Global Risk Management: Balancing Prevention and Response
Theft, political unrest, labor disputes, natural disasters, contract errors, insurance issues…all are issues that may be keeping you up at night and keeping your global shipments from their destinations. While you may not be able to predict when these and other issues may happen, you certainly can and should be planning for and guarding against them.
Finding the right balance between risk, prevention and response will keep your supply chain running smoothly and help it recover as quickly as possible when the unavoidable happens. When developing your risk management strategy, you should consider five key areas for maximum protection.
An understanding of global issues and potential risks is critical to being prepared for the unexpected issues. But, you should have an awareness of your provider’s capabilities and the strengths of your core suppliers too. It’s also important to keep senior management abreast of potential risks so they can make better decisions about where to source, manufacture, and market products.
It’s natural that different authorities will be responsible for managing the many aspects of your risk management strategy. But determining who has control over which parts is critical to success. Whether a regional office, home office, or third party is responsible, each party must understand their own role and duties as well as other parties’ responsibilities.
Evaluating your providers might seem more like an efficiency play than part of a risk management strategy, but scorecarding your in-house and third party providers helps everyone understand what’s most important. Scorecards should balance risk mitigation, contract, and response capabilities.
- Quarterly Reviews
Similar to scorecards, regular reviews—preferably quarterly—helps promote proactive risk monitoring. You share what risks are most important to guard against and your providers can better understand how to handle incidents. Collecting data before and during these reviews can help strengthen you relationships and prepare you for future risk management planning.
- Visual Mapping
Many people think better visually rather than conceptually. So help them see risks by mapping all your transportation routes on an actual global map. This will help you better monitor events like weather, political situations, and more. It can also help you develop more effective risk management plans. Beyond risk management, a visual map of Incoterms® can even help your sales team during contract negotiations.
While a proper risk management strategy can help protect you from the unforeseen, it’s only a small part of the strategy you need to operate globally. Our white paper, Going Global: Building Logistics Success in a Global Environment, goes into more detail about how you can capitalize on global opportunities and enhance your opportunities on a global scale.