Businesses can also avoid supply chain risks by taking a thorough approach to third-party risk management.
Reducing risk starts with asking the right questions, especially when onboarding new suppliers, such as who they are and who they do business with, as well as understanding important risk factors like financial stability and practices. commercial.
Compliance teams should regularly return to this practice with each potential change in risk level. So if a supplier’s risk status changes, they can act on the information.
Without consistent monitoring, a single incident of poor practice can impact the entire supply chain, potentially leading to costly operational delays, regulatory violations and financial penalties.
How can businesses prepare for less predictable risks like natural disasters?
The risks posed by catastrophic environmental events are increasing significantly in cost, frequency and severity.
A report on the impact of climate-related disasters in the United States by the National Centers for Environmental Information found that in 2023, major weather and climate events in the United States resulted in damages of $92.9 billion.
The financial damage caused by these increasingly frequent natural disasters highlights the need for businesses to strengthen their resilience to such risks, particularly to protect their supply chains.
Building resilience starts with the use of climate data and predictive analytics, which allows companies to identify high-risk areas and adjust their sourcing and logistics strategies.
Companies may also consider relocating operations out of vulnerable areas, establishing relationships with other suppliers, and improving overall supply chain flexibility to improve their adaptability to changing environmental risks.
By combining environmental data analytics with proactive supplier monitoring, organizations are better equipped to anticipate, adapt and resist emerging threats to their supply chains.
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