2. Don’t risk more than you can afford to lose. But how do you figure out how much you can afford to lose? It’s all in your risk tolerance. (Keep watching our blog!)
3. Don’t risk a lot for a little, i.e. understand the consequences before deciding which mitigations to act upon. You cannot make decisions on mitigations simply based on the cost of the mitigation – it must be based upon the return on investment.
4. Consider the odds of an occurrence. How likely an event occurrence is directly correlated to how many resources should be assigned.
5. EVERY procurement should take the bidding supplier’s internal supply chain risk management program into account for an award – as well as how they work with their suppliers. We’re going for transparency folks. AND we need to measure performance against the program via active dialogue and supplier assessments. This should be stated, up front, in the contract for simplest and least expensive explanation and enforcement.
Following the above five steps will get you asking the right internal questions for your organization. And, when implemented, far along the path of your own supply chain risk program.