Introducing a 360° Supplier Risk Management Approach
Warding Off Risks Effectively from Identification to Resolution in a Routine Mode.
Copied!
5 Reasons to Develop an Effective Risk Management Plan
1
A NecessaryAdaptation
The risks affect all businesses and are of various kinds. They are not covered by any global device.
2
The Threat of the Amplifying Effect
The risks are numerous and their origins are multiple, the amplifying effects are always more powerfuland the most penalizing impacts.
3
The Anticipation Need
A holistic management approachallows to tangent the exhaustiveness of the risk identification and provides the guarantee of good anticipation.
4
The Synchronization Need
A comprehensive approach promotes the identification and implementation of relevant prevention measures as they are developed by aligned teams.
5
Adopting the Right Reflexes
The approach adopted is structuring, it allows to anchor the reflexes of risk management and the associated procedures in the routines of the company.
Addressing the Risks Commonly Encountered in Companies
KEPLER has setup a non-hierarchical list of common risks encountered in a company. This list will be adapted according to the ambitions and the context of the organization in its market.
CSR
Social and environmental responsibility
Corruption, fraud and influence peddling
Image
Regulatory conformity
SUPPLY CHAIN
Delivery delay
Supply disruption
Erroneous forecasts
Degraded supplier / subcontractor performance
PROCUREMENT
Cost slippage
Deterioration of supplier relations
No control of row 2, .., rank n
INDUSTRIAL
Stop and Break in production
Breakdown / destruction of the production tool
Quality failure
Tool failure following cyber attack
Degraded supplier / subcontractor performance
EXTERNAL
Natural disaster, Epidemic
Geopolitics
Strike and social movement
Terrorist attack
MACROS
MO costs increase
Protectionism and tax trends
Price volatility
Variation of economic indices
LEGAL
Confidentiality
Public liability
Intellectual property theft
Counterfeiting
FINANCIAL
Cybersecurity
Supplier dependency
Financial health
Overstocks
The globalization of trade, commercial pressure, health risks or the massive use of social networks are all factors that amplify the impact of risks.
For some, they can even constitute a source of risk. Their proper identification and treatment are often sufficient and in any case necessary to minimize the impact.
Faced with the proliferation of risks, their types, their extent and their origins, companies are called upon to equip themselves with effective means of management. The right approach must be holistic, methodologically rigorous, equipped and endowed with clear governance. One trick would be to take a close look at the origins of these risks!
The Difficulties Encountered in the Process
Root Cause
Designing and deploying a risk management program is a time-consuming and definitive task, which, once activated, must be carried out without interruption.
The Company wishing to acquire such a tool must, if it wants it to be effective and exhaustive, dedicate sufficient resources to it over time.
The primary cause of the failures in this area lies in a lack of calibration of these resources.
Other possible causes of failure
The spirit of an effective risk management lies in the distinction between risks and their origins and work on the basis of this distinction. However, such gymnastics can be counter-intuitive if not instructed with expertise.It is necessary that the teams devote sufficient time to it and impose great methodological rigor on themselves.
Understanding the methods of calculating the risk assessment, the prioritization index and the components of the index is a critical step in the project because it calls for cross-cutting concepts and subject to interpretation.
Determining the appropriate level of investment for risk treatment is a critical and often overlooked step. Understanding and comparing the cost of risk and the cost of treatment is complex and complicated to be precise.
