A Risk-Management Strategy for Everyday Events

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Improve your company’s financial performance by implementing a risk-management strategy that plans for everyday events and disruptions.

Supply chain disruptions can have a significant impact on business and financial performance. A recent PwC and the MIT Forum for Supply Chain Innovation survey found a strong correlation between the maturity of businesses’ risk-management processes and reduced decline in operational performance indicators in the face of disruption.

A supply chain company’s need for a well-developed risk-management strategy is clear. That means planning for disruptions beyond the big-impact events, like environmental catastrophes, cyber attacks, and geopolitical instability. Companies need to be better prepared to handle day-to-day bumps in the road.

Managing everyday risks

Managers will often consider cataclysmic events but ignore the smaller risks that create friction in the supply chain. Dealing with these smaller factors in a reactive and piecemeal fashion is inefficient and ineffective and can significantly hurt your company.

Consider the following tips when developing an effective risk-management strategy that focuses on the everyday risks:

1) Employ a robust strategy that is always evolving.

Consider all of the factors that currently influence your supply chain, and be vigilant in terms of new technologies or emerging risks that could impact operations in the future.

2) Put a leader in charge.

Choose someone experienced in crisis management, negotiation, and critical problem-solving. This leader should be skilled in diplomacy and remaining calm under pressure.

3) Make sure the strategy is flexible.

A strategy that it uncompromising and rigid can exacerbate issues.

4) Define your comprehensive process.

Develop a clearly defined process to mitigate events such as cash-flow issues, inventory risk, competitor interruptions, client credit risk and default, data backup and recovery, key client attrition, employee satisfaction and retention, social media use and abuse, and reputation recovery.

5) Include human resources in the strategy.

Consider moving employees into new roles as a solution. Moving an employee into a new role permanently (or for a specified period to deal with an event) can help mitigate issues.

6) Don’t hide the issue.

If there is a problem, be sure that the clients hear about the problem from you. Be clear, concise, and honest when you contact clients. Explain what the issue is and what you are doing to address it.

7) Get everyone on board.

Take the time to make sure everyone is educated about the strategy and who is in charge. If just one person knows the strategy, it will not be effective.

About author Frank Cavallaro

Frank has over 25 years of experience in the global technology distribution, supply chain, reverse logistics, after-market services and electronic asset disposal (EAD)industries. He has a proven track record of successful growth, restructuring, and turnaround performance, resulting in superior organizational and shareholder results.

Prior to Fronetics, Frank held various leadership positions within public and privately held corporate environments as well as private equity sponsored organizations. His experience includes CEO of Converge, President at Arrow Electronics, as well as COO and General Manager of NECX.

With domain expertise in international management, selling strategies, sales organizations, and global operations, Frank is recognized as an industry leader with the experience, vision, and capability to motivate all levels of your organization to deliver shareholder value, customer satisfaction, and cost control in the competitive marketplaces of international technology, supply chain and logistics.