Supplier Risk and Business Continuity
How to assess supplier financial, operational, geographic and compliance risk, and plan continuity.
By SupplyChain.management · Last updated
Definition
Supplier risk management assesses and mitigates the financial, operational, geographic and compliance exposures created by dependence on specific suppliers.
Why it matters
Most severe disruptions arrive through the supply base, often from small suppliers with no obvious commercial importance.
Example
A low-spend sole-source supplier of a custom fitting was reclassified as critical, triggering a qualified second source and a six-week buffer.
How to interpret it
Criticality is about substitutability and time to recover, not annual spend.
How to improve it
Assess criticality across the supply base, qualify alternates for critical single sources, and require continuity plans from strategic suppliers.
Common mistakes
Assuming a small supplier is a small risk.