What is the Importance of Supply Chain Security Risk Management?

In the wake of the numerous supply chain attacks, today we’ll discuss how companies can work to reduce the risk by broadening the concept of how third-party vendors manage access to company data.
supply chain security risk management

According to a survey by Protiviti and ISACA, a Cyber breach is the top IT audit risk for 2021. This clearly highlights the need to broaden our approach to third-party vendor information technology and security risk management.

Supply chain risk management events
We all know how technology relies on a complex, globally distributed, and interconnected supply chain and ecosystem that is geographically diverse and consists of multiple tiers of outsourcing. This is what makes the supply chain risky with possibilities of counterfeits, tampering, unauthorized production, insertion of malicious software and hardware, possible poorly manufactured or developed products, and theft.

Must Read: 65% of Product Companies and Retailers to Change Supply Chain Strategies

Threats and vulnerabilities created by malicious practitioners are often sophisticated and difficult to detect and pose a significant level of risk to companies. This is where Supply chain risk management comes in handy. It not only keeps you protected from troublemakers but is a helpful addition to your operations. It helps you in times of natural disasters, unpaid bills, transport disruptions, etc, and revolves all the focus to prevent issues and provide loss mitigation if risk events occur in any case. Some of the most common benefits of supply chain security risk management include the following:

– Ensuring production and deliveries are functioning optimally
– Avoiding profit and losses by detecting risks early
– Quick ability to respond to unexpected events
– Safeguarding the image of your corporation
– Boosting and maintaining customer satisfaction
– Providing useful technology that enables live updates
– Meeting and exceeding rules, regulations, and safety standards

Also Read: How to Digitize Supply Chains?

Establishing robust supply chain security risk management
Information security and risk management teams must think beyond third-party and vendor risk management to a more comprehensive approach to supply chain risk management. The first step to doing a risk assessment of the supply chain is to establish a baseline of current vendors through a criticality analysis. The outcome of the updated criticality analysis then needs to be narrowed down and prioritized. Next is performing vulnerable analysis. This should look for weaknesses in both systems and components, all of which need to be calibrated in the context of the likelihood of damage being inflicted.

The next step is to focus on impact. When the critical analysis is complete, filter the results once again through the lens of the organization’s risk tolerance measures. What companies need is to create plans to mitigate or monitor risks and prepare an appropriate course of action for responding to the risk. The criteria must also be established for specific triggers that would cause the organization to change to risk mitigation strategies.

Conclusion: In the last decade, a number of firms have been rocked by unforeseen supply-chain vulnerabilities and disruptions, leading to recalls costing hundreds of millions of dollars in industries ranging from pharmaceuticals and consumer goods to electronics and automotive. And while multiple government and private organizations have struggled with cybersecurity breaches, losing critical intellectual property due to failures in the supplier ecosystem seems very harsh. We need processes to identify and successfully manage the growing supply-chain risks as the world becomes more interconnected.

Recommended Read: The Impact of Congestion on Supplychains

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