Risk management software – providing essential ‘visibility’ in supply chain risk

Sword GRC Blog

Risk management software - providing essential ‘visibility’ in supply chain risk

Threats to the supply chain can be incredibly disruptive. Commenting in an article entitled ‘Chain Reactions’, published in Enterprise Risk*- the magazine produced by the Institute of Risk Management – Greg Schlegel, Founder of the Supply Chain Risk Consortium in New Jersey suggests that the issue centers upon supply chain visibility. Often the first time that businesses know that there is a problem in the supply chain is when disaster strikes or demand fluctuates unpredictably due to rapidly changing customer buying habits.

“Good visibility means, upstream, understanding who your suppliers are and what is going on with them, and, downstream, what is happening to your customers,” Schlegel says. “Everybody in this discipline starts with suppliers because they assume that is the riskiest area because they don’t directly control them,” he suggests. Risk events downstream, such as a fire in a warehouse, can also have a serious impact on the business’s ability to operate. “Having complete visibility is crucial for a simple reason: “What you don’t know about your supply chain can and will hurt you.”

The article includes a number of statistics to support his point: According to a survey conducted by analyst firm GEP: “European and US global companies may have lost as much as $4 trillion through supply chain disruption in 2020. While about half reported that COVID-19 had “significantly” disrupted supply chains, businesses said their supply chains had also been hit by cyberattacks (36 percent), commodity price fluctuations (33 percent) and diverging regulations (32 percent).”

“The minute you have the dollar value of the cost of supply chain disruption, risk managers can show what they are doing to mitigate that – and can calculate a hard return on investment going forward for their risk activities,” says Schlegel.

Supply chain risk visibility is vital. “If as a risk manager you do nothing else, you need to improve your supply chain visibility upstream to your suppliers – and downstream to your customers in terms of communication – preferably electronically,” he says. “If you can identify a risk, assess that risk and mitigate that risk faster than your nearest competitor, that is a strategic advantage.”

TACKLING THE VISIBILITY CHALLENGE IN RISK MANAGEMENT

“If risk management is the process of identifying, assessing, and mitigating the risks to the integrity, trustworthiness, and authenticity of products and services within the supply chain, then surely visibility is a pre-requisite,” says Jenny Ritson-Smith of Sword GRC. 

“With globalization, digitalization, and the continual drive for efficiency, organizations today are ultra-connected with massively complex supply chains, over which visibility is often limited, making the chains vulnerable to threats and disruptions. Companies with complex supply chains would be advised to regularly undertake ‘supply chain mapping’ and ‘what if’ exercises, if they are to maintain visibility of their extended supply chain risks.”

RISK MANAGEMENT SOFTWARE – CONSOLIDATING RISK DATA INTO A SINGLE VIEW

“Enterprise risk management (ERM) through the use of risk management software provides organizations with the ‘visibility they need to make the most of risks that are worth taking, mitigate the impact of counter-productive risks, and be as prepared as possible for risks that are beyond their control, whilst building resilience.
“The extended enterprise poses great risk management challenge, particularly when you take into account the scope of risks emerging from third-party relationships.”
Risk management software provides a single view of risk across the enterprise. Sword GRC’s solution, Active Risk Manager is used in mega-projects around the world with highly complex supply chains. 

RISK MANAGEMENT SOFTWARE IN ACTION

Read how Elbit Systems of America has extended its use of Active Risk Manager from managing risk in projects to identifying and managing supply chain risk. 

*Summer 2021 issue