Ignoring Supply Chain Risk

Morgan O'Rourke


September 1, 2014

Despite almost universal awareness of the potentially dire consequences of supply chain disruptions, few supply chain executives are actually doing anything to manage the risk. According to a survey conducted by the Global Supply Chain Institute (GSCI) at the University of Tennessee and sponsored by UPS Capital, 90% of firms do not quantify risk when outsourcing production and none use outside expertise when assessing supply chain risk.

Although all supply chain executives surveyed acknowledged insurance as a highly effective risk mitigation tool, it was still not something they were involved with. And while 66% of companies have risk managers on staff, these individuals are usually in legal and compliance and do not focus on supply chain risk either.

"We were surprised by some of the findings regarding the lack of mitigation strategies," said Dr. Paul Dittmann, GSCI executive director and the study's author. "Any business that does not have some basic form of risk mitigation plan in place is simply gambling with its existence."

Morgan O’Rourke is editor in chief of Risk Management and director of publications for the Risk & Insurance Management Society, Inc. (RIMS)