Guest Post by Greg Hutchins (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

The idea of supply chain risk management has been around for about 10 years. It is only in the last 5 years, that it has become popular. We are still at the early stage of supply chain risk management adoption and deployment.

In terms of total dollar amount, external suppliers provide a significant portion of a manufacturer’s product. For U.S. firms, 50% to 80% or more of the final price of a product can be the cost of purchased goods.  In Japan, it can be even higher.

For these reasons, any supply disruption can kill a supply chain.  As a result, supply chain risk management is now critical to a company’s competitiveness. [Read more…]

Guest Post by Geary Sikich (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

If you want senior management to pay attention give them something that challenges their focus – and understand that their focus is not on how many computers you have or RTO, RPO stats. It is on business survivability – will we be in business tomorrow given the issues that we face today. [Read more…]

Guest Post by Geary Sikich (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

Heightened Awareness or Reactive, Backwards Looking?

From financial crises to energy catastrophes to earthquakes and threats of terrorism, we hear a lot about events that challenge our ability to identify and manage risk.

Unfortunately, some of the things that emerge from many of these events are reactive regulatory rules and requirements. [Read more…]

Guest Post by Geary Sikich (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

We hear a lot about things that are being called “Black Swans” today thanks to Nassim Taleb and his extremely successful book, “The Black Swan: The Impact of the Highly Improbable,” now in its second edition. I have written several articles centering on the “Black Swan” phenomenon; defending, clarifying and analyzing the nature of “Black Swan” events. And, I am finding that wildly improbable events are becoming perfectly routine events. [Read more…]

Guest Post by John Ayers (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

Reliability is designed into a product.  Quality is built into a product.  Poor reliability is long term, difficult and expensive to rectify because it is woven into the fabric of the product.

Quality is a relative short term problem because once the badly written procedure, non-compliant material or poor workmanship is identified, it usually can be fixed relatively quickly with minimal impact to the program. [Read more…]

Guest Post by Greg Hutchins (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

When evaluating risk response strategies, executive management along with process owners must align risk responses with the organization’s risk appetite, business objectives, costs/benefits, and overall risk strategy/tactics. Risk response strategies and tactics may involve: [Read more…]

Guest Post by Geary Sikich (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

Introduction

There’s always a story that explains why an event is a “Black Swan” – after the fact. Where are the “Black Swan” prognosticators before events occur? I see “after the fact” articles and statements, such as, “we knew that was coming” or “we predicted this” – all after the fact. Generally projections and predictions seem never to hold sway until after the fact. Predictions and projections never seem to occur when the prognosticator specifies — is it just that the timing never seems to work out – until after the fact. From Nostradamus to the “Bible Code” we are enamored with predictions – after the fact. Does there seem to be a theme developing here? [Read more…]

Guest Post by Geary Sikich (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

Exposure to threats, hazards, and risks leads to vulnerabilities that an organization must deal with.

Commonly these are addressed via a mitigation process. Once mitigation is accomplished, often times the organization feels that the risk, threat, hazard does not need to be revisited. However, as a result of the mitigation efforts on the part of the organization, the risks, threats, hazards reconfigure and re-emerge in a different form.

In order for mitigation to be successful, it has to be a constant and ongoing process that produces a resilience to the negative effects of risks, threats, and hazards that are realized. [Read more…]

Guest Post by John Ayers (first posted on CERM ® RISK INSIGHTS – reposted here with permission)

Six Sigma is a powerful tool used to solve a problem or improve a process. The company (one of the 4 big defense companies) I worked for over 20 years lived, breathed and ate it every day. I became a six sigma specialist. For those readers not familiar with six sigma, I offer the following example to hopefully provide some insight into how it works and the benefits it offers.   [Read more…]