Managing risk

One of the main business functions that managers and executives have had to learn during this century is risk management. Strategists and academicians have been telling us from decades ago that the economics and business environment is changing in an hectic pace; changes are happening faster, they are deeper and widespread.

The ‘butterfly effect‘ seems to be acting virulently, too.

Whenever a company’s supply chain depends on more and more agents and locations, risk increases exponentially as the dependence and lack of redundancy exists. However, independence and redundancies are at an expense, and ROI needs to be assessed.

Take a breath. Now, start thinking about your whole operations (now and in the future: that’s your strategic role): which are the risks hiding along your supply chain? Is it worthwhile to provide alternatives to your operations? Have you provided your customers an assurance about your distribution? Have your suppliers done so? Are your production managers risk-aware?

Nothing an scenario-based analysis and statistical projections couldn’t help to answer.