While an overwhelming majority of North American companies sees risks associated with their supply chain as having grown more significant, complex, and costly, they also consider themselves largely unprepared to deal with these elevated exposures.
A new study of 110 North American risk managers by Marsh in collaboration with Risk & Insurance magazine, finds more than seven in 10 (73%) believe their supply chain risk has risen since 2005; nearly the same number (71%) believes the financial impact of disruptions to their supply chain has also grown.
Most businesses are ill-prepared to handle the rising risk levels, caused by more global and complex supply chains that are increasing supplier disruptions, logistics delays, and product recalls and safety issues. Indeed, no risk managers in the study considered their companies to be "highly effective" at supply chain risk management.
Only 35 percent considered their companies to be "moderately effective" at managing supply chain risk. Meanwhile, nearly two-thirds (65%) characterized their supply chain risk programs as having "low" or "unknown" effectiveness, or they lacked any formal supply chain risk program, altogether.
The study also identifies innovative companies that are blazing trails to improve supply chain risk management and found them taking radically different actions than their peers. For instance, these firms are nine times more likely to have built consistent, company-wide processes for supply chain risk management. And they are more likely to have extended their risk assessments to include direct suppliers, critical raw material suppliers, and logistics partners.
