Corporate Image and Compliance – Supply Chain Risk Briefing (Part 2)

We’re pleased to announce the publication of the second in our supply chain risk briefing series, written in conjunction with risk management solution provider riskmethods, this one titled “Corporate Image & Compliance at Risk: How to Mitigate the Hidden Risks Lurking in your Supply Chain”

Each of our short, snappy papers gives an overview of a particular risk topic, with a quick analysis of the drivers, what it can mean to organisations in terms of the potential consequences, and some suggestions as to how the risk can best be addressed and mitigated. That is all packed into a concise two-page document.

Reputational risk is perhaps the type of risk that has moved most up the risk priority list in recent years. I can’t remember it being a big issue when I started in the profession, but organisations have become much more aware of corporate social responsibility and the related risks under that heading. So modern slavery, child labour, and safety issues in the supply chain have all become much more prominent, and are taken seriously (quite rightly) by many buying organisations who know that these factors natter to their own customers.  Environmental and related concerns, such as carbon reduction or water security, are also a relatively new priority for many.

But as well as how the public and the customers expect firms to behave, the other aspect of these risks is around the greater regulation and compliance that is expected by the legislators. It is not just that customers expect firms to make sure they don’t have forced labour occurring in their supply chain; increasingly governments are introducing laws and regulations to encourage firms to do the right thing, and to punish those who don’t.

So there is a long list – and getting longer – covering issues such as modern slavery, for instance with the California Transparency in Supply Chains Act and the Modern Slavery Act the UK. Legislation covers the use of “conflict minerals” as well, and there is more legislation around doing business with countries that have sanctions applied to them.

As usual with risk management, there are two key steps here. Understanding the potential risks and where they might lie is the first. Then taking action to reduce, mitigate, eliminate (or maybe accept) the risk is the second. To do that successfully in this field, it is not enough to simply inspect the occasional supplier factory once in a while. A more structured approach is essential.

Anyway, to find out more, you can download our paper here. And the first in the briefing series – our paper covering risk that arises from financial risks related to supplies – is still available to download free on registration here.

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