Bill DeMartino, managing director for the Americas with Riskmethods, discusses how the coronavirus pandemic is impacting risk-management strategies, and whether companies were ready for the disruption that it has caused.
The number one lesson of the pandemic is that “those who were best prepared were those who fared the best,” says DeMartino. They were able to deal with the compounding threats of the disease, and identify critical nodes in the supply chain that needed to be addressed.
No one was totally prepared for a disruption of this scale, one that has affected every country and region of the world. Still, the most far-seeing companies had procedures in place that allowed them to react to supply disruptions as they occurred. Typically they would have advance warning of a problem in a given location, and could begin to seek supply elsewhere before the full impact struck.
Effective risk-management programs today require a high degree of collaboration, both internally and with external suppliers. Among the most effective forms of response has been the creation of “war rooms,” drawing on the expertise of multiple individuals and resources. In addition, says DeMartino, companies are learning the importance of having the right technology in place, with applications that will track and monitor risk trends at all times, not just generate surveys once a year.
COVID-19 has spurred a new awareness of the need for supplier diversification. But the trend is leading to even more complex supply chains, as companies draw on larger numbers of suppliers in more regions, and must manage all of those parties and places accordingly. A good risk-management program provides companies with the ability to understand the nature and degree of exposure to potential disruption of any kind, DeMartino says.
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