Supply Chain Risk Management
A practical framework to identify, assess, mitigate and monitor supply chain risk.
By SupplyChain.management · Last updated
Definition
Supply chain risk management is the structured identification, assessment, mitigation and monitoring of events that could disrupt supply, demand or operations.
Why it matters
Disruption is routine rather than exceptional, and the difference between organisations is preparation, not luck.
Formula
Risk Score = Likelihood x Impact x Detectability
Example
A single-source component from one region scored high on impact and low on detectability, triggering dual sourcing and a buffer stock decision.
How to interpret it
Prioritise on impact and detectability. Risks you cannot see coming deserve buffers even when they seem unlikely.
How to improve it
Map tier-one and critical tier-two dependencies, maintain a live risk register with owners, and rehearse response plans.
Common mistakes
Building a risk register once for an audit and never reviewing it again.