Businesses face many hurdles—some we can control and others we cannot. How we manage risk is what determines our success.

As this topic came up frequently at the APICS 2013 conference and has affected almost every one of my clients in the last year in some manner, I thought it would be good to think about why we should care:

  1. Natural disasters – Heard of any earthquakes, tornadoes, volcanoes or hurricanes? One of the companies I worked for was one of the only buildings not destroyed in a few miles square area during a hurricane – as fortunate as it was, the facility couldn’t function for a while as no one could get in or out (unless via a helicopter)
  2. Political unrest – Certainly, we hear about political unrest, danger areas, fly at your own risk zones, etc. every day. Since there are very few companies who have been able to trace back their entire supply chain, it’s very likely something in your supply chain will be affected sooner than you think.
  3. Labor unrest – Even if you are lucky enough not to be affected by political unrest or natural disaster, how likely is it you’ll avoid labor unrest as well? Strikes occur in manufacturers, ports, transportation providers, distribution centers, etc. Just ask the folks dependent on the LA ports during the last strike…
  4. Theft – For my research for a recent webinar I led on the most common incidences of fraud that COO’s should be aware of, I gained a new appreciation for how often theft occurs inside companies. That is nothing in comparison to what can happen in today’s extended supply chains!
  5. Security – The advantage of technology is that it can be leveraged to drive business results with minimal resources and effort. The disadvantage is that the more dependent on technology, the more risk that a disruption or outage will directly impact your business.