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The Intersection of Contract “Invisibility” and Risk Management: Be Afraid (Be Very Afraid)

Over the past decade supply disruption has gone from being an exceptional event to at least an annual – if not quarterly or monthly – occurrence. Most organizations are simply not prepared, even though they may have checked the box with fairly narrow supplier risk management assessments. Considering that disruptions can easily cost an organization orders and sales, six to eight figures in bottom line loss and, nearly half of the time, reputational damage, this is a huge issue.

In response, many organizations have wisely pursued at least a basic supply chain risk assessment to identify the major risk types. These diagnostics are not trivial though, and they require a fair amount of data collection and stakeholder engagement. There is a data source, however, that is often overlooked. It’s a key input into this process – the contract.

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