What does supply chain risk management involve?

Supply chain risk management is primarily concerned with the identification and mitigation of risks that can adversely affect the performance of the supply chain. This encompasses a variety of potential risks, such as disruptions from natural disasters, geopolitical issues, cybersecurity threats, and fluctuations in demand or supply. By recognizing these risks early on, organizations can implement strategies to reduce the likelihood of these risks occurring and lessen their impact if they do. Effective risk management ensures continuity in supply chain operations, enhances responsiveness, and ultimately contributes to the overall resilience and efficiency of the supply chain.

While coordination of supply chain activities, reduction of transportation costs, and enhancement of supplier relationships are important aspects of supply chain management, they do not specifically address the critical focus of identifying and managing risks. Risk management goes beyond everyday operational goals and focuses specifically on protecting the supply chain from uncertainties and potential disruptions.