Managing the Unknown: How We Should Tackle Risk in Global Supply Chains

Early approaches to managing risk in supply chains were based on enterprise risk management tools – tools that had been developed for a system called the “company.” These tools often contained risk categories relating to operational and financial circumstances within the company. Moreover, these tools were easily scalable, as they allowed the inclusion of additional risk categories. It comes as no surprise, therefore, that the notion of risks further upstream and downstream in the supply chain has led risk managers to include new categories such as “supplier insolvency,” “supplier quality” or “defects of supplied parts (per million).” The inclusion of such categories that represent risk sources outside of their own companies has certainly been a great achievement. But, as I will argue, this is not enough to shift from a company view towards a supply chain view that has been shown to enable value creation.