Global Differences on Risk Management Priorities

Information in this post is based on the research and findings contained in the World Economic Forum Report: An Initiative of the Risk Response Network, prepared in collaboration with Accenture.

Priorities differ on a global basis when it comes to confronting supply chain risk and building resilience. According to the above-linked report, “harmonized legislative and regulatory standards” are the top priorities of respondents from North America and Europe. Contrast this with Asian organizations that “consider improved information sharing between government and business as the top priority for building supply chain resilience.” Hmm … perhaps sharing of ascorbic acid pricing among suppliers in a recent Chinese global price fixing scandal no doubt must have some connections with this public/private sector information sharing partnership in Asia (see the NYT story for further information).

But I digress. On a more serious note, the report suggests that “respondents from Asia also prioritized improved alert and warning systems more than their western counterparts.” Furthermore, “inadequate capacities to provide early alerts for earthquakes, tsunami and flooding impacting Asia in 2011 may have contributed to this prioritization.” In contrast, “European and North American respondents emphasize building a culture of risk management across suppliers as a top priority. This is less valued in Asia, where the growth opportunities in emerging economies elicit high risk strategies for maximum return … Also many Asia-based supply arrangements are typically younger and more fluid, resulting in weaker lines of communication through which a culture of risk management can be established.”

Other top resilience measures include “common risk assessment frameworks” and “improved alert/warning systems.” The report also cites SAP Supplier InfoNet as one example of a means of shared technology/infrastructure that is predictive in nature to help companies collectively mitigate potential supply chain disruptions, a recommendation which we endorse. Readers can download a Spend Matters review and analysis of SAP Supplier InfoNet on SAP’s site.

As our review of this report continues, we’ll share some of Accenture’s findings about the impact of supplier risk on shareholder value. In the meantime, Spend Matters readers can download the following briefs from our Research Library (free with registration):

Supplier Information Management Technology Fundamentals – Part 1

Supplier Information Management Technology Fundamentals – Part 2

Supplier Lifecycle Management: Reduce risk, Improve Performance and drive Supplier Value

Leveraging Supplier Management Platforms for Multiple Goals: Risk Reduction, Supplier Diversity and CSR

Supply Risk Management – Segmenting the Technology and Content Landscape and Choosing the Right Category of Solutions

Beyond Basic Scorecarding – Supplier Performance and Development Approaches to Drive Competitive Cost and Risk Advantages

Supplier Management Market Observations: Recent Trending, Musings on SAP’s Core Offering and General Deployment Pitfalls (for all Solutions) to Avoid

You can also read the first installment of this series on Spend Matters:

Exploring Supply Chain Resilience: Top Global Supplier Risks

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