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EXECUTIVE SUMMARY | For the last 10 years, approximately 1,000 world leaders have been meeting in Davos at the World Economic Forum to identify, assess, and articulate risk around the world. Their 2015 Global Risk Report classifies risks into five categories-Economic, Environmental, Geopolitical, Societal, and Technological. They've also built macro models to continually profile the scope, scale, and strength of the relationships among these five categories, 28 global risks, and 13 trends. They posited two themes for 2015: 1) "As people's lives are becoming more complex and more difficult to manage, businesses, governments, and individuals alike are being forced to decide upon courses of action in an environment clouded by multiple layers of uncertainty. 2) The importance of risk management and the need to build resilient supply chains has become a top issue for decision makers who are recognizing that risks are no longer isolated but inherently dynamic around the globe." We'll dig into supply chain risks, their causes and impacts, and ways to mitigate them.
Before we profile supply chain disruption causes, their impacts, and a few critical mitigation strategies, we need to know what supply chain risk management is. APICS, the organization for operations and supply chain professionals, provides this definition: "The variety of possible events and their outcomes that could have a negative effect on the flow of goods, services, funds, and information resulting in some level of quantitative or qualitative loss for the supply chain." APICS has embraced Supply Chain Risk Management (SCRM) as a critical success factor for their operations and supply chain professionals-so much so that they've partnered with The Supply Chain Risk Management Consortium to develop a first-of-a-kind certificate in SCRM. Dr. Robert Trent of Lehigh University and I have posited a slightly different definition in our new book, Supply Chain Risk Management: An Emerging Discipline. "It is the implementation of strategies to manage every day and exceptional risks along the supply chain through continuous risk assessment with the objective of reducing vulnerability and ensuring business continuity. "We like to think of SCRM as the intersection of supply chain management and risk management. A few of the critical SCRM content threads within our new book, our MBA course at Lehigh, and inside APICS' certificate are: 1)...