Executive Briefings

Too Many Risk-Management Systems Are Backward-Looking. They Need to Be Proactive.

What keeps supply management professionals up at night? For many, it's worrying about a disruption to operationally critical services because a supplier is in financial distress or becomes embroiled in a scandal. Many supply managers who have weathered the economic storms of the past few years have seen firsthand the crippling effects of supply disruptions to a company's operations and bottom line.

Traditional risk management approaches take a static, often outdated, snapshot of risk. Steps like prequalification, risk classification and periodic maintenance reviews rely predominantly on backward-looking indicators and do not necessarily capture future risks. It is well-known that history is not always a good predictor of the future. What businesses today need is a risk management program that anticipates risk and potential supply disruptions in advance, so that mitigating actions can be taken before the disruption occurs.

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What keeps supply management professionals up at night? For many, it's worrying about a disruption to operationally critical services because a supplier is in financial distress or becomes embroiled in a scandal. Many supply managers who have weathered the economic storms of the past few years have seen firsthand the crippling effects of supply disruptions to a company's operations and bottom line.

Traditional risk management approaches take a static, often outdated, snapshot of risk. Steps like prequalification, risk classification and periodic maintenance reviews rely predominantly on backward-looking indicators and do not necessarily capture future risks. It is well-known that history is not always a good predictor of the future. What businesses today need is a risk management program that anticipates risk and potential supply disruptions in advance, so that mitigating actions can be taken before the disruption occurs.

Read Full Article