Embed your risk management: risk mitigation assessment can be essential at all levels in the supply chain.
Amid all the components driving critical business processes and relationships, risk managers need to become especially familiar with supply-chain dynamics. In fact, supply-chain risk management has taken center stage because critical business activities, including offshore operations, global outsourcing and lean sourcing are impacting the core of modern companies. For this reason, maintaining a stable supply chain is a vital goal for any insurer risk manager. Increasingly, risk managers are in a position to influence decisions within a range of functional areas of the enterprise, helping to guide subsequent risk mitigation assessments.
Effective supply-chain risk management strategy consolidates three objectives: recognize and prioritize critical business elements; map the supply chain to show interdependencies; and identify potential failure points along the supply chain.
Examining the various supply-chain components and working to identify and evaluate the potential consequences of risk--in procurement, technology, manufacturing, real estate, logistics, legal, distribution and staffing--are other key priorities. An effective supply-chain risk management plan also requires senior management to become active participants and sponsors.
In cooperation with senior management, risk managers must embed risk management practices, including supply-chain risk considerations, into all mission-critical points along the enterprise's operational network. By teaching risk management techniques to key staff, risk-based decision making can be encouraged and instituted. Managers can make more informed distinctions between the competing priorities of cost-effectiveness on tactical levels and enterprise-wide risk exposures on strategic levels.
With support from stakeholders throughout the company, risk managers can become integral players in the supply chain, while creating and supporting multiple operational risk managers across the overall process. Together with their risk management constituents, they can execute gap analysis and implement a variety of advanced risk analytic tools.
Insurer risk managers can monitor process exposures by risk-scoring various owners, suppliers, distributors, or customer geographic locations for natural catastrophe loss potential. Comparable to the "numetrics" used by many supply-chain managers, they can use sophisticated modeling techniques to improve risk-adjusted decision making. Risk managers will have the ability to quantify risks associated with traditional and evolving business supply chains--all with the goal to enhance risk-based scenario planning and analysis.
Rapid changes are occurring in today's national and international business environment, contributing to increased risk exposure across supply chains and operational functions. Senior management must consider a more comprehensive risk management program to address a wide variety of insurable and uninsurable risks.
Best's Review columnist Frank J. Coyne is chairman, president and chief executive officer of ISO. He can be reached at email@example.com.
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|Title Annotation:||Property/Casualty: Underwriting Insight|
|Comment:||Embed your risk management: risk mitigation assessment can be essential at all levels in the supply chain.(Property/Casualty: Underwriting Insight)|
|Author:||Coyne, Frank J.|
|Date:||Oct 1, 2009|
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