outside of supply chain: Economic, Environmental, Social, Geopolitical,
Hazards, Infrastructure, Regulatory, Security)
o Extended value chain: from upstream and downstream parties (Tier N supply, Tier 1, 3PL, Distributor,
Dealer, End user)
o Operational from internal processes (Develop, Plan, Source, Make, Deliver, Return)
o Functional from enabling areas (Finance, HR, IT, Legal)
Assess the risk vulnerabilities Risk index: Impact * Probability; Annualised Loss Expectancy
Determine the risk, likelihood and consequences
Identify risk handling options (eliminate, mitigate, transfer, accept)
Prioritise and deploy analytics and visualization technologies to strengthen the fundamental resilience
building blocks build risk management across the end-to-end supply chain towards a resilient supply chain
under an appropriate governance with main attributes such as:
o Leadership (roles, responsibilities, communication, collaboration, CSR))
o Visibility (map, track and monitor supply chain events, data sharing platform, analytics and visualization
tools)
o Flexibility
Prioritisation according to risk categories (risk-maturity assessment, standardization, supplier
collaboration, inventory policy)
Disruption scenario modelling and consolidation (risk based metrics, allocate resources)
o Control (implement policies, risk-based KPIs and execute processes)


2 What in detail would happen to an organisation (issues to the supply chain) if this activity was not in place?
Out of stock lost production & lost sales
Forecasting error, demand unpredictability
Sourcing issues - loss of a key supplier; No alternative supplier / service provider
Environmental / Safety / Health / Security / Quality issue
Increased delivery cost
Business interruption
Recovery speed to long
Non-compliance with regulations or legal
Increased losses
Decreased reputation with stakeholders
Increased financial volatility
Cultural, Change management issues
Delayed innovation and product development
Increased cost of capital
Delayed decision making

3 Please list the projects you have specifically worked on where you played a part in the risk management
process.
Example 1:
What was the project / assignment?
o Loss of key tier 1 suppliers
What risk elements did you identify?
o Non- compliance with and anticipation of new legal and regulatory requirements
What work processes did you have to monitor (aspects of the supply chain)?
o sourcing issue,
How did you assess / analyse the risks?
o high probability, medium business impact
What did you do to eliminate the risk?
o Train suppliers on standards, knowledge sharing, Communities of practice,
o alternative suppliers knowledge base, insights from consulting partners about the market
o change in workflow and transactions
What was the outcome?
o No business disruption alternative supplier stepped in
o Compliance with standards, sustainable practices


Example 2:
What was the project / assignment?
o Misallocation of resources in inventory and information management
What risk elements did you identify?
o Forecasting errors led to demand unpredictability and led to forecasting inaccuracies in certain areas linked
with short product lifecycle, lead-time, and promotions. These were very frequently happening risks that led to
misallocation of resources in inventory and information management, pricing, sourcing and bullwhip effect
What work processes did you have to monitor (aspects of the supply chain)?
o Planning issue,
How did you assess / analyse the risks?
o high probability, medium business impact
What did you do to eliminate the risk?
o What-if analysis to realize the impact of supply demand fluctuations on business costs and revenue
o Collaborative Planning, Forecasting and Replenishment with key suppliers
What was the outcome?
o Extra inventory at a supplier covered the forecasting error

Example 3:
What was the project / assignment?
o Higher transportation cost
What risk elements did you identify?
o impact profitability of entire supply chain
What work processes did you have to monitor (aspects of the supply chain)?
o Inbound logistics, production costs, inventory costs
How did you assess / analyse the risks?
o Medium probability, medium business impact
What did you do to eliminate the risk?
o Analytical and visualisation tools; supply chain mapping, modelling, network optimisation
o Cost drivers of transportation cost
What was the outcome?
o trade-off with producing costs and trade-offs with inventory costs