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A Supply Chain Risk Framework for the Crises of Tomorrow

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By Erika Peters, Exiger Global Head of Third-Party & Supply Chain Risk Management

Erika shared the insights below during an Exiger expert session at Gartner Supply Chain Symposium/Xpo™ 2022.

Supply Chain Risk is Varied and Complex

It can’t be overstated—global supply chains are experiencing unprecedented challenges from a combination of complex issues:



The governments and organizations operating in this challenging and rapidly evolving threat landscape need a new approach to supply chain risk management. Resilience and integrity must be key ingredients as we restructure supply chains to withstand current conditions and prepare for the future.  

The Exiger TRADES Supply Chain Risk Management Framework

Exiger developed the proprietary TRADES risk management framework as an actionable blueprint for building a third-party and supply chain risk management program to stay ahead of current and upcoming threats and vulnerabilities. The framework helps governments and companies baseline their current risk management maturity stage, and work to develop a predictive rather than reactive risk management model.

Here is an overview of risk landscape view considerations:

Supply Chain Macro
Risks
Supply Chain
Operational Risks
Supply Chain Micro
Risks
·      Foreign Influence
·      Environmental   Disruption
·      Geo-Political/ Regulatory
·      Economic
·      Product Quality & Design
·      Manufacturing & Supply
·      Transport & Distribution
·      Financial
·      Compliance/Regulatory
·      Technology/ Cybersecurity
·      Human Capital

While COVID-19 upended every company’s supply chains and operational plans last year, geopolitical risks — regional trade policy, instability, corruption — represent an organization’s biggest concern.

The TRADES risk management framework is designed to address those concerns, and includes six distinct steps:

  • T – Transparency of Current State
  • R – Risk Methodology Design
  • A –  Assess Current Risks
  • D – Determine Mitigations
  • E –  Evaluate Framework Uplift
  • S – Supplier Monitoring

How Mature is Your Organization’s Risk Management?

We encourage you to find your starting point in the TRADES risk management maturity model by identifying the stage that most closely matches your organization:

STAGE 4: Anticipatory/ Predictive Posture
Predictive models and a dynamic TRADES framework 
Criticality monitoring of critical sources of supply 
High risk disruption events modeled for each critical region (e.g., climate/weather events, pandemic/public health event, political unrest events, etc.) and impact assessed 
Alternative sources of supply identified to minimize disruption and migration plans developed
STAGE 3: Proactive PostureRisk appetite known, established RACI governance and continuous program improvement model 
Sub-tier supplier ecosystem risk effectively mitigated, integrity restored, continuous monitoring activated to ensure resiliency 
Micro-level entity risk across the entire supplier ecosystem is identified through continuous monitoring and mitigated in real-time
STAGE 2: Progressive PostureEstablished strategy and governance 
Tier 1 supplied ecosystem risk effectively mitigated, integrity restored, continuous monitoring activated to ensure resiliency 
Sub-tier supplier ecosystem illuminated, and associated risk known and mitigation plans developed for high-risk entities within sub-tier supplier ecosystem
STAGE 1: Awakened PostureRisk owners and risk types known 
Tier 1 supplier ecosystem illuminated, and associated risk known 
Criticality assessment conducted, critical sources of supply identified and geographically mapped 
Mitigation plans developed for high-risk entities within Tier 1 supplier ecosystem
STAGE 0: 
Reactive 
Posture
Fragmented program, with lack of strategy, governance, risk owners and risk types 
Largely unaware of supplier ecosystem or associated risk 
Risk identification is ad hoc/episodic and typically in response to significant disruption that has occurred

For more information, download your complimentary copy of the TRADES third-party and supply chain risk management framework.

Based on our conversations with leading supply chain risk management professionals, we see forward-thinking companies pursuing a range of actions and investments to mitigate the impacts of future disruptions. In 2022, the key areas of investment are:

  • Skilled team members
  • Technology
  • Integrating risk views into one
  • Supply chain risk solutions
  • Central golden data source
  • Vendor & supply chain due diligence

Technology is key to managing third-party and supply risk management. Exiger clients mitigate critical threats to their supply chain and entire supplier ecosystem with Supply Chain Explorer, our platform offering supply chain risk insight in a single click.

The risk landscape is constantly changing. Hear about the latest with Exiger.