Understand Enterprise Risk to Build Resiliency

Global Companies, Global Risks

Our world is becoming increasingly interconnected, increasing the speed of commerce and making it ever easier to source products from one continent to sell in another. We hear it all the time at conferences, in newspaper op-ed columns, and in TED Talks we watch on YouTube. We hear it so often that it has almost become trite and uninteresting, something that we take as a given – our world is shrinking and companies everywhere can only benefit.

What you hear less often from pundits and conference presenters are the new risks that globalization exposes companies too. The extension of supply chains across multiple continents greatly increases their complexity as well, meaning that a flood at a textile factory in Chengdu, China could prevent consumers in Canton, Ohio from buying the latest fashions because the cloth couldn’t reach a garment manufacturer in Dhaka, Bangladesh. Even if nothing goes wrong, sourcing from a wide range of far-flung locales creates rapidly-changing supply chains so complex that sourcing departments find it difficult to stay in sync with legal teams, corporate social responsibility departments, and security functions. 

Of course, the bad guys benefit from our shrinking world as well. What scholars have termed ‘deviant globalization’ means that pharmaceuticals counterfeited in Turkey can reach consumers in the United States through a series of well-disguised intermediaries in several different countries. Cargo stolen from a warehouse near Madrid can end up in North African bazaars before anyone realizes it’s gone. Crooked labor brokers and human smugglers from Nicaragua to Nepal take advantage of opaque and ever-changing labor rules, corruption, and rapid global travel to move workers to locations where they are likely to be exploited and abused.   

Being Prepared Isn’t Enough – Become Resilient

Faced with this level of complexity and such a wide range of risks, it’s understandable that risk managers, business continuity planners, chief security officers, and corporate social responsibility managers would feel overwhelmed. Unfortunately, simply creating contingency plans for a list of possible disruptions may not be enough. Complex systems give rise to complex problems that defy simple checklist solutions.

Instead, creating a baseline understanding of where risk exists in your global supply chain – getting the ‘big picture’ – will allow you to prioritize which threats can cause the greatest disruption. Doing so will break your company out of the geographic or department-based silos that prevent you from seeing the links between risks your group faces. From there, you can design proactive solutions, such as better business partner vetting in Turkey or stricter labor policies in Central America, that will move your organization from simply prepared to resilient and better able to adapt to rapidly-changing risks. BSI’s team of advisors can help you through all parts of this process, from objectively quantifying risk to your operations to coordinating responses, ensuring you get the complete picture of risk your organization needs. 

What steps are you taking to make your supply chain more resilient?