In the wake of the earthquake/tsunami/nuclear disaster in Japan, once again companies who thought they were not impacted by events half-way around the world are having to shut down production and their supply chain’s disrupted from beef to auto parts. Whether you are in Operations, Finance, Human Resources, Legal or a member of the Board and CEO, not enough attention is being placed on true “Enterprise Risk Management”. In the past few decades the world has gotten smaller, business transactions faster and more complex and the interdependencies of countries to companies to suppliers and customers has grown tighter. In a recent speech by Tom Ridge, former director of Homeland Security stated that today’s supply chain has more opportunity than ever before but with the cost of greater vulnerability. Supply chain disruptions go deeper than just loss of product. They strike at the core of damaging the company’s brand. Key activities business leaders can take now are: (1) Develop a risk committee/team which is cross functional in scope and consider involving key suppliers, customers, partners and third parties. (2) Determine the frequency and volatility in your market and risk evaluation. (3) Assess the overall company risk including business climate/environment, regulatory, strategy, processes, human capital, supply, demand, IT….. (4) Quantify impacts and probability of events. (5) Develop risk mitigation plans and contingency strategies to support business continuity. (6) Manage implementation initiatives and perform tests of the enacted systems and processes.

Managing risk today requires executives to think holistically and act proactively. Your greatest downfall is what you don’t know or doubt it will ever happen. For more information on what companies are doing contact Rich Sypniewski at rsypniewski@saginllc.com