Supply Chain Risk Management, 2nd Edition by Waters Donald

Author:Waters, Donald...
Language: eng
Format: epub
Published: 2014-05-21T23:49:06.532000+00:00

In summary

The first of the three core activities of SCRM is to identify the risks. This is a notoriously difficult task, as there are a huge number of possible risks and forms in which they appear. It is best to focus on the most significant types of risk, and to help with this we can define different categories. A standard classification describes risks in the internal operations of supply chain members, risks within the supply chain itself and risks from the external environment.

Managers need some formal method of identifying risk. The usual approach breaks the overall supply chain process into a series of activities, systematically examines each activity in turn and identifies the risks in each. Many tools have been developed to help with this, and they work in three ways – by analysing past events, collecting opinions or directly analysing operations.

In principle, risk identification leads to a register of significant risks to the supply chain. But there are always problems. Apart from the inherent difficulty of identifying risk, managers can be reluctant to accept that risks exist and that they have to take appropriate action to deal with them. Other risks are simply unknowable in advance.

After compiling a list of the most significant risks, managers have to do something about them. The next step is to analyse each risk, which we discuss in the following chapter.

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