The combination of subject matter expertise and wide practical experience underpinned by solid evidence, historical understanding and deft chairmanship produced a stimulating and instructive Willis Breakfast Briefing on Wednesday, June 19.
The subject under consideration was ‘Supply Chain Risk in a Turbulent World’. I joined a panel comprising Matthew McEwan, Director of Risk Management, Coca Cola Enterprises; Justin Dargin, Head of Energy and the Middle East, Oxford Analytica; and Marc Lehman, a Partner in Willis’ Catastrophe Risk Management department. The objective was to identify and consider new strategies and practical risk management solutions in respect to supply networks.
The Risk Landscape
In an unstable world, the by-products of current uncertainty and confusion were identified by participants across a substantial range of threats to the interdependent networks that constitute a supply chain, including the ever-present spectre of natural catastrophes and pandemic.
Key risks considered included cyber-attack, shifts in regulatory frameworks, internal procedures and staff, political violence, reputational risk, terrorism and piracy. It was noted that the probability of any two or three of these threats occurring simultaneously increases with the geographical span of the chain especially if it crosses fragile states, or areas prone to natural hazard.
Furthermore certain risks, such as that to corporate reputation and terrorism, may be amplified by or affect the activities of first and second tier suppliers.
To deal with these issues, an emphasis was placed on engagement, collaboration in bringing about common standards, sustainability and the demonstration of Corporate Social Responsibility.
Fundamental to managing risk is a mapping and understanding of all risks exposures throughout the pipeline. The power of data both quantitative and qualitative can be harnessed to understand local and regional exposures and bring about mitigation measures but it is critical that this is proactive and includes an understanding of social, political and economic contexts.
At the corporate level it was agreed that the management of such risk may require a cultural shift at board level where risk managers become key strategic players. Risk managers should also try to leverage the deeper understanding of the world and its markets gained during this process.