I came across this excellent article that explains the “scale and scope” related-shortcomings of the frameworks and methods used to manage risk in an organization’s supply chains.
My Thoughts
Two points. The lack of “complete” coverage (beyond the scope of physical triggers and assets) reflects the bigger issue of how many organizations neglect to address risk in their supply chains. One of the reasons for this gap is due to the functional nature of organizations and the lack of ownership of these issues across entire supply chains. Today, the scope of most supply chain risk work is limited to sourcing and procurement.
The second challenge is what I refer to as the complex sale. When we (while I was at Marsh) developed this type of coverage back in 2008 we found that few organizations were willing to do the upfront “insurance” assessments across multiple functions (again, partly because of the previously stated reasons. However, organizations that were willing to step up to the broader challenge preferred a much more detailed analysis, driven by value (products that drove profitability). Ultimately, we’d get back to “now what”, i.e. what to do to mitigate the risks, and the value of having the scope of NDBI coverage was welcomed.